Today, the Internet giant will announce the purchase of a clever Web site called BuzzTracker, which uses a combination of editorial selection and complex algorithms to aggregate content from all over the Web, allowing users to delve deeply into specific topics.

For those techies, it is not unlike the very fine TechMeme, which essentially has its digital thumb on the pulse of tech news and is a big traffic driver in the sector.

While Yahoo did not disclose the price it paid for BuzzTracker, sources close to the company said it bought the site–which is wholly owned by Chicago-based Participate Media–for about $5 million.

Earlier this week, Yahoo’s European head Toby Coppel struck an interesting ad and search deal with social-networking site Bebo. And last week, Yahoo bought behavorial ad-serving network BlueLithium for $300 million.

So it looks likes the lights might be on over there at Yahoo, which has been struggling to reinvigorate itself of late and by necessity under Yang’s leadership.

Back to BuzzTracker: Using its own technology, BuzzTracker creates “custom content feeds” automatically that aggregate news, blogs, reviews, discussions, video and audio. But to add a level of quality, it handpicks the 90,000 online content sources it uses.

Its motto is: “All the News the Buzz Approves.”

As BuzzTracker explains on its site: “Our goal has been to launch a news site that leverages the power of the ‘head of the long tail’ of the blogosphere to automatically generate news pages for a multitude of topics, both broad and narrow.”

To determine relevance of an item, for example, it looks at a range of elements, such as what the most blogged-about story for a particular topic is.

Yahoo had looked at other better-known competitors in the space, said sources, such as the San Francisco-based Sphere (which we use on this site for such content aggregation).

But those trendier (and more popular) start-ups apparently had too lofty valuations.

In an interview, Yahoo Media Group exec Scott Moore said he had connected with Participate’s founder and CEO Alan Warms, in fact, at our D5 conference in late May. (Another coincidence: I covered one of the early start-ups at which Warms was a senior exec called Freeloader, based in D.C., for the Washington Post.)

Moore said he had been looking around for such automated-news and content-discovery functionality, in order to augment the efforts of Yahoo’s 60-person news team.

“We want to connect our users to as much information as possible, anything from Britney Spears to the Santa Monica City Council meeting notes,” he said. “We love BuzzTracker’s usefulness, because if you’re interested enough, you might want related content we might not be publishing and hosting.”

The purchase is clearly part of Yahoo’s renewed efforts to link to more third-party content, rather than pointing at its own owned-and-operated properties.

As part of the deal, Warms will become vice president and general manager of Yahoo News, which Moore said currently has an audience of 36 million unique visitors a month.

Participate has said on its Web site that it will soon include user-review and discussion sites to layer over the aggregation at BuzzTracker, much like what happens on the popular Digg service.

According to sources at Yahoo, the company has already built a Digg competitor, but has not launched it yet. It is not clear if that effort would be integrated into BuzzTracker or not.