My primary website has a relatively large amount of traffic. On average, I'll have more than 3,500 unique visitors in a day, and about 50,000 pageviews.

The focus of the site is entirely local. People from the local area all come to the site for local news and gossip, classifieds, local searches, etc. In fact, I've recently discovered that the wide majority of my traffic (about 80%) does not have a referrer; they either use my site as their homepage, or have it bookmarked. Almost 100% of my traffic is held to this one region; the exceptions are generally people that are from the area but have moved away, or are planning to move here in the near future.

I've been selling ads to local businesses, and that works out OK, but not great. I'm in a small town, and a lot of the local business owners have no idea what the internet is. Worse, the bigger businesses all say "we can't authorize it locally, you have to go to our corporate," and then corporate says that they don't do any internet advertising outside of their affiliate programs (if at all).

I currently offer 3 advertising options: a homepage banner, a smaller rotating banner that goes throughout the rest of the site, and a search engine ad.

Any ideas on how I can bank on all of this traffic? I've tried affiliate banners with very little success, and I've tried offering "enhanced" features for members at $1/month with NO success. But after 4 years, I'm still spending more on the site than I'm bringing in.

What have other small internet portals done to be financially successful?

TIA,

Jason