The Los Angeles Times has paid dearly to crack the San Diego newspaper market. Millions have been lavished on radio and billboard promotions of the paper's six-year-old "San Diego County Edition" and millions more spent to support a 45-person editorial staff. Precious little of this expenditure has been recouped from the sale of advertising: fewer than one-third of the 60 ads in Sunday's local sections were placed by area retailers.

But this disheartening result hasn't discouraged the Times from financing extensive improvements in the paper. The San Diego edition's reporting staff has grown from 15 to 22, including a two-person business staff and four sportswriters. Weekly local restaurant reviews began in 1980, but when Times readers continued to complain about the lack of theater, art, and music reviews,Times editors installed former Union music critic Matt Damsker as "arts editor" and expanded arts coverage to include reviews.

A Friday calendar of weekend cultural activities and "items" columns on business and arts have been added. Times editors have pushed more local news to the paper's front page and business page, and when they realized these stories were often lost among the jumble of Los Angeles news, the editors this fall began highlighting local stories with special bold-face captions reading "San Diego County." Last month all advertisements were cleared off Sunday's editorial page, which was expanded to include a weekly letters column and a "pro" and "con" opinion debate on a local subject.

The Times promotion department also know that some San Diegans still resent buying an "out-of-town" newspaper, no matter how many local stories it has. To neutralize this "outsider" image, the words "Los Angeles" are no longer mentioned in radio and newsstand advertisements for the paper. Promotions for the newly expanded editorial page, for example, simply refer to "The Times, San Diego County Edition."

These changes in the substance and appearance of the Times have not resulted in startling readership gains. In March of 1983 daily readership of the San Diego edition was 49,283; this year's daily readership is 50,663.