Microsoft was fairly vague about exactly what that future collaboration might involve, but said it would start with text and display ads and go from there, probably adding video at some point.
Similar to Facebook deal
While the web giant didn't discloses what kind of revenue was guaranteed to Digg in the deal, the pact is structured similarly to another Microsoft deal of a year ago, in which the company sells standard ad units on Facebook.com.
"This audience -- we need to understand better what they really want as part of this experience," said Steve Berkowitz, senior VP of Microsoft's online services group, who talked up what he called Microsoft's "newer state" of advertising technologies, thanks to the combination of things like AdCenter and aQuantive's Atlas, which will soon be part of Microsoft if that deal goes through.
"There's lots of potential for this audience to become much more engaged and helpful in the advertising experience," he said. "And it puts a tremendous demand on the ad community to create better advertising."
Digg, a social-media poster child, launched in late 2004 focusing on tech news and in two-and-a-half years has amassed an impressive audience of 17 million unique visitors a month. Users of the site "digg" stories submitted by other users, with each digg essentially counting as a vote that moves the story up in the rankings on the site. The most "dugg" stories show up on the front page of digg.com and are generally huge traffic drivers for their sources. Digg has since expanded from just tech news into other verticals such as sports, business and entertainment.
Room to breathe
The site has been the subject of much acquisition speculation and was once rumored to be within News Corp.'s gaze. This deal gives the company breathing room to figure out what it will do next.
"Digg obviously is extremely excited about being able to focus on user experience as opposed to having to build our own ad force and worry about monetization," said CEO Jay Adelson.
Previously, Digg's primary ad-sales relationship was with John Battelle's Federated Media. Mr. Adelson said Federated Media will still sell the "high-touch custom sponsorships" and "we're continuing that relationship going forward."