Since its launch in late 2004, Digg has tried its hand with several outside advertising networks, going from an off-the-shelf Google AdSense arrangement to working with Federated Media before finally signing a deal for Microsoft to deliver its display advertisements. But in April of this year, Digg announced it would end its deal with the software giant in favor of selling and delivering its own ads. Earlier this month, it announced that in the coming months it would introduce Digg Ads, a platform that involves injecting sponsored links directly into Digg’s news stream, allowing users to Digg up or bury the ad just as they would any other story.

Over the past several years, it has not been unusual for a Digg user to screenshot a Digg display ad that he found particularly annoying or ironic and submit it to the site itself — in fact, several such items have made it to the front page. Describing Digg’s user base as anti-consumer wouldn’t be quite accurate given the daily front page stories of the latest gadget news on Gizmodo and Engadget, but its community has been quick to lash out against corporations seen as having brushes with unethical behavior.

Like all major Internet communities, Digg’s hosts a fair number of trolls (though the community itself polices the worst offenders) and the user base has never hesitated to criticize the very site that hosts their comments. Given all this, it’s not difficult to be skeptical that advertisers would want to throw their brands right into Digg’s news stream, possibly placing them within the cross hairs of an extremely outspoken and acerbic community.

Over the past few week, I reached out to several of the site’s most powerful users, people who have pushed hundreds of submissions to the coveted front page. All of them spend sometimes hours a day on the site, commenting and Digging their friends’ articles. Did they think that the community would welcome sponsored submissions and treat them just like the dozens of other stories, videos and images that flow across the front page every day?

Power Users react

Steve Elliot became an active user of the site in April of last year, pulled in initially by the idea of promoting his own content. But like other power users, he quickly realized the quid pro quo nature of Digg, in which you must push and network other Diggers’ content. He told me that he’s hopeful that the new ad platform will work, but that he’s worried about the “noise” generated with front page submissions.

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Steve Elliot

“I think that it’s possibly a workable system, but for it to be workable, they’re going to have to find a way to cut through the noise of the automatic knee-jerk negative reaction a lot of people have to any front page story,” Elliot said. “For any paid content, there’s going to be even more users ready to react negatively to it. So if there is a way to separate that inevitable sizable negative reaction to an ad, then maybe out of the rest you can get enough usable data of up and down votes to see what kind of advertising is most effective.”

He explained that if a company feels like an outsider to the community, then they’re going to have a different experience of feedback than if they somehow integrate themselves into the community. The question, he said, is whether they can learn and replicate the formula for a popular Digg submission. He believes that it’s possible.

“I’m cautiously optimistic,” he said. “And when I say I’m optimistic, it goes beyond the baseline optimism that maybe they can pull this off. It goes for me all the way to the level that I’m hopeful that maybe in their attempts to catch the eye of the Digg community…instead of trying the same little tricks of old media, maybe they’ll get creative. Maybe they’ll break some new ground, and maybe we’ll see some exciting ideas and ways of interacting with the community, which to me is what Digg is all about.”

Abusing the ‘Bury’ Button

A Digg power user named Patrick (he didn’t want me to use his full name) told me that he thought that the idea was a “brilliant one on Digg’s part,” because of the potential for massively higher click-through rates than you’d ever see with standard display advertising. And, unlike some, he was confident that the advertisers could create enticing content.

“I’m sure Digg has people who are smart enough to come up with stuff that’s eye-catching, and I’m sure that people who work for Digg monitor the site and know what works really well and what doesn’t,” Patrick told me. “So they know what formula works. They know the algorithm…If I saw [an ad] that caught my eye, I’d click on it just like any other Digg submission. By the time I opened it and checked it out, and if I’m reading it and checked it out that long, I’m going to Digg it because it held my attention.”

As for what consumer products would work well under this new system, Patrick said that anything involving mobile phones and tech products already gets a lot of coverage on the site, but pointed out that, with entertaining content, almost anything could work. His only fear would be that a certain percentage of the site’s users would automatically bury all sponsored content.

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Rami Taibah

“They should get rid of the bury button, because more often than not it’s misused,” he said.

Rami Taibah, who has submitted over 700 stories to Digg, over 100 of which made it to the front page, said that the Digg demographics — and likes and dislikes — could be somewhat limiting in terms of what advertisers could be successful on the new platform. He noted that companies that have prior histories of perceived unethical behavior will likely have some negative pushback from Digg, no matter what the content.

“Advertisers will have to try to understand the Digg community and what the users like to click,” he said. “It’s very anti-establishment, and is pro-Apple, pro-Linux, and very anti-Microsoft. If they try to understand the submission culture, then yes they can succeed. There are a lot of social media experts out there that could help such companies to customize articles and content that would sit well with the Digg community.”

When I pointed out the sometimes-trollish behavior of some Digg commenters, Taibah said that this is simply the nature of the Internet and that he didn’t believe that such a thing should or would deter companies from promoting their brands through the social news site.

Digg Ads

Mike Maser, Digg’s chief strategy officer, told me in a phone interview that they first approached a few of the site’s advertisers with the idea years ago and were met with enthusiasm. As their ad budgets have continued to contract — especially in the last year or so — the companies have been looking more toward performance-based advertising and less toward the traditional branding approach.

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Mike Maser

“They believed in this model that Digg was leading, which was this user-generated, user-led definition of what’s popular content,” Maser said. “But they wanted to apply those ideas in some way to their advertising as well. I remember a conversation with Intel, which has been a longtime advertiser with Digg, in late 2007. We came in and said, ‘What if we could apply a Digg platform, the Digg model, to advertising?’…And they were absolutely interested in that because they were seeing that consumers were part of that conversation already, whether they like it or not.”

Maser explained that a large percentage of Digg’s front page stories are already directed toward promoting consumer products, and he doesn’t think it will be very difficult for advertisers to sponsor that kind of content. Not only that, but they would have monetary incentive to tailor their submissions to those users.

“So let’s say an advertiser comes in and has a $10,000 budget,” he said. “We place their advertisement into the system. Let’s say it starts a baseline of $1 cost per click. So the ad gets shot out to the Digg audience in the stream of news. If that ad is really resonating, and people are clicking out to see the content…that dollar will come down so every time there’s a click maybe they pay 90 cents, or even better 80 cents and so on. So even more people are clicking on that advertisement and it’s spending more of their budget, but the incremental cost of that ad is going down.”

The flip side is that if people aren’t Digging the piece, or if they’re actively burying it, the cost-per-click will go up until it hits some pre-set maximum, causing the ad to fall out of the system.

User control

But what if a so-called “bury brigade” forms that automatically buries every sponsored post?

“When we announced this last week, we saw a lot of generally positive reactions from our user base,” Maser said. “The notion going into this is that there will be more control over the ad experience, so when Digg is transparent with their users and gives them that control over the site, they’ve actually really taken it to heart and appreciated that control. So we feel like the users being able to sort of have a more relevant content experience on the site is one way we’ll mitigate any sort of backlash.”

And then there’s the Digg algorithm. For years the site has refined the algorithm to weed out organized attempts to “game” the system, so Maser was sure that they were well equipped to locate any sort of advertisement bury brigade and neutralize its efforts.

The ad platform is still a work in progress and won’t be rolled out for a few months. Maser said they announced it early so they can work with advertisers over the coming months, developing the kind of content and ideas that will attract Digg’s user base.

“I do think innovation is the name of the game,” he said. “I think that sites need to come up with advertising experiences that are more endemic to their own property and their user base. So I don’t think there’s a one-size-fits-all approach to advertising anymore. Does that mean that display advertising is going away? No, but I do think systems like Digg Ads speak directly to our audience; it has a pricing mechanism that works for advertisers. Being more performance-oriented advertising, it gives them a more innovative option than display advertising.”

Of course, Digg’s display advertising isn’t going away. But with continuous reports that advertisers are getting frustrated with the lack of effectiveness of traditional CPM advertising, it’s not unfathomable that they would want to take the risk and inject their brands right into the user base. What the users do with the brand once it’s in their hands will likely determine whether Digg has come up with an advertising program that will truly break the mold.

Simon Owens is a former newspaper journalist and an associate editor for MediaShift. You can read more of his writing at his blog or contact him at simon[.]bloggasm [at] gmail.com.

Photo of Mike Maser by Scott Beale of Laughing Squid.