Microsoft and Digg have announced a partnership in which Microsoft will serve up display and contextual advertising to the social news site’s 17m monthly users.

The three-year exclusive deal will boost Microsoft’s efforts to compete with arch-rival Google, which it is replacing as Digg’s online ad partner. 

The two firms will work together on future technology and advertising initiatives, Microsoft said.

On the Digg blog, founder Kevin Rose said:

“This move gives us an advertising partner with a larger organization and a more scalable technology platform to keep pace with Digg’s growth. Best of all, it lets the Digg team completely focus on new feature development.”

Microsoft – not a massively popular company with Digg’s user base – beat Google and Yahoo! to the deal because it offered a higher level of customisation, according to Reuters.

Rose said Microsoft would work with Federated Media, Digg’s current ad sales partner, while Microsoft’s release said that the two would bring “integrated programmes” to the site’s users and advertisers.

Microsoft already has a similar ad-serving agreement with Facebook – it apparently gave a positive recommendation of the software giant to Digg.

Further reading:

7 ways Digg can improve without the Brain Police