As far as I'm concerned, no... advertising in local newspapers doesn't give you anything except exposure in the local community. Whether or not you will benefit from a wider range of advertising depends on what kind of industry you are in. Are you a local merchant that only deals with people who come into the store? Then you should probably stick to local advertising. Maybe spread the wealth into more of a county area rather than just one city; most counties aren't too wide and aren't too long of a drive from one point to another.
But if you do business via internet/shipping/phone as well (are you able to ship products to your customers?) then advertising in a wider-hitting medium would be a good investment. Get with a newspaper that is distributed to multiple counties or even nation-wide. As far as I'm aware, the New York Times and Los Angeles Times are distributed to a variety of cities throughout the nation.
Looking to keep record of how people found out about you? Take note of how many coupons you distributed and make them "must present at time of purchase" coupson... then you can track how many come back to you. When it comes to how people found out about you... ask! That's how we do it around here. Any time someone calls/emails us about a quote or questions on our products, we make it a priority to ask them how they heard about us. We have a variety of sources that have our name within their database and each source is listed. Each time someone names the source, we tally. At the end of the week, we see where people have been looking and where we should turn up our promotions.
We're a promotional company ourselves. We deal with putting out custom-labeled products for your promotional needs. If you need anything, feel free to contact us. We could even help with ideas!
Hope that helps!