In many ways their service is a competitor service to Google's ubiquitous Adwords/Adsense. Which makes me wonder how long they will remain independant, especially considering that while both Yahoo and Google both offer context sensitive advertising services, Microsoft does not.
They appear to offer two services to website publishers: AdLinks and TextMatch
With AdLinks the viewer is presented with words having a special underline. When the viewer hovers their mouse over the special underline, a popup appears containing an advertisement. The advertisement is textually oriented, and is contextually relavent to not just the page but also the word which is underlined.
It's not clear to me however whether their service supports niche categories. In their signup process they ask you to declare a category for your website, giving a list of around 20 choices. But they claim to dynamically determine the content of your web site. So if they can dynamically determine your content, they why have such a small number of categories? For that matter, why ask for categories at all?
That a special underline is used appears to be an interesting choice. The public is accustomed to "underline means a link to a related resource", hence they might move their mouse to underlined words and click on them. This will regularly cause links to be clicked on. I know that's sure what happened to me, and for that matter the way I discovered the company. So this bit of psychological subterfuge appears to work.
The AdLinks style of advertising blends very well with a website, since it is simple unobtrusive underlining.
Under Qualifications they target web publishers with more than 150,000 page views per month. Hmmm... ??
Their service is of course also available to advertisors, because without advertisors there would be no advertising to offer. The processes available to advertisors appear to be similar to those for AdWords.
The usefulness of such a service is based on how well it matches relavent advertising with the content. It's that matching which makes adsense so compelling, because it adds value to the web site rather than diminishing it by being unrelated to the content.
I have before me an example of the AdLinks service running on a web site. The article is about a programming library for Java programmers that helps with mapping Java objects to database tables. The first word AdLinks chose was "access", and given the context you might expect them to offer an advertisement for Microsoft's Access database. But, no, instead the advertisement is about Radio Frequency ID (RFID) based access-control systems. Ooookaaaay, just how is that related to the subject?