They do pay per click and we are using them on other sections of this site, as well as on Meowhoo. On the forums however, CTR was so low they simply weren't worth displaying anymore.
Most ads we have here are CPM based, some are affiliations and we rotate them from time to time. We try to get cat related advertisers directly (like the catnipetc ads you see here as well). If you know of a cat related advertiser who might be interested, please do drop them a line and tell them about TCS