How the low-tech appeal of puppets brings in the dough.

After an impressive 2,534 Broadway performances, Avenue Q is slated to close this September. The ultimate poster child for puppets' ageless, ubiquitous appeal, the show spoofs the Sesame Street aesthetic, favoring raunchy humor over feel-good messages. And the formula has worked: In its first 10 months alone, the show had earned more than $3.5 million. But Avenue Q, perhaps, should not have been such a surprise hit. Puppets have long drawn staggering profits through ticket sales and merchandise.

Just one year after Sesame Street premiered, the Village Voice blasted the show—which they called "a program aimed largely at ghetto children"—for selling a $20 book. But that was just the beginning for puppet-merch sales. When the Tickle Me Elmo doll debuted in 1996, shoppers reportedly snatched the doll out of one another's hands, and resale values for the doll ran up to $1,500. All told, Sesame Street merchandise rakes in approximately $7.5 million in merchandising and licensing—all of which goes toward production costs, as the show is run by a nonprofit group, Sesame Workshop.

All this might seem surprising for a PBS program. But the very origins of the show are tied to the Madison Avenue TV advertising boom of the 1960s. As one Syracuse pop culture professor put it in a recent CNN story: "[T]he idea they came up with was kind of radical: If you can sell kids sugared cereal and toys using Madison Avenue techniques, why couldn't you use the same techniques for teaching counting, the alphabet and basic social skills?" And Sesame Street has proven that you can have it both ways.

This commercial success translated easily-seven years later, in 1976—into The Muppet Show, a program blending grand vaudeville numbers and variety-show humor. Puppets performed it all—with the help of the numerous celebrity guests who flocked to the show. The Muppet Show's official album, released in 1977, garnered gold and platinum sales status, placing the Muppets among the top earners in the music industry at the time.

With their low-tech appeal, puppets also have an obvious place in TV advertising. Every year, Nike spends millions of ad dollars on its basketball apparel, and this year the company designed one of its most important ad campaigns—TV ads during the NBA Finals—around puppets. When the Kobe Bryant-LeBron James puppet commercials emerged—predicting a Lakers-Cavaliers showdown in the NBA Finals—the blogs went wild. The campaign became one of the most discussed in the sports world.

Comedian and ventriloquist Jeff Dunham may have earned upward of $600,000 a year long before taping his smash-hit special on Comedy Central, according to a recent bio in Time magazine. But it was in 2007—when he introduced the PC-be-damned character Achmed the Dead Terrorist—that his career caught fire. Of course, 2007 was just the beginning.