Digg's New Advertising System

Digg has been struggling to find a good advertising system that will generate them good profit. They used many systems, along with Google Ads. They are now in the works of creating, what they call a "social advertising platform". According to Digg, the the system is a “social advertising platform” in which users will get to exercise their natural impulse as consumers and express approval or disapproval for the site’s ads with up or down votes.

If an ad gets a lot of approval from users, than the cost-per-click of the ad decreases and there is a more likely chance that the ad will stay on the site longer. This type of system is what we have talked about class, how sites are more likely to keep higher quality ads than those that have the highest click-rate, even though they may provide more revenue. Digg's new system is related to the question we had for homework (or maybe exam?) as to why Google is likely to get rid of a low quality add, even though it has a high click-rate. The answer is simply in the long run, many users will realize the low quality of ads and so will decide not to click on any ad, even high quality ones. Therefore it is more beneficial for a site to keep high quality ads. Digg is taking this simple logic and applying it to a completely new advertising system. This system will reward high quality ads with a cheaper price as well as an prolonged exposure on their site. Digg, in turn, will benefit because many users are more likely, in the long run, to click on ads if they have been in general of high quality.

One bad outcome of this system is that users may also vote down every ad, therefore making the whole advertising structure fail. To counter this, Digg is starting off slow with ads only from a few companies that can be voted on.

Article: http://bits.blogs.nytimes.com/2009/06/03/digg-will-charge-less-for-ads-its-users-like/

Problem with Digg is that the site lacks a clear focus and that the audience is very broad. However, that can be their strength since they can potentially attract a broad range of advertisers.

If they can somehow identify the content being Digged, then they can place specific Ads that is related to the page's content. This way, the effectiveness of their advertisements would be amplified.