Here's a great example of why actual customer/prospect communication is better than undiffentiated advertising: Steve Greenberg has been posting on Twitter about his headaches with a Parallels installation (and the non-responsiveness of their support) - so just a moment ago I saw this:
VMWare has a Twitter account. Offering me a $30 discount to switch. See, Parallels? Other companies have a clue about customer service.
So what's more useful - a message to a prospect that's actually useful and desired, or a blizzard of banner ads that are completely ignored? Sure, the former takes a lot more effort - smart systems to scan for references to your product (and those of your competitors) - and some real people who look through the hits for things worth responding to. You might say that's expensive, but think about it: is the salary for the staff you need for this kind of thing more money than your advertising budget? I doubt it. Would it result in more qualified leads? I'm sure it would. 
I think some advertising is useful; you do need to create enough awareness to let people know you exist. Beyond that, you need something more like real communication.
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marketing, communication