Microsoft has confirmed that they are testing a new revenue model for Hotmail for some users in the US market.
The company has replaced display ads with ads for deals for some users in select markets.
Hotmail said that this is going to offer a much better experience for the user as the deals would be regional in nature.
The company indicated that this is a small test right now which can be expanded to more users in more markets in the future.
Microsoft admitted that such ads are likely to drop revenues from Hotmail for them but they are not concerned about it.
Microsoft is working with partners and using their own services to offer the deals through Hotmail.