There’s a lot of talk about tech IPO candidates lately. Conspicuously missing from those lists is longtime media darling Digg. Reportedly courted by Google in 2008, the five-year-old news aggregator has been elbowed out of the spotlight — and traffic rankings — by six-year-old Facebook and three-year-old Twitter.
In other words, Digg has a MySpace problem.
Unlike MySpace, however, Digg has no plans to passively watch its audience migrate elsewhere. It may have lost some of its first-mover mojo, but the San Francisco-based company — which has 40 million registered users — is actively working to get it back.
For starters, Digg is planning to launch a spate of new Digg sites centered around niche content. To continue broadening away from its original base of men ages 18 to 34, Digg is “extending beyond our one-size-fits-all home page and atomizing content,” says Digg’s chief stategy officer, Mike Maser. If you’re interested in rock climbing or knitting, Digg aims to have in-depth news for you to vote up or down on a separate home page.
The company isn’t discussing when the sites will be ready, but CEO Jay Adelson tells me their rollout will be a gradual and collaborative process with Digg users, and that there will be “lots of different mediums” through which to access the content.
More ambitious are Digg’s plans for a new advertising system. Right now, if you visit the site, you’ll see ads that are clearly marked yet designed to look like article links. Essentially advertorials, they are performance-based and cost advertisers more money or less, depending on how long they last in Digg’s system before getting voted out.
“The audience then doesn’t have to see what they don’t like,” says Maser, “and advertisers don’t have to pay for something that isn’t performing well.” (To improve on their odds of likeability to Digg users, the company’s own employees are working with some of its advertising clients to craft some of the content.)
Digg next hopes to put the advertorials on the sites of major newspapers, adjacent to the stories that Digged users are reading. “Search today sends tons of traffic to [major publishing] sites that they are unable to monetize it because it’s dumb traffic,” says Adelson. Instead of posting bottom-of-the barrel remnant ads that are essentially worthless, he says, Digg can “put [relevant] ad product on their system, giving them revenue that’s an order of magnitude higher than what they were going to see on their own.”
Adelson won’t comment yet on any specific “[publishing] relationships that we’re planning at this stage, because a lot of the details still have to be worked out.” Asked how big a percentage of Digg’s revenue he envisions the ad platform becoming, he says he has “extremely high hopes” for big numbers but that right now, “it would be premature for me to try and size it for you. In 2010, it will not be significant. It will be experimental and mostly generated within Digg.com.”
In the meantime, Digg is doing more to distinguish itself from Twitter, which seems to have stolen Digg’s trending topic thunder. “Digg applies crowd wisdom and collaborative filtering to content that passes through its system,” says Adelson. “On Twitter, there’s a certain random nature to what you might pick up, regardless of who you are following. Some will be links, some will be statements of status or feelings or emotions and there isn’t a filter over that.”
Maser is less delicate. “Others have characterized [Twitter] as link vomit,” he says.
One way or another, Digg seemingly has some time to figure out its second act. Backed by $40 million from Highland Capital Partners, Greylock Partners, and Omidyar Network, among others, the 85-person company ”has the capital we need” for its current plans, said Maser.
“I think we’re just beginning to scratch the surface of what’s possible,” he says.