Microsoft News Tracker

Kevin Rose, founder of the popular social networking site Digg, provided a terse heads up today that Digg is shifting its Web advertising to Microsoft:

We’ve signed on Microsoft as our new partner to sell and serve the ads on Digg. It’s a deal similar to the one Facebook signed with Microsoft last year.

This move gives us an advertising partner with a larger organization and a more scalable technology platform to keep pace with Digg’s growth. Best of all, it lets the Digg team completely focus on new feature development.

The formal press release isn’t any more explicit other than saying that it’s a three year deal, but Federated Media is nominally Digg’s current advertising partner and apparently parcels out the ad space between direct sale banner ads and Google text ads. On that basis some pundits are viewing this as a loss for Google which I suppose it is on an indirect level at least. Since no terms have been announced yet, it’s not clear what the price of this eyeball auction was and one wonders whether Google was ever directly involved in the bidding.

As for Federated Media, they continue in some unclear ancillary role selling custom sponsor display ads and working on special projects.