• by Mark Walsh  @markfwal, April 21, 2009

Digg will begin selling premium ad inventory on the social news site directly July 1, taking over that role from ad partner Microsoft.

Under a revised agreement, the software giant will continue selling remnant and "network reserve" inventory, or higher-quality placements sold on a blind basis.

ClickZ reported Monday that Digg's internal sales force will focus on selling non-standard custom inventory along with a significant portion of its standard IAB units.

The move follows Digg's recruiting of former Yahoo executive Thomas Shin in January to build a direct sales team to better monetize the site. The company had cut 10% of its 75-person workforce shortly before announcing Shin's hiring. Digg expects to have a national sales team of five to seven reps by year's end.

"This was sort of a natural evolution of where we thought the business would go," said Mike Maser, chief revenue and strategy officer for Digg. He added the company would maintain its three-year ad partnership with Microsoft under the amended terms until October 2010.

In a statement, Microsoft said: "Digg has created its own internal sales executive team, and we respect their decision to sell their owned-and-operated site inventory directly to help further accelerate their growth as a company."

Microsoft also has a display ad deal with Facebook, in which it invested $240 million in 2007.