Behavioral targeting, search engine optimization (SEO) and direct email using house lists are the best-performing tactics in online marketing, according to MarketingSherpa's annual survey of ad:tech attendees, writes MarketingCharts.

Marketers also report strong ROI from paid search and direct email from rented lists, albeit they are less likely to say so than last year.

Top (and Bottom) Online Performers

• SEO is gaining in popularity among marketers: 57 percent of those surveyed in 2007 said it outperforms other tactics ("great ROI - outperforms other tactics"), compared with 45 percent in 2006.
• Email marketing from house lists, a top tactic of 47 percent of marketers in 2006, was cited by 42 percent in 2007.
• Behavioral targeting offers a stronger ROI than contextual targeting, marketers again said - but in greater proportions: 44 percent said so (up 10 percentage points from 2006), while 21 percent cited contextual advertising (down 8 points).
• Paid search remains a strong money maker for 34 percent of those surveyed, but that's down from 49 percent in 2006, likely due to increased competition that raised keyword prices and lowered ROI.

Among the ad types rated by marketers as having the lowest ROI in 2007 were rich media ads (only 7 percent said it delivered a strong ROI), banner ads (cited by 10 percent), and pop-ups and pop-unders - awarded the "worst Web ad of 2007": No marketer said it provided a significant ROI.

Budget Plans

Pay-per-click (PPC) and behavioral ads are set to earn a larger percent of marketers' budgets, according to the survey:

• Some 32 percent of marketers cited PPC (i.e., agreed that they plan to increase their budgets for the tactic more than 5 percent).
• Strong ROI from behaviorally targeted ads is likely to attract more investment - 27 percent of marketers said they'll increase their spend, compared with 18 percent in 2006.

What's Next - New Tactics

Viral marketing and advertising on mobile phones, online video sites and virtual worlds are gaining the attention of marketers, many of whom are being encouraged by agencies to increase budgets, or allocate budgets for the first time, to those tactics:

• 93 percent said agencies recommended an increase in spending or begin spending on viral video.
• 87 percent were asked to start or increase viral marketing spend on social networking sites.
• 60 percent were urged to try, for the first time, wireless ads on mobile networks.
• 62 percent said agencies advised advertising, for the first time, in games and virtual worlds.

About the survey: MarketingSherpa asked internet marketers (ad:tech attendees) what tactics worked and didn't work in 2007 and where they plan to spend their budget in 2008. The data is based on 421 responses.