jatiN mahindrA doT coM

Back in the summer of ‘07, Digg and Microsoft announced a partnership that would see Microsoft selling and serving ads on Digg, not unlike Microsoft’s deal with Facebook inked the previous year. The deal was to last until the summer of 2010, but Digg has now pulled the plug according to ClickZ.

In January of this year, Jay Adelson announced that some of Digg’s major priorities for this year included:

- Rolling out new features to grow and engage the community – Despite the controversy it has attracted, the DiggBar appears to have accomplished this goal.

- Building on advertising infrastructure – The reason that Digg thinks it doesn’t need Microsoft any longer.

- Building on successful partnership with Microsoft – Wait a minute….well, plans change.

- Ongoing sponsorship opportunties – ClickZ reports that Digg Chief Revenue Officer Mike Maser says the company’s internal sales efforts "will focus on custom, non-IAB inventory combined with standardized banner ads."

Is ditching Microsoft the best way to go for Digg? "To be honest, I can’t quite figure out who this deal hurts the most," says Marketing Pilgrim’s Andy Beal. "Yes, it hurts Microsoft to lose an ad partnership that it stole from under the nose of Google, but does Digg know what it’s getting itself into? After all, the company doesn’t exactly seem to have the momentum of Facebook or Twitter–both of which are struggling to find that magic ad revenue formula–and building out your own ad sales force is both risky and expensive."

Some seem to view the termination of the deal as just the norm. "The move is fairly common among sites ramping up their ad-sales efforts; after a couple years growing traffic it often makes sense to partner with an outside sales company to sell advertising inventory before investing in hiring a salesforce," says Rory Maher at paidContent.org.  "Once revenue starts coming in the door many publishers see more profit in selling their own ads versus splitting revenue with an exclusive third party for selling their inventory."

In any case, it looks like Digg will continue working with Microsoft on "network reserve" inventory until July, when Digg will completely take the reins.

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