NEW YORK (AdAge.com) -- Founded in late 2004, social news site Digg helped define Web 2.0 at the outset and made a celebrity of founder Kevin Rose. It has inspired a host of imitators and quite a lot of speculation over when or how it would become profitable and if or when it would be acquired. Now the site is launching Digg Ads, its bid to move away from static banners and apply the social nature of the site to advertising.
Digg Ads will allow users to vote ads up or down or share them with friends, just as they do news stories. And marketers are rewarded when ads resonate with users. The more an ad is "dugg," the less the advertiser pays on a cost-per-click basis. Ads that don't perform are buried by the Digg community and priced out of the system.
Digg plans to start testing the system this year, part of its bid to become profitable in 2009. The site recently cut 10% of its staff of 75 and hired its first direct-sales team. Microsoft, which once sold all Digg ad inventory, will now handle remnant display ads. The question is whether the famously fickle and opinionated Digg community will accept Digg Ads or vote them off the island. In an e-mail interview, Mr. Rose, 32, told Ad Age he's got faith in advertisers' ability to produce Diggable content.
Ad Age: So, what makes you think Digg-ers want to vote on ads?
Kevin Rose: People are already doing this on Digg with all kinds of commercial content. There are tons of examples, like the recent Intel "Rock Stars" TV ad that got more than 1,500 Diggs. I think our audience is OK with the idea of advertising when it's relevant or useful or interesting. So it's happening already, but our goal is to give the Digg community a degree of control over the advertising they like and don't like. It's a logical progression for a community like ours and we think it represents a form of advertising that is a little more in sync with what people are coming to Digg to do anyway.
Ad Age: Is there a place for commercial messages within the editorial environment of Digg?
Mr. Rose: Yes. You can search on Digg right now for words like iPhone, Palm Pre or even Zune, and you'll find tons of stories, product reviews and feature announcements. Our goal with this platform is for the ads to be useful to our users. We look at it like a Google search results page, where most of the time you find what you're looking for in the organic results, but sometimes it's the sponsored result that you end up clicking on.
Ad Age: Won't users suspect Digg is giving sponsors a push, or doing something else untoward to favor advertisers?
Mr. Rose: There is a definitive separation between church and state here. There will be no favoritism toward sponsors. The same system that currently applies to news stories and content will apply to ads.
Ad Age: It's hard enough to get a story to pop on Digg; can Madison Avenue really compete with headlines like "Pop Culture's 10 Greatest Nerds."
Mr. Rose: I've seen some pretty amazing Super Bowl Commercials. I mean, most people watch the Super Bowl just for the ads. I think if advertisers take a look at the type of content that is on the Digg home page and try to appeal to the community, they'll come up with some good stuff.
Ad Age: Will you help sponsors write good Digg headlines?
Mr. Rose: I think in the beginning we'll consult with advertisers to help them understand what type of content works on Digg and just educate them a little on how Digg works. But we hope over time advertisers will start to catch on and figure out on their own what's going to work.
Ad Age: Can you see advertisers getting voted onto Digg's home page? What sort of ads do you think have a chance?
Mr. Rose: I think anything that is useful, entertaining or interesting will get votes. It can't be just a standard marketing ad, it has to be something that people care about and want to consume. Digg users are coming to Digg to discover cool content, and if advertisers can talk about why their products are cool, I think they'll have a chance of getting Dugg.
Ad Age: Until the market crash, Digg was constantly rumored to be on the block. Why do you think that speculation has stopped?
Mr. Rose: People will always speculate on stuff like this -- it's the nature of the tech industry. We're focused on continuing to innovate for our users and driving to profitability in 2009.
Ad Age: Does this have to work for Digg to become profitable in 2009?
Mr. Rose: No -- we're not going to roll out even the first phase of Digg Ads for several months and will be in Beta stages for much if not all of 2009. We should be able to become profitable with our new sales force selling regular ads on Digg and Microsoft selling our remnant stuff. What's cool about that is it gives us the opportunity to really work on Digg Ads to make sure we get it right for our community. It's nice to be able to take the time to get it right without this huge pressure of trying to make money off of it right away.
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