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Microsoft In, Google Out for Ads on Digg

Kevin Rose at Digg is saying the popular user-driven news site has just signed a three-year exclusive ad deal with Microsoft. Bye-bye Google. Don?? think it will hurt Google?? bottom line much, and Mike Arrington at TechCrunch thinks it?? another money-losing deal for the software giant, which also did a similar deal with Facebook. But neither is this a ringing endorsement of Google from one of the stars of Web 2.0, with 17 million unique monthly users. ??o dancing monkey ads, and the design will remain uncluttered,?Rose vows, no doubt anticipating the usual Microsoft-bashing in Digg comments on the post.

Although John Battelle’s Federated Media is still involved and apparently will work with Microsoft on Digg sponsorships, some folks are wondering if Federated’s role is rather less than it was intended to be. Will update as I hear more.

For now, though, “it’s a real coup for Microsoft,” Internet marketing consultant Andy Beal told my colleague Tom Giles. “It’s a good way to put their product in front of a high-tech savvy audience.” On the other hand, it remains to be seen how lucrative an ad magnet Digg will be. Ashkan Karbasfrooshan at thinks not so much.

As for the odd man out, Yahoo!, Beal says it’s in a tough position: “They want to get the partnerships away from Google, but can’t afford to cut deals. They need the revenue coming in. With investors watching closely, I don’t think Yahoo can afford to be ultra-aggressive.”

Clearly, the battle for the ad business of the new crop of Web companies is intensifying. In particular, it will be interesting to see how Google and Microsoft will spend their seemingly boundless budgets—and if and when we’ll see one of them blink. Not for a good long while, I think.

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