Digg ditches Microsoft as ad partner

Digg will be ending its exclusive advertising partnership with Microsoft after two years, a deal that should have ended mid-2010, according to a Clickz report. The deal is believed to have earned Digg only about $20 million over the last two years. The partnership was initially announced in 2007.

The move comes as Digg shifts to selling its own advertising to maximize revenue.

According to Digg executives, the company will focus on selling customized and standard banner ads to partners. Microsoft will now get whatever ad inventory space is left over. There is speculation Digg could release an AdSense type product, where partners can place contextual CPC advertisements within the Digg news streams. 

In January 2009, Digg hired former Yahoo sales executive Thomas Shin to establish an advertising sales force.

Digg has raised about $40 million in capital to date, the last round being $28.7 million in September 2008. Digg is still on the way to becoming a profitable company. A report by BusinessWeek indicated 2008 Digg revenue would total $8.5 million, with a $5.3 million loss.

In 2008, there was also speculation Microsoft would acquire Digg for up to $300 million, though nothing really ever materialized.

Digg currently has about 70 employees, mainly engineers, who support product development and the Digg community. Digg has been criticized in the past for employing too many people to support operations.

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Hercules holds a B.Comm Finance from Ryerson University in Toronto, Canada. He is a Chartered Financial Analyst (CFA) level 3 candidate. He was previously a contributor at FiLife, a finance website owned by Dow Jones and IAC. Write to [email protected]
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