Digg drops Google AdSense in favor of Microsoft

In an unexpected and seemingly unpopular move by Digg, founder Kevin Rose announced yesterday that it has dropped its Google’s Premium Publisher status to become a solid partner with Microsoft in the next 3 years. John Battelle’s Federated Media used to be the sole ad campaign manager for Digg, which draws in 146,630,000 page views per month.

The quick announcement by Kevin over at the Digg blog is an obviously downplaying a bigger announcement coming up. They also missed saying that they’ve totally dropped Google AdSense. But why Microsoft and not Google? Perhaps, the poor 0.04% CTR doesn’t cut it.

10e20 says that this is more of a big blow for Google than with FM. TechCrunch gets an explanation from Federated Media:

Microsoft has agreed to use its technology and sales force to manage Digg’s advertising. It turns the two-way FM-Digg partnership into a three-way one, with FM primarily responsible for selling the conversational and integrated marketing deals that have been so successful for Digg in recent months. It also opens up new doors that will help FM build opportunities for all of our authors’ sites.

Danny Sullivan adds that this is now 3-way partnership between Digg, FM and Microsoft which used to be just Digg and FM + Google. Andy Beal thinks this is a great move for Microsoft — if Microsoft can announce a few big deals like this – even if they don’t make a dime on them – other networks will take notice and come knocking. Search Engine Land agrees that the 17 million uniques per month will be served better performing ads.

Read the official Microsoft Press Release here. Digg users are split on the idea and are worried that Microsoft could influence Digg’s editorial control. Microsoft’s aggressive move in the advertising space is moving forward. It just announced the acquisition of AdECN Ad Exchange today.

Business-wise, Digg is just following the smell of money and obviously Microsoft is dangling a little bit more moolah than Google.