Fortunately Paul Forster, CEO of Indeed, has laid out the basics of Indeed's sponsored jobs offering in this post on Blog Indeed.
If you take a look at this Indeed results page, you can see what Paul is talking about.
The listing with the light blue background at the top of the search results is a sponsored advertisement. The sponsored listings on the right sidebar are additional sources of revenue.
It's a very natural revenue model. As Paul explains in his post:
The advertiser only pays for clicks on the sponsored advertisements, while clicks from the same jobs in our natural results continue to be free. Job seeker referrals are highly qualified because sponsored jobs are ranked by relevance as well as by bid. Conversion rates - from sponsored clicks to applications - are also extremely high because the advertisement landing pages are the individual job descriptions on the advertisers’ own websites.
Thanks for that explanation Paul. We are enthusiastic about Indeed's revenue system because, like the PPC systems invented by Overture and Google, it is a very natural extension of the search experience and advertisers have shown that they are happy to pay for performance.