Unfortunately or fortunately, the best web design jobs you'll likely get are going to be through word of mouth.
Because there is so much competition on the internet, people searching for someone to design a site are most often going to ask friends, family and colleagues for the name of the company that did theirs.
So make sure you do a better than average job each time you get a customer and your customer base will grow on it's own. Basically, take a little of you marketing budget and time and devote it back into customer service and providing a smoother experience and you will find yourself on the right track.
Obviously, there are other forms of advertising including print media (newspapers, yellow pages, magazines) but they are often costly vs. return. You could start a small adwords campaign, if for nothing else than to see what people are really searching for (a whole thread on it's own) rather than what you 'think' they are. If you do use it just for testing, I'd recommend turning off the google network options, so you target your results to google itself instead of all the adsense ads you see on everybody's sites.
Getting in bed with graphic designers will get you more work, but you'll not make the same sort of money doing on your own. Mind you, if you are not a 'graphic' designer yourself, your sites may work well but not have that flare that helps to complete a well branded site, not only impressing the client but having customers comment back to the client that they liked the look of his/her site.
I hope that last point makes sense, because if you can get the clients customers commenting to your client that they were impressed by what they first saw on the website. Then your client is even more likely to refer you and give you more work in the future.
There is plenty we can talk about with business promotion in general, let alone a web design business, so I won't add anything further for now and we can see what everyone else has to say.