Yes, use your imagination.
The horror film considered to be the most scariest of all time, The Exorcist, did that throughout the whole movie. While it was considered to be quite graphic at the time, and to many people today, the director understood that horror is best left up to the viewers imagination. Tap into that, which he obviously did, without obviously leading the audience like a bunch of children, who shouldn't be watching such films in the first place, and you have yourself the best horror that can be made.
The Blair Witch Project was successful, I think, because it did that entirely throughout the whole movie. Much of the younger generation laughed at it and dismissed it, as they did when I watched it in the theater, because younger people today lack imagination with all the distractions they have in their lives.
Younger people today also tend to be much more cynical about things so it isn't too surprising, unfortunately, to see film makers relying on special effects and graphic sex to interest the viewer.
A talking fox?
