Posted February 12, 2008 11:59 am by with 10 comments

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While paid search is still the top tactic for internet marketers, more competition and higher costs has dampened enthusiasm. However, SEO (search engine optimization) is more popular with marketers because of its lower cost and high returns.

“SEO continues to increase in popularity. Its low costs and high returns make it a leader among more than half (57%) of the marketers surveyed. Those numbers were 45% in 2006 and 33% in 2005.”

That’s according to MarketingSherpa’s 5th Annual ad:tech Survey. The survey received 421 responses from top internet marketers. These marketers decide how to spend large marketing budgets for well-known brands.

MarketingSherpa asked what worked in the past 12 months and how they plan to budget for the next year.

Here are some additional findings:

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  • Behaviorally targeted ads. Contextual ads show up based on the content of a web site. Behaviorally targeted ads show based on the perceived interest of a web surfer based on what sites they have visited. People are more likely to click if the ad reflects their interests.So if you have visited several travel sites then you’ll see an ad about travel. This is expensive for smaller retailers but larger brands can target ads based on interest and see a strong response.
  • In-house email lists are more successful than paid search (and cost significantly less).

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  • Pop-ups and pop-under ads. These were the worst performer of the year – which comes as a surprise only that marketers still use them. Not one marketer found them successful. They may be effective in a few industries that were probably not represented at ad:tech.
  • Banner ads. These graphical ads dropped 2% from last year and are down 4% from 2005.

Even with higher costs, most marketers said they plan to spend more on paid ads (PPC, or pay-per-click). That’s good news for Google.