Nothing beats word-of-mouth advertising from happy clients, but that doesn't cast a wide net. Has anyone tried paid advertising -- Internet or traditional? Is it effective for our kind of business?

Recently I got a flyer in the mail from a hosting company that came in one of those bulk coupon packs. I wonder how effective that was.

A number of companies have. I know Interland and some others have because I've gotten their cards in the mail. I don't know how helpful it's been for them and I think it may be a waste without a good reputation. For instance, Interland is a former PC Magazine Editor's Choice, yet has gone downhill since then. They are also a spam haven so I would advise against them on that alone. (They host a spamware site that is still up, depite me having confirmed receipt of reporting it to them months ago).

They might pick up some customers that don't know about sites like this one and how to find a good host. For those who do know, the advertising is probably wasted unless the company is reputable.

Considering the low response from direct mail, as reported by direct marketers, such advertising is probably only feasible for larger companies. At least it is preferable to spamming, though some do spam (sent unsolicited bulk e-mail) as well. I would rule out any host that spams for two reasons. One, they are spammers, two, how much help do you think they would be at reducing the spam you get if they are spammers?

Many do advertise on the Internet. Just go to most of the host rating sites and you'll see their ads. In many cases, they are in the form of paid reviews. If you've ever wondered how highly rated companies can be so tgrrible, wonder no more. That's why.