I operate about 15 'ppc' search engines (7000 advertisers)and key is definately niche markets.
The pitfalls are giving away $25.00 start up bonus's etc and operating affiliate programs which pay per click or search.
They are consistently open for abuse.
The problem in giving away dollars at the start is that the bids are artificial which affects your affiliate program and the quality of your listings.
Once the initial dollars run out, only about 5% convert.
Where they are very profitable is using them to promote other programs you own.
Search feed providers are very ordinary and some average less than 1 cent per click through.
This is because they do not send you there premium listings, or eliminate over 60% of the clicks as genuine.
Some are very good and pay within 7 days XML Revenue.
I have had rejections because a searcher did 2 searches in a day 15 minutes apart and on different keywords.(I said whats the point of encourageing people to put search boxs on there site) They said unique 24 hours.
The real key is getting the searches and click throughts happening. The advertisers will hunt you down if you are achieving results.
Regards
good luck