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How can linkfarms make money using sponsor advertizing

How are these companies making money...have they lost their mind?

10:18 pm on Dec 3, 2005 (gmt 0)

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I have noticed that many of the paid search engines links go to websites that are purely setup only for the purpose of generating ad revenue. In order for this to work they these companies would have to make more from their adds than they are paying to place their ads. However, this does not seem to make sense because some of these companies are paying $5-10 per click for the ads I am seeing and they could not be making that much from their ad revenue. Does anyone understand what these companies are doing?