Posted April 20, 2009 8:59 am by with 7 comments

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It appears that Digg has decided to dump Microsoft as its ad inventory provider and is instead planning to build its own ad sales force.

The deal was originally announced back in July 2007 and was supposed to last 3-years. Now ClickZ is reporting that the partnership will end one year early:

But beginning in July, Digg will be solely responsible for all custom ad deals and a significant portion of its own Interactive Advertising Bureau standard ad inventory.

The partnership initially was supposed to last until summer 2010, but the two always had an understanding that Digg would at some point step up to rep the bulk of its own ads, according to Mike Maser, Digg chief revenue and strategy officer. He said the company’s internal sales efforts will focus on custom, non-IAB inventory combined with standardized banner ads.

I just took a look back at the original announcement from both Digg and Microsoft and found no mention of an “understanding” between the two companies. This leads me to believe that the use of an “understanding” is tech-speak for “things just didn’t work out, so we’re getting out of this mess.”

To be honest, I can’t quite figure out who this deal hurts the most. Yes, it hurts Microsoft to lose an ad partnership that it stole from under the nose of Google, but does Digg know what it’s getting itself into? After all, the company doesn’t exactly seem to have the momentum of Facebook or Twitter–both of which are struggling to find that magic ad revenue formula–and building out your own ad sales force is both risky and expensive.

Still, Digg’s pressing forward with building its own sales team–former Yahoo sales exec Thomas Shin is the first hire–and Microsoft appears to be content to stand by to supply any remnant ad inventory from Digg. If Digg can’t find success with its own ad sales, that “remnant” supply could end up being as much as the original partnership deal anyway.

What’s your take on Digg? Is the social bookmarking service still relevant?