Digg Gets Readers in on Ad Act

As Digg expands its ad sales operations, its latest offering gets its readers in on the advertising act. The firm will unveil a new advertorial-style ad unit that, like its content posts, lets users give them the proverbial thumbs up or thumbs down. The product is also Digg’s first performance-based ad opportunity. However, advertisers may not appreciate the ability of users to pan their ads.

Though labeled as advertising, the new units will look just like typical Digg content, enabling sharing functionality, and allowing readers to “Digg” them, or not. “We want to make sure that the campaign itself, [in terms of] quality, could have potentially been an organic Digg story,” said Digg VP Business Development Bob Buch. Ad units can include images and text or video.

Electronic Arts and Intel will be among the first advertisers to use the product, which will be in beta for the next few months.

As with Digg content, appreciation from the community will benefit the advertiser. In this case, rather than raising content above other posts, the Digg Ads will decrease in cost-per-click as users approve them. “As the community starts voting up and down, we use that indication as a quality score,” said Buch. At first ads will be sold direct by the firm’s sales team, but Digg has begun building a system for selling the ads through an auction-based marketplace.

Ads also will be subject to removal from the system if they are not popular with users. Indeed, the possibility of rejection by Digg readers may be considered risky to some advertisers. However, the company will encourage advertisers to create multiple versions of ads to allow for optimization, weeding out the lower quality creative while retaining more popular ads.

“We’re going to learn about what they’re into and what they’re not,” said Mike Maser, Digg’s chief revenue and strategy officer.

Because ad content will be judged by readers, the company expects advertisers will be compelled to make it interesting. It also anticipates some will be able to use content from their own Web sites, which many consumers may have yet to see. Digg’s sales team will help advertisers develop appropriate ad creative, said Buch. “We’ll almost be in a consultative role.”

As Digg has grown, it has evolved its ad offerings. In its early days, the company partnered with Google and Federated Media to sell its ad space. The firm later formed a deal with Microsoft to sell all of its advertising exclusively. Today, Microsoft only sells the CPM-based display inventory Digg doesn’t sell on its own. The firm recently hired former FM sales head Chas Edwards to lead Digg ad sales.

In addition to the new ad units and its display advertising, Digg also sells sponsorships of its celebrity interviews on a flat-rate and CPM-basis.

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