The deals services of today are essentially glorified email marketing. Groupon gets credit for turning the concept in to a huge mainstream trend, and deals are certainly accessible in other ways, but all in all, it's still email marketing.
As long as users are accessing their deals through email, it makes sense then that an email service provider, which already shows display ads, would show deal ads. This appears to be the logic fueling a new strategy by Microsoft.
According to Greg Sterling at Marketing Land, Microsoft is replacing the display ads in Hotmail with with deal ads. The company is reportedly doing this beginning with a limited pilot program before all users see the changes.
It doesn't sound like a bad strategy, and I would not be surprised if Google took a similar approach with Gmail and Google Offers (which continues to frequently expand).
Hotmail reportedly has somewhere around 45.5 million users in the U.S. That's 62.7 million for Gmail (comScore).
According to Sterling, who spoke with Dharmesh Mehta, Director for the Windows and Windows Live Business Group, the deals being advertised in Hotmail are coming from Microsoft itself, as well as from partners. Microsoft's own Deals offerings include Bing Deals and MSN Offers .
Earlier this week, comScore put out new data on display ad providers. Facebook is dominating (again), but Microsoft is in third place. Still, the company's share is under 5%.