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Leading digital advertising company Federated Media and WordPress developer Automattic forged a strategic partnership today that allows for greater interaction between advertisers and audiences from over 24 million blogs hosted by WordPress.com.

The partnership, which was announced during the Web 2.0 Summit event in San Francisco, Calif., gives WordPress.com blog owners the ability to place advertisements on their sites. In turn, advertisers on Federated Media’s network gain the ability to target their ads by matching them with the right audiences from specific WordPress.com blogs.

Blogs hosted on WordPress.com — not to be confused with the free, open-source content management system on WordPress.org or the premium WordPress VIP service — are typically created and managed by people as a side job or hobby. The WordPress.com blogs are limited in what they can change on the site, meaning most third-party WordPress widgets and advertising solutions aren’t supported. It also means the blogs are limited in how much money they can bring in.

However, the new agreement with Federated Media has the potential to transform casual blogging into a source of revenue for bloggers using a site hosted by WordPress.com. Yet, neither company has disclosed its plans for sharing revenue, and it’s entirely possible that Automattic will use the ad partnership to boost its own revenue — especially since it offers WordPress.com accounts for free.

As for what the new ad integration itself, I imagine it will look and perform similar to the advertising on many sites hosted by WordPress VIP. For instances, VentureBeat — which uses the VIP hosting, often has a row of potentially related VentureBeat stories that appear as thumbnails below the body of a blog post. One of the thumbnails is always a sponsored post with an outbound link to another site.

The new partnership, along with Federated Media’s recent acquisition of Lijit Media, gives the companies a combined reach of nearly 247 million unique visitors in the U.S., according to Quantcast data cited by Federated Media.

Disclosure: VentureBeat is a WordPress VIP customer. Also, Federated Media powers some of the advertising on VentureBeat.

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