Digg is planning to launch a network to place its ads on other Web sites.
The goal is to expand Digg's three-month-old cost-per-click ad program that allows users to vote on ads they want to see. Digg plans to begin with publishers who already receive large amounts of traffic from Digg they have difficulty monetizing because it arrives in unpredictable torrents. The network is slated to initially roll out in 2010.
"Advertisers want the ability to take an advertising format and scale it in many places," said Chas Edwards, chief revenue officer of Digg. "It's like what Google started with AdWords."
Digg took a step in that direction last week when it began running its first standard banner units with customized content. Those placements let advertisers pull in feeds of user-submitted stories around particular subjects. For example, a Symantec placement showed stories about security that users had Dugg. This came a little over six months after Digg took back much of its banner ad inventory from Microsoft, which continues to fill remnant inventory.
Edwards said Digg would probably begin syndicating such "content ads" before eventually offering user-voted Digg Ads to other sites, many of which already let users vote on content via a Digg button.
"Some of the fundamental elements of Digg have been taken across the Web," he said. "They're universal."
A key to Digg's ad plan is the peculiar nature of traffic patterns it directs. A site featured on Digg's home page typically receives tens of thousands of visitors in an especially short time span. The downside, however, is that the sites can't plan for the traffic and typically must turn much of the ad inventory created by it over to low-priced ad networks. Showing Digg-fueled ads to visitors well versed in the site experience could help make publishers more money, Edwards said.
"We're then giving them two good things at once," he said.
Digg executives claim their efforts to introduce advertising to the social media site have been a resounding success. Digg ads are displayed like user-submitted content in the site's "river" and can be voted up or down by users. Digg has added a performance elements designed to improve the quality of the ads by factoring in their click and recommendation rates. Ads that get more Diggs are shown more often and those frequently buried appear less.
he click rates have been high enough that Digg has tripled its 2009 ad forecast, Edwards said.
So far, these ads are drawing 1 percent click-through rates, according to Digg, comparing favorably with industry averages that hover at .1 percent. Some advertisers are seeing significantly higher click rates. Intel, Threadless, Toyota and Amazon all ran campaigns that averaged click rates above 2 percent.
Toyota's effort featured eight different ads, each with two sets of copy. The highest performing unit featured a thumbnail of the Toyota Prius alongside the headline, "10 Tips From Happy People." The copy read, "Check out some surprising suggestions for being happy...Yeah, there's more to it than 'Don't worry.'" The placement pointed to a HowStuffWorks.com article, which carried Prius advertising. It got a 2.4 percent click rate.
Movie studio Fox Atomic found a higher interaction rate for its ads that drove traffic to a Jennifer's Body video snippet posted on Facebook than the same content on the official movie site.
Other advertisers saw success with more direct approaches. Amazon got a 3 percent click through rate to its own site with an offer for $5 DVDs of the full seasons of TV shows like Battlestar Galactica, Heroes and The Office.
Digg hopes to complement its ad network with a self-serve system to build up a large base of advertisers -- that would provide a larger pool of ads to match to audience interests.
One feature of typical Digg stories that hasn't yet made it to the ads: comments. That's still in the works, Edwards said, with both users and brands in favor of it. The one reticent group: agencies.
"They're still getting comfortable with the idea," he said.
See also: "Digg Helps Send Time's Traffic Into Orbit"
Nielsen Business Media