I'm not sold on the classified ad way to market this... direct offline marketing works but is really something different.
I've worked for both a magazine doing local publications and a business resources company who specialized in mailout / brouchure type advertising. Taking from that I've got like 7c to hand out to everyone
1st thing, I don't think these inserts discussed are a flat $60/thousand. It's probably $60 to place the insert but the design & printing is not included. Getting this stuff produced is probably 3x that cost
Direct mailings can work if you use the right list. Do something like gather sorority contact info (filetype:xls works well for list building) from universities across the nation and send cosmetics, birth control, sex toys type of offers. Use postcards, they are cheaper to print & mail.
Perhaps the best advice I could give is to pick yourself up some of those "free take one" type publications you see in gas stations & supermarkets. Every major city has one for restaurants, entertainment & a few real estate ones. Make your ad fit in this niche
restaurants = eat for free, be a secret shopper
entertainment = pick up artist or dating offers
real estate = mortgage loans, credit reports, etc
kids / parents / family = loads of possibilities
These guys are not major corporations (for the most part) and print out only what is circulated, you will have very little unused publications. 10k circulation = 9k actual ad impressions and it's all targeted traffic.
Another HUGE benefit would be that if you are thrifty, you can work out some huge discounts. Magazine type publications are printed in sets of pages. 8, 16, 24, 32 .... with the cheaper prices being clips of 16 pages. So what happens if a publication sells 34.5 pages worth of ads? They print a 40 page issue and run 5.5 pages worth of "freebie" ads (public service, special interest, etc). They all hate losing money to this shit and will gladly work something out with you so you can have overspill if there is some available. It might mean that you have to skip a few months due to full books (it happens) but in the months where there are a few pages left over, they will happily sell you the spot at 60-70% retail.
The best way to get this is to find out their deadline for placing ads then call that day and see if there are any spots available. If you call them at the right time, you will often be looked at as someone who helped them out in a jam instead of the guy looking for the discount.
Depending on the circulation, real estate magazines charge anywhere between $300 & $1200 for a full page ad ... much cheaper for business card or 1/2 page. These ads will hit the eyes of 1000's of people who are looking for niche information instead of randomly browsing the classifieds. It sounds like a wiener to me, will probably try next month.