Microsoft is replacing conventional display ads in Hotmail with deal ads it deems to be more relevant and interesting to users. Microsoft is experimenting with this format via a pilot to test for consumer response, Greg Sterling writes at Marketing Land.

Sterling spoke with Dharmesh Mehta, director for the Windows and Windows Live Business Group, who told him that users will prefer the new ads to the old, especially as they will be “less distracting”. Mehta is basing this opinion on “early qualitative feedback” Microsoft has received.

In addition, he says, Microsoft will make a number of refinements as the new units roll out.

Other Changes

Last week Microsoft rolled Hotmail onto the Kindle Fire.  Microsoft has made a number of other tweaks as well to the email service,  beyond mobilizing it–including several features not so welcome by marketers, such as a one-click unsubscribe button.