Well, you have to work at it – List with every free place you see – Yahoo Locals lists free, it depends on what you are selling.
Do a search as if you were a customer and sign on with other website that you come across and are free. Some require you to place a banner – you don’t want your website junked up, but a couple of well chosen ones aren’t bad.
Many times, a local magazine or small town newspaper will list you on their website free. Typically just a name and number though.
Free advertising is not as good as paid – the old addage is true – you have to spend money to make money.
Oh, something else – put your website or email on everything you send out – even personal stuff.
It takes time as well – eventually word of mouth starts helping.
Videos in my experience are the most effective since they are free and theres tons of websites out there (youtube, dailymotion, veoh) where you can upload the same video. Dont make it an ad, make it a tutorial, that teaches people something, then they will favorite it and show others. I make informative videos, but at the same time, I advertise my site with a banner at the bottom reading “for more information visit this site”. Some topics catch on better than others. My “make money” videos dont get any views compared to my “cure acne” ones. Its hit or miss, pick a subject thats popular that people will watch. They see my ‘make money’ videos and think its a scam, but an acne video they trust in watching.
Sam N’s answer is better for higher priced items that are specific to location. Good answer. I guess it depends on what type of item you’re selling. Something like concert tickets wouldn’t sell well on Hannah Montana videos on youtube I would assume since its people all over the world looking at it, and craigslist narrows it down to people in certain areas where the concerts would be, so Sam N’s answer is spot on.