Digg, the social news site with an audience of over 27 million users, is rolling out its first major ad product.  In an effort to raise some marketing dollars, without alienating the users, the new Digg Ads will mimic the site experience by including a headline, thumbnail photo and link to another site.  The ads will also appear within the stream of headlines and will allow users to “Digg” them, bury the links and leave comments, exactly like article links.

Just like the site, users will have an opinion on what ads get shown more often through their Digg recommendations.  The more Diggs, the more often that specific ad will show up.

The Digg advertising pricing model charges advertisers on a cost-per-click basis, adjusted based on how popular the ad becomes.  “Ads that draw a higher-than-average click rate and number of Diggs will see their CPC fall. Conversely, ads drawing few clicks and getting buried will see their CPC rise. Ideally, such a system would result in better advertising, rewarding efforts that are appreciated by users and punishing those that aren’t.”

For more information about Digg’s new advertising model, go to: http://www.adweek.com/aw/content_display/news/digital/e3i3506b270c4e1b2d94d6c70ade33f4877

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