Under the agreement, Microsoft will become the exclusive provider of display and contextual advertising on Digg, supplying both the advertising technology and the salesforce.
The two companies also agreed to work together on future technology and advertising initiatives.
"Our collaboration with Digg is about bringing our advertising technology and salesforce to one of the fastest growing sites on the web and a true innovator in user-generated content," said Steve Berkowitz, senior vice president of the Online Services Group at Microsoft.
"We believe that advertisers will welcome the combined strengths of Microsoft and Digg to forge more meaningful connections online."
Microsoft and Federated Media Publishing, Digg's current advertising partner, plan to collaborate to bring integrated programs to Digg users and advertisers.
"Federated Media has unique advertising sales assets that dovetail with our efforts, and we look forward to working with them," said Berkowitz.
The companies expect to begin execution of the agreement in the coming weeks.
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