If you have a small local (niche) market, cheap local advertising is somewhat effective for the purpose of exposure. However, I've found that word-of-mouth exposure pays off the best.
Thus, I recommend asking your happiest (perhaps even most enthusiastic) clients to recommend your services/products to whomever they feel might be able to use them. Offer them discounts or even freebie incentives to encourage them to refer your business.
If your referral network grows, you might find your existing clients doing most of the selling of your business/products/services for you. Resulting in reduced courting time and cost of sales for you.
However, I think this only works with higher quality or lowest cost positions on the offer curve. Otherwise, your customers would have a difficult time explaining to others why they should use your business.
On using social media ......
Firstly, your focus should be on the long term rather than short term. In the short term it's more about giving value than getting it. Building relationships and gaining trust is the first aim. Another aim is to drive people to your website, where they can gain value without spending a cent. But of course, as they experience your "expertise", some will become more predisposed towards your products/services.
Before I describe how to use LinkedIn (LI), FaceBook (FB), and Twitter, let me say that the sooner some platform emerges that combines the functionality of all three, the better. They each have their good and bad points.
Linkedin is where you'll probably find your most serious B2B connections. Joining groups and contributing to discussions in the "Answers" section is good way to boost awareness of your profile, and to give value. LI lets you maintain lifetime connections with former colleagues, clients and referral sources. Having said that, LI is quite static, and in some ways just sits there like a plate of cold porridge waiting for Goldilocks.
Twitter is a very open platform, and can look like utter rubbish until you work out how to find the gems among the rocks. You should have a couple of aims on Twitter. For business purposes, seek then follow folk who may share your target market, plus potential clients. Then start to converse with them, and often they'll follow you in return. Generally try to tweet wit or wisdom, not what you had for lunch, like the airheads do. Add na URL in your tweet, sending them to your website to expereince about your business. Other folk send followers to their blog, where they receive further value.
As you identify serious contacts via Twitter, suggest to them that you connect on Linkedin.
Another aim with Twitter is purely social. Being a sole operator, based in a home office, it's fun to participate in lighthearted conversations about topical issues, from swine flu to Somali pirates. Simple is that.
Facebook is more the place where you have friends, family and like minded colleagues. It's a good way to maintain a sense of connection, because of its greater multimedia capabilities. However, I know some who hate the coldness of LI and migrate their Twitter contacts to FB.
Just imagine if LI had the microblogging capability of Twitter and the multimedia, interactive functions of FB, but all integrated in a way that each user could control to suit their needs. That's what will one day emerge, I hope.
As I said, online networking is about giving value before getting it. I hope you get some value from these comments.