Digg teams up with Microsoft

Digg Inc. has signed on Microsoft to sell and serve ads on Digg.com. The companies also have agreed to work together on future technology and advertising initiatives.

"This move gives Digg an advertising partner with a larger organization and a more scalable technology platform to keep pace with Digg's growth," wrote Kevin Rose, founder of Digg, on his blog at Digg.com. "Best of all, it lets the Digg team completely focus on new feature development."

Federated Media, a Digg partner, will continue working with Digg, focusing on integrated sponsorships and custom programs.

"This is a great move for Microsoft," said Martin Laetsch, senior director of search strategy at SEMDirector. "This is a key target market for online advertisers, as Digg users have a large disposable income and have typically stopped watching TV, reading magazines and other traditional methods."

Laetsch said Microsoft is serious about becoming the No. 1 online-advertising company and is not shy about spending money to get there. The companies expect to begin execution of the agreement in the coming weeks.