Revenue is being made by the company that is selling the ads. The issue is if the CTR's aren't high enough or the ROI on the media isn't coming through to the a

Revenue is being made by the company that is selling the ads. The issue is if the CTR's aren't high enough or the ROI on the media isn't coming through to the advertising businesses, they will pull out and go elsewhere. This is great because all it costs to sell the media is the sales guy salary, any commission he makes off the media sale, and if you're good any in-house media guys that create the banners/ads etc. The more traffic you bring, the more "inventory" you can sell. Selling advertising and media is very profitable. Most internet companies make their money through advertising if their product is free. Only companies that sell actual things like EBay or Amazon make legitimate sales of real goods. The trick is to keep the faith in your advertising platform. Yahoo, Google, Facebook ... companies advertise with them because they know eyes go there. What the product is determines the audience it brings, which will determine who your advertising clients are. The more qualified the audience is, the more impactful the advertising is, especially if they know enough about you to target the correct ad (most advertising-revenue based companies will collect some form of data about their users for this - this is nothing new). The loophole in the OP's logic is that people invest in the internet due to revenue growth of Yahoo. If Yahoo was the reason the investment was made, and all that money went back into Yahoo - yes there could be a false feedback loop. But as long as the advertising that is sold on Yahoo is somehow benefitting the advertising company, there is a sustainable model. Only if they sell a bunch of advertising that later turns out to be useless will you have a pot of hot water to climb out of. Edit: Impaction is definitely not a word.