Microsoft, Digg Form Advertising Agreement

In a deal that boosts Microsoft Corp.'s plan to increase revenue from online advertising, the company will be the exclusive provider of display and contextual advertising on the popular Digg Inc. news site.

Microsoft also said it will work with Digg to develop new campaigns that combine advertising and technology for the site, and will collaborate with Digg's current advertising partner, Federated Media Publishing, to bring new programs to the site's users and advertisers. The deal's duration will be three years, the companies said.

Digg aggregates news stories from around the Web and lets users rate stories and recommend them to others with the popular "digg it" tag. More than 17 million unique users visit the site monthly, according to Digg.

Microsoft has been slowly building its efforts to become a stronger competitor in the fight for online advertising dollars, waging an uphill battle against market leader Google Inc. and others. This is the second partnership that Microsoft has unveiled in a little more than a week to boost its advertising presence. Last Tuesday, the company said it had added the ability for subscribers of its Office Live small-business hosted service to purchase paid-search advertising from portal Ask.com's s Ask Sponsored Listings.

Partnerships aren't the only way Microsoft is building its advertising strategy. The company is currently waiting for its $6 billion purchase of digital advertising and marketing services agency aQuantive Inc. to close, something the company said it expects to happen next month after a vote by aQuantive shareholders.