I have an established publishing business and bookstore. In order to help promote the bookstore and our own publish books we also created and publish an online magazine, showing talented authors, interviews, book reviews etc. Over the past 5 months, the content and format has improved and now we find ourselves with a monthly periodical that has a subscription readership of over 2000.

We've circulated it as a finished pdf document and recently started posting it to issuu.com to give a nice magazine feel which readers seem to like because circulation really jumped after that. Until now we've filled blank spaces between articles with web affiliate ads, they are colorful and fill empty space but no one or very few people seem to click affiliate ads, especially in document formatted reads, so basically the affiliate ads bring color but no additional revenue.

I started thinking this month, why not fill the space with paying ads, just like a traditional magazine. I realize being a new periodical with a little over 2,000 readers is not going to make our ad rates top notch, but seriously, anything brought in on this side venture would be gravy margin.

The only trouble is, how to fill the ad space? Where do I look to reach an ad agency that would work on commission. Where would I post an ad, trying to get businesses to post their ads to me in turn?
Is there a magazine ad space service that will link up publications to businesses looking for affordable space? Everytime I contact an ad agency they think I'm trying to buy space, I'm trying to sell it.

Our readership is focused, the magazine is called Lit. & Music Review. The readers like the newest bands and musicians, unknown but very talented authors, and poets.

I did have an idea of reaching out to authors with books to promote or musicians with a new cd release, so they could place ads, pay for space in our magazine but the same question persists, how to reach them. Myspace? Facebook ppc?

Any ideas welcome, our main business is doing fine, this is an opportunity that we've walked into and it makes sense to fully leverage it if we can bridge the gap and connect with either an ad agency to fill the space or somehow connect directly to businesses.

Thanks (sorry for the length, just trying to give as much background as I can think would be useful)