A year or so ago, I checked out LinkXL and considered selling contextual link ads through them, but for some reason I never did. I don't remember why I didn't. I probably just got busy with something else and forgot about them. I do that alot unfortunately.
Nevertheless, I was alerted to them again recently, and when I found out that they offer the ability to sell contextual links with nofollows on them, my interest was peaked. Say what you will about nofollows, but I learned my lesson last fall when Google slapped me upside the head, and I promised Google then that I would forever place nofollows on all paid links. So, in keeping with that promise, I thought checking LinkXL out again might be a good idea.
I signed up with LinkXL a couple of weeks ago, went through the process of getting the site spidered by their bots, and waited. Sure enough, within a couple of days, several people had purchased links. These links were automatically placed in my content by the widget code, and the requisite "nofollow" tags were appropriately applied. In other words, after the initial signup, configure, and install process, I didn't have to do anything. Everything was done automagically, in a Google-friendly manner. Of course, I have the option of canceling any purchased links, so if I have a problem with any of the advertisers, I'm not forced to run their ads.
I haven't used the service long enough to really be able to judge whether or not the market is large enough to make this worthwhile or not, but it definitely shows promise, and I'm willing to let the test run for a few months to see how it all turns out.
If you want to sell text ads, but don't want to face the wrath of mighty Google, consider using LinkXL's nofollow option (make sure to actively choose the nofollow option). This may be the text link option of the future.