Digg Ads will be clearly marked as sponsored items and the company is encouraging its 36m-strong user base to participate in the ad voting process when the platform rolls out in a few months.
Digg said the new platform allows marketers to get real-time feedback on the performance on their ads.
Ads will include links to stories, video trailers, product reviews or virals -- typically what a normal Digg link entails.
The amount advertisers pay will be based on the popularity of the ad, the more an ad is "dugg", the less the advertiser will have to pay, the more an ad is buried, the more the advertiser is charged, eventually pricing it out of the system.
Digg has signed Electronic Arts and Intel as beta launch advertising partners with more ad deals expected as the company streamlines the service.
Mike Maser, chief strategy officer for Digg, said: "With Digg Ads, we have two key objectives -- to provide advertisers a more effective way to reach consumers, and to provide the voting community of Digg users with a more dynamic, relevant advertising experience.
"We want to do for advertising what we've done for news."
The initiative follows last week's appointment of Chas Edwards as Digg's chief revenue officer, who was brought in to create new revenue streams and advertising channels.
Edwards joins Digg from Federated Media, which he co-founded and served as publisher and chief revenue officer.
Until recently, Digg had an exclusive ad-sales partnership with Microsoft, before ending its agreement in April and starting its own in-house sales team.