Microsoft, Digg in advertising pact

Microsoft Corp said on Wednesday it reached an agreement to be the exclusive provider of display and contextual advertising on Digg.com, a popular Web site that lets readers recommend online articles to others.

The three-year agreement between Microsoft and Digg, which has more than 17 million visitors a month, provides a boost to the world's largest software maker's efforts to gain a foothold in the rapidly growing online advertising market.

The two companies said they would also work together on future technology and advertising initiatives.

Digg challenges the long-held journalistic assumption that editors know best what people want to read and allows readers to "digg," or vote for a story to push up its rankings.

Microsoft has a similar advertising agreement with another hot Web property, social-networking site Facebook.com.

Shares of Microsoft fell 14 cents to $30.66 (14.93 pounds) in afternoon Nasdaq trading.