Microsoft scores a win over Google

There is no free lunch, even in cyberspace. Had the industry heeded that little piece of ubiquitous advice during the dotcom boom years, the bust might never have happened. After wasting hundreds of millions of dollars on advertising (does "because pets can't drive!" ring any bells?), the industry learned that the best way to make money online - sans actually selling something tangible - is by selling ad space, not buying it.
Maybe it's no surprise that two of the companies that have learned this lesson best are both sitting in key positions in the industry today: Microsoft and Google. It's also no surprise that these two are each other's biggest competitors in term of managing online advertising.
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It's far too early to tell who will win the war, but Google lost one battle last week. Digg.com, which claims it receives over 17 million visitors a month, ditched Google's AdSense, instead opting for a three-year deal with Microsoft to manage its online advertising.
Google has been offering AdSence since 2003. At the time it came out, it provided small business with a way to get their products listed on Google's main search page, but not much has been done to enhance AdSense as a business option since. The price of using AdSence has skyrocketed as competition in the bid-for-prime-position scheme has increased, and click fraud - where competing advertisers can drive up the price of rival advertising by repeatedly clicking on pay-per-click ads - has frustrated many users. Google claims to be aggressively combating this type of fraud.
Advertising partner
Digg doesn't seem to care. Kevin Rose, founder of Digg, said in his blog that "[t]his move gives us an advertising partner with a larger organisation and a more scalable technology platform to keep pace with Digg's growth." Maybe it's just me, but you could read that as a saying Digg is tired of dealing with old technology and wants something new. Signing Digg has to have the execs in Redmond dancing in the street. Digg will be Microsoft's second biggest advertising client behind Facebook.
While Facebook isn't the largest social networking site online, it is the fastest growing. The website hit the 30 million user mark last month, and many people are expecting the company to eclipse MySpace. Even Rupert Murdoch, who purchased MySpace for $580 million a few years ago, has been heard lamenting about how fast MySpace seems to be going from the cool space to be online to "lost in space". Last week's announcement that there are 29,000 registered sex offenders cruising around Myspace won't help boost its popularity either.
Regardless of who eventually wins, the war to control and sell ad space means only good things for the industry. As long as the ad dollars flow, there will no more dot-com busts and no more annoying socks puppets promoting websites.For those who don't understand that, look up pets.com on wikipedia.