Rumors are circulating once again that Digg.com is up for sale, this time naming Google and Microsoft as likely bidders for the company. And while these may just be rumors, it makes sense why both would be interested – Microsoft already has an advertising deal in place with Digg and Google is already an inadvertent partner (and could also certainly sell advertising on the website). Google is the top referral source and consistently drives a significant share of Digg’s traffic. For example, Google provided 39% of Digg’s upstream traffic for the week ending March 8, 2008 and Yahoo followed as the next largest source of traffic. These types of stats could very well change if Microsoft were to acquire Digg.com (and Yahoo).

Surprisingly, for the week ending March 1, 2008, 77% of Digg.com’s upstream traffic was new (defined as those that have not visited the website in the past 30 days). I would have guessed that Digg had a higher share of returning visitors from users checking the website often to see what is popular, but these high new visitor ratios are good for Digg in terms of driving growth. On a site by site basis, the top two referral sources account for almost 50% of the total upstream traffic and each is sending over a significant share of new visitors. The share of new visitors from Google’s upstream traffic was 83% for the week ending March 1, 2008, and 85% from Yahoo Search.

The user base for Digg.com tends to be younger, which could be a benefit for either MSN or Google to help capture additional users ages 18 to 24 that tend to be more active with collaborative social media.

Heather Dougherty

Heather Dougherty is Director, Research at Hitwise. This piece originally appeared on Hitwise's analyst blog here.

Image By ojbyrne