The Internet is a great medium to use for marketing your business. Why? The following are my 5 top reasons.

1. You are marketing to qualified leads

Traditional marketing is based on the rule of numbers. Show your message to as many people as you can so that you have the highest chance of being seen by your prospective customer. This can be focused a little by advertising in relevant publications or at the appropriate time of day but in the end, the advert is shown-to-many, responded-by-view.

The Internet changes this.

Search engines allow people to find only what they are looking for, when they want to. The table turns and now you market to a lead. The visitor is already pre-qualified in that they are looking for an answer to a question. This is targeted marketing at it's best.

The market is no longer a demographic but a set of keywords. Identify the keywords that your prospect is using, answer that question and you are in the best position to convert that person into your customer.

2. This is probably the most cost-effective marketing medium

It costs almost nothing to create and host a website. You can market your business with a single page on a free hosting account if you need to - it doesn't get much cheaper than that.
Pay per click advertising is also cost-effective if done right. You are only paying for clicks so you can show your advert to as many people as needed until you find the person ready to click. That person is your prospect and you only pay for the prospect.

3. Everything you do can be measured and tested

Almost everything you or your visitors do on your website is measurable which gives you a huge advantage over the alternatives.
You can track where a visitor came from, where on the site they went, when they bought or when they left.
If used correctly, this information allows you to refine your marketing, constantly improve it and increase your profitability.
You can see what works and what doesn't. In traditional advertising this type of measurement is extremely difficult to obtain, if not impossible.

4. It never stops

Your business is always open. You are able to help the person looking whenever they are looking.
Your website can continue marketing while you sleep, improving your ability to service customers.
Best of all, you're helping them when they want to be helped.

5. You can reach anyone, anywhere (provided they're on the Internet)

Traditional marketing has always had a limitation of reach. The publication is only available in one area, province, state or country so you would have to limit yourself to that area or work with publications outside of your knowledge space. You might not know enough about the magazine and it would be more difficult to create effective marketing messages to unknown territories.
With the internet, you can reach people across the world and while you will still encounter language and cultural differences, it is easier than ever to get your message out there.

The Internet provides a medium for marketing which is fundamentally different from traditional media. In the same way, the approach to marketing on the Internet must be different.
The 5 points in this post have highlighted the reasons I believe that Internet marketing is highly effective. Let me know if you have other points I haven't covered here (or if you disagree).