Internet users want ads that are relevant, useful and offer discounts according to a survey by Lightspeed Research and the UK based Internet Advertising Bureau.

The survey found that younger Internet audience are more interested in special offers, the entertainment factor and exclusive information within advertising.  For 45-54 year olds however, ads need to be more relevant and useful to make an impact.

Ads that offer discounts particularly appeal to 18 -35 year olds, but with the economy slowing, people of all ages are looking for ads that offer discounts.

The majority of respondents believed they had been exposed to more traditional forms of online advertising, such as sponsored links, banners and emails. These ads were most likely to have generated click-though rates.

The research found that newer forms of online advertising are gaining ground, specifically ads using rich media such as video and widgets. Facebook gifts and branded applications online are especially effective with 18-24 year olds – 29 percent had seen and sometimes interacted with an ad from either Facebook or branded content.

Email advertising is particularly effective for those 25 or older. Thirty-four percent of 25-34 year olds said they had seen and sometimes clicked on an ad in an email.

“The research has found that even though not all consumers click on ads, they are now fully acquainted with most forms of advertising online, with the majority having been exposed to most internet ad formats,” said Sorcha Proctor, Research Manager for IAB UK.

“It also highlights exactly what consumers what online: relevance, entertainment and value for money, and its important for brands to bear this in mind when planning their digital campaigns.”

A big surge in the annual growth of local search outpaced growth of overall Web search, according to a study by comScore and released by the Yellow Pages Association.

The study found that local search grew 58 percent in 2008, reaching an annual total of 15.7 billion searches. By comparison, overall U.S. Web core searches grew at a smaller rate of 21 percent year-over-year, nearing 137 billion searches by the end of 2008. Local searches account for 12 percent of core searches on the top 5 portals.

Boosted by the growth in local search, Internet Yellow Pages and locally focused online business directories also saw double-digit growth of 23 percent in the same period, totaling 4.6 billion searches in 2008.

As more users do local searches, exposure to sponsored links for Yellow Pages data is increasing as well. Year-over-year, Internet Yellow Pages sites have seen their exposure to sponsored links increase 50 percent to reach 353 million in the month of December 2008 alone, signaling the increasing need for local business information.

“As local search grows, our data becomes more valuable,” said Neg Norton, president, Yellow Pages Association. “Whatever way consumers choose to find a local business, chances are the last mile of the search was supported by Yellow Pages — whether the consumer knows it or not.”

Seventy-five percent of the top 100 keywords searched on Internet Yellow Pages sites were non-branded, indicating that a majority of consumers have not decided on a specific company or product brand when they begin their search.

Small-and medium-sized businesses are now spending 11 percent of their advertising budgets on online marketing campaigns, up from less than 4 percent three years ago, according to a new report from Borrell Associates.

These SMBs are blurring the lines between what’s advertising and what’s not. They consider whatever they spend on their own Web sites to be advertising, but that is a technology, design and telecommunication expense.

SMBs are less receptive to buying banner ads but are in favor of search engine advertising, online directory listings and streaming video.

The nation’s 14.6 million SMBs were responsible for more than $6.9 billion in locally generated, locally targeted interactive advertising in 2008- more than half of the U.S. total.

“The owners of small businesses would be well advised to understand these trends as they look to the Internet to help stimulate sales from both inside and outside their market,” the report states. “Many Internet marketing products are oversold and under perform.”

Google has announced its launching “interest-based” advertising as a beta test on its partner sites and on YouTube.

The ads will be matched via users browser based on the types of sites they visit and the pages they view. Google says it will use interest categories to show users more relevant text and display ads.

Google says it will allow users to select categories for ads they want to see. Users can also tell Google categories they don’t want to see ads for.

Google offers details on what it says are the three most important features of interest-based advertising.

• Transparency – We already clearly label most of the ads provided by Google on the AdSense partner network and on YouTube. You can click on the labels to get more information about how we serve ads, and the information we use to show you ads. This year we will expand the range of ad formats and publishers that display labels that provide a way to learn more and make choices about Google’s ad serving.

• Choice – We have built a tool called Ads Preferences Manager, which lets you view, delete, or add interest categories associated with your browser so that you can receive ads that are more interesting to you.

• Control – You can always opt out of the advertising cookie for the AdSense partner network here. To make sure that your opt-out decision is respected (and isn’t deleted if you clear the cookies from your browser), we have designed a plug-in for your browser that maintains your opt-out choice.

Interest-based advertising will be introduced over the next several months in beta form, and will expand later this year.

The Internet Advertising Bureau (IAB) has worked with key players in online behavioral advertising to launch Good Practice Principals.

The Good Practice Principles aim to empower consumers and give them information and choices about behavioral advertising.

Microsoft, Google, Yahoo and AOL all support the new principles. Online behavioral advertising is the growing practice of serving relevant ads to groups of anonymous Internet users, based on previous browsing activity.

New research by IAB found that 85 percent of consumers would rather have free content on the Internet with advertising on Web sites, than have to pay for access. Fifty percent of those Internet users said they would prefer to receive advertising that is relevant to them.

All companies that sign up to the Principles have six months to comply with three core commitments:

* Notice – a company collecting and using online data for behavioral advertising – such as a website publisher, ad network or technology company – must clearly inform a consumer that data is being collected and used for this purpose.

* Choice – a company collecting and using online data for behavioral advertising must provide a mechanism for users to decline behavioral advertising and where applicable seek a consumer’s consent (where data protection law or specific regulatory guidance applies).

* Education – a company collecting and using online data for behavioral advertising must provide consumers with clear and simple information about their use of data for this purpose and how users can decline.

The Federal Trade Commission documented the most cases of identity theft ever in one year in its “2008 Fraud and Identity Theft Complaint Data.”

In 2008, the FTC said it had received about 1,200,000 complaints related to fraud, identity theft and other consumer complaints, representing a 50 percent increase over the previous year.

Those consumers reported fraud related losses of more than $1.8 billion. The states that reported the most complaints include Arizona, California and Florida. Those states have the highest rates of foreclosure, indicating that the economic downturn has been a driver of increased fraud.

“This FTC report confirms what we have been seeing in the online chat rooms where identity thieves buy and sell stolen personal information. Since we are constantly monitoring these rooms on behalf of our customers, we’ve been able to track a significant increase in activity over the last six months,” said Dan Clements, vice president, Affinion Security Center.

“In fact, we think that the number of complaints that the FTC receives are just the tip of the iceberg, and there are actually many more cases of identity theft that go unreported. Americans, more than any other nation, are vulnerable to identity theft,” he added.

The FTC report found that credit card fraud was the most common form of identity theft. When credit card information is stolen, the thieves often turn to online chat rooms where they buy and sell this information and also do tests to make sure the card is valid.

In 2009 companies will continue to invest significantly in online marketing, but less than half (47%) of marketers use analytics to measure their campaigns, according to a recent survey by Alterian.

Online marketing investment is predicted to increase for the 6th year in a row as organizations begin to look to social networks as well as email, SEO and pay-per-click advertising. A quarter of marketers said measuring results are the hardest part of any campaign.

“With the current economic climate, it is refreshing to see results that show businesses investing in areas that can directly drive sales – essential in this market,” said David Eldridge, CEO Alterian.

“What is less encouraging is the low number of marketers who use analytics to evaluate and refine their campaigns.”

Online direct marketing is on track to see healthy growth this year, with 62 percent of organizations citing planned increases in budgets.

“Multichannel marketing is commonplace in 2009, but the challenge for marketers is to measure the value and draw results across these various systems in order to provide a true picture of ROI back to the business,” said Eldridge.

“This seems to be a tough challenge for many organizations as they continue to market in the dark.”

One-fifth of respondents claimed their Web site was only “basic” and not the center of its marketing activity, but with increased investment predicted in online marketing channels, companies need to better understand the importance of the Web site in establishing its online presence.

“Marketers must not forget that their own website is the destination that many of their activities drive customers and prospects to, and they need to be extracting the maximum value this cornerstone of any forward-thinking company’s marketing activity,” said Eldridge.

The Federal Trade Commission has issued a report outlining self-regulatory guidelines for the online advertising industry.

“This is the industry’s last chance to get self-regulation right,” said Leslie Harris, President and CEO of the Center for Democracy & Technology. “The FTC report makes clear that the industry’s own efforts in this area have fallen short and must do more.”

The report discusses the potential benefits of behavioral advertising to consumers, including the free online content that is ad supported. It also discusses the privacy concerns surrounding behavioral advertising.

The FTC’s overall approach to consumer privacy seeks to balance the potential benefits of behavioral advertising while encouraging privacy protections and maintaining a competitive marketplace.

Because privacy policies posted on company Web sites are often long and difficult to understand, the report encourages firms to create effective disclosure information that is separate from their privacy policies.

The report calls on companies to provide reasonable security for any data they collect for behavioral advertising and to keep data only as long as it is needed to fulfill business or law enforcement needs.

The FTC said significant work remains and that it will continue the public dialogue regarding privacy issues raised by behavioral advertising. In the coming year it will evaluate self-regulatory programs and conduct investigations if needed, to determine any violations.