For a long time now, Digg has been the king of technology news aggregation. Tech fans liked the way they could rate their favorite tech stories highly, and see links to those rise to the top of the site’s home page.

Competitor Reddit.com started much later than Digg, and never really had a chance to catch up — until now. Reddit is not only grabbing traffic from Digg in the wake of that site’s troubled redesign, but it is also reporting a healthy jump in advertising deals and subscriptions.

So what are Reddit’s realistic chances of catching up to Digg? It may have just happened. According to recent Alexa numbers, the two sites are even in terms of page views (see chart below). It should also be noted that Digg’s bounce rate has taken a frightful jump of more than 20 percent since the redesign was unveiled.

Reddit saw an uptick of about 30 percent in “self-serve” ad sales this week, and is seeing a strong rise in new subscriptions to it’s ‘Reddit Gold’ program, (which gives users who pay a sneak peak at new features), according to Erik Martin, Reddit’s community manager. “It’s still going up. Our numbers have been going up significantly for the entire year, and in the last week or so with the refugees from Digg, a lot of people are hearing about us from friends or on Twitter. We’re seeing a lot of new users.”

Reddit has always played second fiddle to the much more famous Digg, but this week has seen a change, as thousands of people switched to Reddit because of the error messages that brought navigation on Digg to a standstill. There has also been general unrest in the Digg community because of changes to what is promoted onto the Digg front page. Companies and celebrities have largely gotten the edge in the new Digg world, to the detriment of casual visitors as well as “power users.”

Reddit is loving the traffic. The site, which averaged 600 thousand unique impressions per day before Digg’s problems started, saw that number hit 900 thousand on Tuesday. The site’s daily average of 11 million page views reached 14 million on Tuesday. About 300 thousand page view referrals came from Digg alone. At one point, all of the stories on the Digg front page were submitted by the Reddit publisher account there.

“We’re excited about all these new people coming in, many of whom have their own businesses or products,” said Martin, “With Reddit there’s a lot more interaction and dialogue than traditional ads. But the new interest is exciting, especially with all the mentions in the press. People are coming around to the fact that Reddit can serve bigger brands too.”

That’s always been a problem for Reddit. The San Francisco-based company of six employees has been so focused on maintaining the uniqueness of its community, (one that does not enjoy traditional banner ads) that big companies have shied away from starting campaigns.

“Booking big media campaigns is a big challenge for us,” said Martin. “I think it’s that way because large companies may not be as comfortable when they don’t know what’s going to appear on the page, as opposed to a site with content chosen by web editors. They are just not comfortable with it because they are not familiar with it. Even though our numbers are strong and everything, it’s just not as well known a brand in this world.”

Conde Nast bought Reddit 2006. Martin says being a part of the company has helped Reddit make money off of Digg’s troubles. “We have access to a lot of advertisers that are already working with Conde Nast,” he said. “Reddit is not often a part of those plans but as people realize that we are there, there’s potential…It definitely helps that they have their sales team already out there.” Conde Nast also owns Wired, Arstechnica, GQ, Vanity Fair and Details.

Some companies have made the effort to design ads specially for Reddit, and it has paid off. Electronic Arts used the site to great effect in ad campaigns for its game “Dragon Age.” “They ran successful ads and made a real connection with users,” Martin said. “They took our Reddit alien logo and dressed him in battle gear for one of the ads. It was very customized. We made a sponsored community for those who wanted to talk about the game. Now that ‘Dragon Age 2’ is coming out, the community is still there for people to talk about the next game.”

Reddit is also hoping to monetize the traffic spikes through subscriptions to its premium “Gold” service as well as self-serve ad campaigns that allow regular users and small companies to create their own ads. The ads are similar in format to other Reddit stories and can be commented on and discussed by community members.

Overall, employees are excited. “It’s certainly an opportunity for us,” Martin said. “A lot of it is getting people back who tried Reddit a few years ago, and also people giving Reddit a first look. A lot of people are coming from Digg and that’s great, but we aren’t adversarial to them that way. I think it would be bad for all social new sites if Digg’s not successful. But we’re excited that finally a lot of things are being written about us.”