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Digg Feels the Pressure, Slashes Staff

Posted by Vaibhav Kalamdani on January 24, 2009

diggSocial news site Digg is facing a tough time as increased competition is hitting its bottom-line hard, thereby leading to forced employee reduction. The California-based firm plans to trim its 75-member staff by around 10% as profits are difficult to come by for the company.

Digg founder and CEO Jay Adelson said that the company is aiming at profits this year, due to which it is going the “conservative” way. Being more conservative means Digg will adopt proactive measures to manage its costs, which includes downsizing of staff in areas that are less core to the company’s objective this year. However, Digg also plans to hire a direct-sales team along with other key hires to help build on its leadership position and achieve profitability faster.

In order to provide innovative features to its 35-million-plus community members, the popular online news aggregator has several things lined-up in 2009. To start with, Digg will continue to focus on sponsorship opportunities and maintain its trade partnership.

Also, Digg will works towards expanding its advertising strategy and build on its existing collaboration with software giant Microsoft to sell and serve ads. Digg entered into the three-year agreement with Microsoft in July 2007 after considering Google and Yahoo as partners.

Besides declining profits, sluggish traffic growth rate is another area of concern for Digg. According to comScore, Digg managed to draw 6.8 million unique US visitors in December 2008, a marginal increase of 13% year-on-year. This, in comparison to other social networks like Facebook, MySpace and Twitter is barely anything.

It was just four months back that Digg drew a whopping $28 million in funding, adding its tally to $40 million so far. Now, with the accumulated funds, it needs to refocus on its strategy to counter the growing competition. Hence, it wouldn’t be surprising if we see Digg entering into few strategic alliances later this year.

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