(FORTUNE Small Business) – The corner doughnut shop generally doesn't slug it out with General Motors, except in one arena: advertising. People have the time and willingness to notice only so many sales pitches. That means every company, no matter what its size, must compete for attention with every other business that advertises.

In our annual look at notable small business advertising from the past year, the examples we've assembled share an ability to grab attention and then do something useful with it. None of them display what you'd call groundbreaking technique, and they didn't necessarily require a massive budget (the single Dale Labs ad that follows cost just $6,000) or a big New York agency (you'll be better off in Portland, Ore.). They use such advertising warhorses as hyperbole, flattery, and humor, yet they all connect with their audiences because they give lucid statement to strong ideas. The techniques may appear simple, but that doesn't make them easy to execute. If, on a lark, we had chosen to assemble lousy ads, the characteristics would overlap significantly with the traits seen here--but they'd appear as evil twins. Applied without wit, overstatement is a frequent hallmark of bad ads, whether as a telltale sign of bad faith or as a reflection of excess self-importance. Heartfelt honesty works. So does audacious exaggeration. It's when an ad falls somewhere in the middle that we find it a dud. Ads that play crudely on people's insecurities also place themselves in the worst pile, even as ones that do it adroitly can be among the best. No wonder advertising is more a recondite art than a transparent science.

Ads have the best chance of swaying the target audience if they're grounded in basic tendencies of human nature. For instance, people are always glad to blame someone else when things don't pan out. An ad for Dale Laboratories (by William Harris Advertising, Boca Raton, Fla.) uses that fact as the subtext for a shrewd bit of show-and-tell. Why do the photos we take sometimes look crummy? Surely not because of any lapse on our part! Rather (we read), it's because other photo labs lack Dale's expertise and equipment. When the copy says an underexposed wedding photo came out badly because the chain-store photo lab "couldn't give it the tender loving care it needed," few readers will leap to the defense of this Dale competitor. Glad to absolve ourselves of the blame for photographic mishaps, we're disposed to accept the claim that a good lab--say, Dale itself--could make all the difference. In other words, the ad trashes the competition while disarming our latent resistance to Dale's own pitch.

Neat trick. And it grows out of the way smart agencies approach their work. "The agency surveyed us, came up with our strengths and weaknesses," says Dale Farkas, president of Dale Laboratories. "Then, as outsiders, they came up with the concept of finding a flaw in the system and how we cure that flaw."

An advertiser can get mileage out of us-vs.-them sentiment even when it's not bashing a competitor. In an ad for the Hat Trick Snowplowing service in Cleveland (by Brokaw, Cleveland), the "them" is all those snowflakes that inundate the city each winter. A company that'll torch Frosty must be (as its motto says) "passionate about snow removal." Another ad in the series shows a snow-dome toy with a hole drilled in it to let the fake flakes leak out. Hat Trick could treat the topic in more prosaic terms, but that's not the way the target audience feels about it. In places like Cleveland, the heroic amounts of snow play a part in residents' self-identity. These folks see themselves as scrappy survivors, undaunted by the challenges of Snowbelt and Rustbelt life--winter weather included. By attacking this common enemy in such vivid terms, Hat Trick leaves Clevelanders feeling that the company is truly one of their own.

If some advertisers can tap into a communal esprit de corps, others have the delicate task of addressing two distinct audiences at once: the customers they already have and the ones they hope to get. It's not easy to do so without making one or the other feel neglected. Jimmy Mak's, a jazz club in Portland, Ore., finesses this dilemma with ads that resemble old album covers. Devotees of three-chord rock will take the point that they're missing out on something--and the fear of missing out is what drives avid nightlifers from club to club. At the same time, the visual homage to storied labels like Blue Note and Impulse will signal jazz enthusiasts that this genre isn't merely the club's musical flavor of the month. Skillful art direction has produced a good-looking ad (by HMH, Portland), but it's not just art for art's sake. It helps define the brand for a crucial segment of the audience. The copy, meanwhile, isn't bashful about using the imperative voice: "Be amazed," "Experience some of the world's best jazz talent," "Bring 40 or 50 of your closest friends." In other words, for all its nuance, this ad is very much a call to action.

While the Jimmy Mak's ad draws different constituencies together, a campaign for a vegetarian deli (by Moffat/Rosenthal, Portland, Ore.) works by driving a wedge between two kinds of people. Ads typically present vegetarian fare as spartan but good for you. Dogs Dig Vegetarian Deli instead bonds with its core constituency by inviting them to look down on the carnivorous dolts who clog their own arteries. Note how sharply this differs from the peace-love-and-granola sensibility to which partisans of vegetarian food are usually subjected. Here again, it's a case of playing on basic human tendencies: We enjoy feeling superior to other people and will cheerfully spend our money on brands that help us do so. Even vegetarians have their aggressive side, and a business can thrive by playing to it.

Indeed, the campaign grew directly out of the sensibility of the deli and its customers. According to Dogs Dig's owner, Sheila Gilronan, the art director for the ads was a regular at the deli--an 82-square-foot place, actually, in which any conversation soon becomes common property. "He'd come in for lunch and hear the conversations the staff and customers exchange--the jokes about meat eaters, etc.--so he knew what we were about." Thus, this wasn't a case of an ad agency's imposing a contrived identity on a client, always a formula for disaster. "When it came time to do an ad campaign," says Gilronan, "all we had to do was rehash old conversations back at his table."

Dogs Dig's ads work in part because they're a bit unexpected coming from its line of business. Sometimes an ad must out-and-out transform the way we look at the company's category. That's what a campaign for Morningstar Mini-Storage accomplishes. Ads for storage facilities tend to function (unintentionally) as appeals to give our excess baggage to Goodwill. We take the point that our homes are littered with things we never use; we're less apt to see the need for paying good money each month to keep them in a glorified closet. Instead of treating our storable stuff as so many cubic feet of undifferentiated clutter, each ad in Morningstar's series (by West & Vaughan, Raleigh) focuses on a single, beloved object--something we might not need close to hand every day but that we'd be sorry to part with forever.

And instead of asking us to store the item, the ad calls on us to "preserve" it. It's a smart choice of language. We're already trained to feel there's something worthy about preserving things. "Store" is an activity for disorganized slobs; "preserve" is an activity for high-minded do-gooders and bold-name socialites. By using the right verb (rather than the expected verb), Morningstar elevates the status of its service. Nor does it hurt that Morningstar has enlisted the power of nostalgia. You may not have a toy car like the one pictured, but you've doubtless got some old keepsake that you can't bring yourself to discard.

Wherever an ad falls on the emotional spectrum, it does well to think along with the customer. We see this in another ad in our collection, for Cornerband.com (by TDA Advertising & Design, Boulder, Colo.). Notwithstanding the brash humor, the ad is speaking to the professional anxiety its target audience feels. People in obscure bands know all too well that every gig is a potential fiasco. Of course, an ad that makes this point too bluntly will rub its readers the wrong way. Cornerband.com takes the unpleasant sting out of the message by stating it in comically hyperbolic terms. Embellishment gets (and often deserves) bad press, but smart use of it can engage our interest and give the advertiser an air of vitality. After all, most of us exaggerate as a matter of course; it's a natural style of our speech.

While we tend to think of hyperbole as an attention-getting device, it can also help an ad connect with a reader's emotions. That's what we detect in a campaign for Coffman Excavation (by Johnson Sheen Advertising, Portland, Ore.). The company sends out calendars featuring blueprints of wildly improbable projects for which its expertise in excavation and related crafts would make it an indispensable partner. Granted, it's unlikely that any potential clients of Coffman's will be involved in replacing Portland's streets with a network of canals or (as in another ad) building a Northwest Passage from Lake Superior to the Pacific Ocean. But the sheer audacity of the ideas makes one feel Coffman will be undaunted by any real project thrown its way.

The ads are rich in funny detail, as when the schedule allots 2004-05 to "Eradication of beaver dams." Beneath the campaign's humor, though, lies a serious insight: The people Coffman seeks as customers are involved in more mundane projects now, but they probably had grander dreams when they began their careers. With its fanciful overstatement, the campaign reconnects its audience to those bygone ambitions. Like a lot of effective ads, then, they don't just say something about the advertiser; they say something about the audience--in this case, something that will give readers a fellow feeling with Coffman.

One wonders whether a campaign as idiosyncratic as Coffman's would have survived the focus groups and approval processes to which big corporations often subject their ads. As they vie for consumer attention, small firms can take advantage of their nimbleness. Morningstar's marketing director, Kris Fetter, found this in developing the storage company's campaign. For him, "the best part of the process is the small business adjusting to needs so quickly." In just 30 days "we went from creative blobs to purchasing the billboards."

Dealing with fewer variables than a mega-company, a small firm can also see more quickly whether an ad is paying off. Dogs Dig's Gilronan has noticed the deli getting "way more foot traffic" since it launched its billboard campaign. Farkas of Dale Labs can go one better: "The campaign helped overall sales," he says. "The number of new customers that had previously used us once and then came back increased."

Naturally, good ads can't guarantee that an advertiser will prosper. You've likely heard it said that the quickest way to kill a bad product is to give it a great ad campaign: Everyone will try the brand and discover it stinks. Still, the process of trying to get a special ad can be highly instructive. If it's hard to come up with a catchy image, maybe that means the substance of the company lacks sharp focus. Or an advertiser may discover it does emit a distinct image--but not of the sort it intends. Mirroring the flattery and exaggeration that the ads here showcase, we know you don't have to worry about that.

Mark Dolliver is an editor at large at Adweek. Additional reporting by Maggie Overfelt.

For smart advice on advertising your business more effectively, read the Direct Marketing Diva's column at www.fsb.com.