The July 8th issue of the Economist had a really good overview article on Internet advertising and marketing.(Access to the article unfortunately is not free after the first week,and you may not be able to access that link unless you're a subscriber).
The gist is that current advertising model across the world (innovatedby John Wanmaker back in the 1870s) takes the approach of carpet-bombeveryone in a city with the ad, rather than what the Internet enables,pin-point targetting individuals who would be interested (rephrasingRishad Tobaccowala, chief innovation officer of Publicis, one of theworld's biggest advertising groups). It also talks about viralmarketing by word-of-mouth and attempts to measure this, as well asother possibly effective methods.
Definitely worth the read.
Economist article on Internet advertising and marketing