This story was written by Rory Maher.
It was supposed to last until summer 2010, but social news website Digg has decided to end its exclusive ad-sales agreement with Microsoft (NSDQ: MSFT) a year early in order to sell its inventory through its own internal salesforce, according to ClickZ. Microsoft will continue to sell Digg's remnant inventory.
Following a trend among publishers that have had a difficult time convincing advertisers of the value of their banner ads, Digg will focus on more custom sponsorships that typically go beyond banner placement to more in-depth features like ownership of certain sections of the site or custom contest campaigns, for example. In addition, it will sell the more traditional banner ads - as measured by the Interactive Advertising Bureau (IAB) - and will maintain a relationship with Miscrosoft to sell IAB banners left over after Digg's sales efforts.
The decision doesn't come as a complete surprise. Digg began hiring an internal sales team in January 2009, leading many to speculate that it could dissolve its exclusive partnership with Microsoft early. The two companies entered into the deal in July 2007. Microsoft continue to push custom ad sales, recently announcing an exclusive deal with *Discovery* to sell custom sponsorships for its series The Deadliest Catch across online, mobile, and video games.
The move is fairly common among sites ramping up their ad-sales efforts; after a couple years growing traffic it often makes sense to partner with an outside sales company to sell advertising inventory before investing in hiring a salesforce. Once revenue starts coming in the door many publishers see more profit in selling their own ads versus splitting revenue with an exclusive third party for selling their inventory.
By Rory Maher