On the eve of Microsoft's annual confab with financial analysts in Redmond, the company is looking to make a splash in one of the areas likely to be a big focus of the meeting -- online advertising. The company announced two advertising deals today: one with Digg.com and another with video-game publisher Electronic Arts.

The Digg deal will make Microsoft the exclusive provider of display and contextual advertising on the widely read site, according to the announcement. It's similar to an agreement Microsoft struck with Facebook last year. (Note: Corrected to give proper time frame for Facebook deal.) Digg's Kevin Rose writes: "This move gives us an advertising partner with a larger organization and a more scalable technology platform to keep pace with Digg's growth."

As a result of the deal, Microsoft will replace Google's advertising system in some capacities, but Digg is expected to continue working with Federated Media on sponsorships and specialized ad campaigns. Digg and Microsoft didn't disclose the financial terms of the deal.

Apart from the revenue, Microsoft believes the association with Digg will also help Microsoft improve its approach to advertising.

"One of the most exciting parts about this deal is that we get to sit in a conference room with these guys every now and then and brainstorm about how to do a better job of that, with some of the leaders in social networking, some of the leaders in community-driven content, some of the leaders in the Internet and advertising space," said Adam Sohn, director in Microsoft's Online Services Group, via phone this afternoon. "We get to really think about and try new things here to see what will do well with customers and what will do well in terms of (return on investment) for advertisers."

It will be interesting to see how Digg's users react to the site's association with Microsoft.

Separately, Microsoft announced this morning that its Massive in-game advertising subsidiary has struck a deal to put advertisements into five upcoming Electronic Arts games, including "Madden NFL 08" and "Tiger Woods PGA Tour 08," for Xbox 360 and Windows PCs. These are the kinds of ads that can be updated and changed using the online connection.

It's not the first EA deal for Massive. The companies started with "Need for Speed Carbon" and later added "Def Jam: Icon."

Putting these two deals into broader perspective, Microsoft reported a 33 percent boost in online advertising revenue last quarter (see graphic above) but it's still well behind Google and Yahoo in that measure.

I asked Chris Liddell, the company's chief financial officer, about the online advertising trend last week. "Look, I'm not going to celebrate until we string a few quarters of that together, but 33 percent is a good quarter," Liddell answered, adding that it's still "early days" for that part of Microsoft business.

I'll have coverage of this and other topics from Microsoft's Financial Analyst Meeting, starting Thursday morning and continuing throughout the day.