Microsoft to replace Hotmail banner ads with deals

If you use the free version of Microsoft's Hotmail service, you have likely seen your share of banner ads. Some of these ads might be a little inappropriate such as online dating ads showing young ladies. Now Microsoft is planning to change the way it displays ads. In a new article on the Marketing Land web site, it's revealed that Microsoft will start replacing the traditional banner ads on Hotmail with ads that offer deals to users.

You can see an example of how Microsoft wants to change the look of Hotmail's ads. On the left side you see the current types of banner ads and on the right is a banner that gives users discounts on items and services.

Dharmesh Mehta, the Director for the Windows and Windows Live Business Group, admits that Microsoft, along other companies that offer web-based email like Yahoo and Google, make over $1 billions a year via banner ads. However, even he admits that some of the ads can be inappropriate or even "creepy."

Switching to a new style of ad banners might result in a reduction of revenues from Hotmail but Mehta says that Microsoft isn't concerned about that, saying, "We’re focused on making a great product."

The switch to the deals ads will first be launched in select cities. Mehta believes that ultimately users will prefer the new format although he admits that Microsoft will refine the ad experience before it goes live worldwide