Digg's Quality-Priced Ads Perform for Toyota, Amazon

Digg’s new ad platform, which rewards brands with lower prices when users “Digg” their ads, is off to a strong start. Several of the early brands to use it have enjoyed click-through rates above 2 percent, the company says, and the platform is on track to deliver more than half the company’s revenue by mid-2010.

Flush with that early success, Digg is now making plans for an ad network built on the Digg Ads system that will roll out next year.

Among the early brands to use Digg Ads was Amazon, which achieved a 3 percent click-through rate with an ad promoting the sale of full-season downloads of Syfy’s “Battlestar Galactica,” and NBC’s “Heroes” and “The Office.”

Meanwhile, Toyota directed traffic to a HowStuffWorks.com article, “10 Tips from Happy People,” with sponsorship by Prius. The average CTR for that campaign was 2.4 percent.

And launch advertiser Intel scored a 2.2 percent CTR with a Digg Ad titled “2006 vs. 2009 Mobile Internet Devices.” Intel and other Digg advertisers have been assisted by an in-house copywriter who helps brands craft headlines designed to appeal to the site’s audience.

“There’s a grammar that performs well on Digg,” said Chas Edwards, publisher and chief revenue officer. “We want to make that available to marketers.”

Roughly 24 advertisers have tested the new system since it launched in June. In each case, ads assume the look and feel of Digg’s editorial content and can receive Diggs and “Buries” just like that regular content. Each Digg an ad picks up validates it to the community and raises the odds a user will click.

The above three advertisers all benefited from that collective approval cycle, enjoying accelerating response rates that peaked at levels 25 times higher than the site’s display ad average CTR of.08 percent. Execs say the system is now on track to deliver one half to two-thirds of the company’s total revenue by the middle of next year.

Emboldened by their early success, Digg’s sales brass is now planning to syndicate the Digg Ads system to several publisher partners. Phase one of its ad network ambitions will be to represent standard ad inventory on partner sites. Phase two will be to become a more integrated ad platform for those sites.

The company may also offer to sell ads directly on certain targeted pages of partner sites as a component of custom ad executions. Those deals would look similar to Toyota’s ad above, which used a third-party article as the ad’s landing page.

Mike Maser, Digg’s chief strategy officer, notes many site are accustomed to receiving periodic influxes of traffic from Digg. When that traffic comes, publishers are often forced to sell surplus inventory on ad networks that pay a fraction of what they make on direct sales. He believes Digg can generate more revenue for site partners by offering to present the hordes of in-bound Digg users with a familiar ad experience.

“We think this is not only a game-changer on Digg,” said Maser. “Beyond our walls it could have a big impact on social media [sites] in general.”