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%.

Did you hear that AOL, Hotmail, and Yahoo? Google thinks you are so bad that they have compared you to hardcore drugs. Yikes.

From the official Google blog –

I have one friend, Andy, who’s the straggler in the group. A couple months ago, I sent out an email about a barbecue I was having. On the “To:” line, there were 15 Gmail addresses and then Andy. He stuck out like a sore thumb. Shortly thereafter, Andy was complaining to us about how much spam he got. That was the last straw.

We all have a story like this. On the Gmail team, we affectionately refer to them as “email interventions.” We hear about them all the time: the cousin who finally switched from an embarassing address like hottie6elliot1977 to a more professional elliot.d.smith@gmail.com, a co-worker who helped his dentist switch after he heard her grumble about having to pay for IMAP access, etc.

And that’s the story Google gives behind emailintervention.com.

When you visit the site, you’ll see a big red button asking you to “start the intervention.” Once you click that, you will be asked to enter your personal Gmail address as well as the weird, funky email address of your friend who needs the intervention. There, you can also sign in to your Gmail account in order to have access to your full contact list.

Next, you get to select your message for your friend. You can either choose one of the pre-written messages that range from “straightforward,” “concerned” and “outraged” in their sentiment, or you can create your own. The email will also include a video, either the standard intervention video like the one above or one you create yourself.

Lastly, this finished product or something like it will be sent to your friend with the “embarrassing” email address.

Would you advise your friends to switch to Gmail? Do you think it is the best email service? Let us know in the comments.

That’s why, when the post about Hotmail’s “Instant Email” upgrade hit my inbox, it felt like stepping out of Doc Brown’s DeLorean after arriving back to 2007. The post details how Microsoft’s developers streamlined the Hotmail service, making it 10 times faster that it was before:

We trimmed content on our pages to speed up download time, and we eliminated a network round trip on login for further gains. But our goal was to make Hotmail feel instant, and we knew that speeding up downloads would only get us so far towards that goal. Even with today’s broadband speeds, the network is the bottleneck, and we needed to keep our customers from experiencing that latency.

The approach we decided to take was to get user data closer to the browser, and when the data is not available on the browser, get it there more efficiently, without the user noticing. We also decided to take advantage of modern browsers like Internet Explorer 9 to be more app-like, by doing more work in the browser and less on the server.

To speed up Hotmail’s process, the developers focused on three areas, caching, preloading, and asynchronous operations. While the post provides detailed explanations, simply put, by caching and preloading content, the user has a shorter wait when working in the Hotmail environment. Preloading downloads more content to Hotmail’s cache storage, so when the user accesses a page and/or document, the load time is decreased.

And, according to their reports, the difference was significant:

Open message

Dec 2010 – 3.3 seconds

June 2011 – 0.18 seconds

Delete message

Dec 2010 – 3.1 seconds

June 2011 – 0.14 seconds

Compose new message

Dec 2010 – 4.3 seconds

June 2011 – 0.20 seconds

There’s also side-by-side comparison video, which leads this post.

The WebProNews Test Drive
In order to test the more-efficient service, an account was created and tested. The streamlined Hotmail is indeed fast, but since there hasn’t been a Hotmail account associated with this author for sometime now, the memories of Hotmail’s old performance have faded. That being said, the client performs as reported, that is, it’s efficient and the wait times are not noticeable. There was something that stood out, however. Apparently, new accounts have to fill out a captcha field before being allowed to send an email. Hotmail indicates this is done to fight spam, but such a step seems overwrought:

Is it enough to make me switch clients? No, but the improvements should be acknowledged.

Google’s Gmail traffic is only exceeded by traffic to Google.com itself.

“The actual percentages aren’t really all that important here. What’s important to note is that the subdomains used for webmail have a ranking near or at the top for all three companies,” Pingdom says on its blog. “Imagine the hit to their web presence if they didn’t have these webmail services.”

“Email has been declared dead several times over the past few years. The truth, however, is that we still depend on it more than most people realize, and there is no replacement in sight,” Pingdom says. “Google knows this. Microsoft knows this. Yahoo knows this. They know that their email services are still extremely important.”

They also make a good point in that the email services of these companies provide ways they can get other offerings i front of customers. Pingdom uses Google Buzz as an example, which was launched within Gmail. While Buzz may not be the most successful product of all time, it certainly put the service right in front of users.

In fact, Google has added a lot of things to Gmail over the years, such as GTalk, video chat, and of course ads, which are based on words that appear in conversations you have in your email.

This week, Yahoo began rolling out its all new feature-rich version of Yahoo Mail. Email would appear to be more critical to Yahoo’s strategy than even Google or Microsoft’s, as Yahoo Mail makes up the majority of traffic to Yahoo.com.

Email isn’t just important to these three major web entities either. Even the newer-genartion social media compnaies recognize the signifiance of email. Facebook has gone so far as to launch its own email addresses, and Twitter just started rolling out email notifications for more of its features, in an effort to drive further engagement with the service.

Earlier this month, MarketTools released a study commissioned by Microsoft, indicating that 45% say their use of email at work will most likely increase in the next year. 51% said it would likely stay the same, and only 4% thought it would decrease. At home, 36% said it will increase, 55% said it will stay the same, and only 6% said it will decrease.

In a nutshell, this means you can now interact with each of these services as if you were on their respective sites, without leaving the inbox. Pretty nifty.

“First, we focused on popular types of emails with photos, videos, documents, and shipping notifications (e.g. YouTube, Hulu, Flickr, FedEx) and how we could make common actions easier,” said Hotmail Group Program Manager Dick Craddock. “For those messages, we fetch the important content from other websites and let you engage with it in an Active View that appears at the top of the message. This lets us take an email with a text URL for a shared video, and instead of just showing dull text, let you watch the video without having to leave your inbox.”

“Now that we have a great experience for common attachments and links, we’re taking the next steps with invitations, updates, ratings, and deals,” he added. “More and more services use email to let their members or customers know when something has happened, and most of these messages have a simple response – accept the invitation, comment on the photo, rate the movie. Now those actions happen right in your inbox, saving clicks and time, thanks to the work of partners like LinkedIn, Posterous, LivingSocial, and Netflix. Here are some more before and after pictures of the Active Views platform at work.”

It’s always good to see new and interesting things happening in email, while some carry on with this notion that this medium is somehow dying by the hands of social media.

More on Microsoft Active Views here.

“In the nine months since they launched, Office Web Apps are now accessible worldwide in more than 190 countries,” a representative for Microsoft tells WebProNews. “More than 30 million people are using Web Apps to view, edit, and share Office documents from anywhere with a browser and an internet connection.”

With the apps, you can do things like:

- Embed an Excel spreadsheet
- embed a PowerPoint presentation
- View Word documents in app on smartphones

“Out of approximately 2 billion internet users worldwide, there are roughly 750 million Office users,” says Jevon Fark of Microsoft’s Office Team. “To us, this delta represents tremendous opportunity for 1) offering our 750 million (and growing) customers the best online companion to Office; and 2) offering people from all walks of the life the ability to view, edit, and share Office documents from anywhere with a browser and an internet connection. This includes viewing, editing, and sharing Office document attachments in Hotmail.”

Microsoft has 360 million people using Hotmail. Users of Sky Drive, Microsoft’s cloud storage product, can also use the apps even if they don’t use Hotmail.

A couple weeks ago, Hotmail users worldwide got Facebook Chat integration.

We’ll admit: this may not sound like a big deal insofar as it’s pretty simple to toggle between a Hotmail tab and a Facebook tab.  But the development at least goes to show that relations between Microsoft and Facebook are as good as ever.

Also, a slight increase in usability is something, and the change could come in handy when access to Facebook is restricted (by employers, for example).

Finally, a post on the Inside Windows Live blog pointed out, "Since announcing the availability of Facebook chat in Messenger worldwide two weeks ago, nearly 2.5 more million people connected their Facebook accounts to Windows Live, bringing the total to over 20 million customers.  And with three out of four Hotmail customers using Facebook, we expect that many more people will want to take advantage of this feature . . ."

So if you’re interested, the post later suggested, "[F]irst connect your Facebook account to Windows Live and make sure the ‘Chat with my Facebook friends in Messenger’ box is checked to give your consent to Facebook.  We’ll link your accounts (this may take a few minutes), and you can start a chat from Hotmail just by clicking on the name of a Facebook contact.  If this doesn’t work right away, sign out and back in again, and you should be good to go."

Users can create and manage multiple email aliases from a single account. "The email address a person uses is a big part of their online identity," says Dharmesh Mehta, Director of Windows Live Product Management. "The average person maintains three different email addresses in order to organize different types of email, maintain different personas, or keep junk mail away from a primary email address. So there are many good reasons that people want multiple email addresses, but maintaining multiple accounts, with different user names and passwords that require you to check multiple inboxes, is inefficient. With today’s update, Hotmail helps you save time by making it easier to manage your current and future email addresses in one place."

"Hotmail (and many other email services) already allow you to just add a plus sign (‘+’) and a descriptive word to the first part of your email address," he continues. "For instance, if your email address was doctor-smith@live.com and you wanted to create an alias for online shopping, you could use doctor-smith+shopping@live.com. Email sent to this alias will still be delivered to your inbox or to a particular folder. This can help with managing different types of incoming email. In addition to the plus feature, we’ve also released Sweep to help manage this type of incoming email traffic."

"However, with the plus addresses that many services offer, it’s still very easy to determine your actual email address and there are times when you simply don’t want to give out any part of your real email address – that’s where our new alias feature helps you out," he adds. "Email aliases let you create completely different email addresses that you can use to receive email into your primary account without anyone knowing what your primary email address is."

As others have pointed out, Yahoo has had a similar feature for some time, but it’s still new territory for the millions of Hotmail users out there. 

Microsoft says it recovered 100% of email and folders for the accounts affected. Unfortunately, for those who didn’t sign into their accounts between the time of the incident and the time the account was restored, any messages sent to their accounts during that time would have bounced. 

Microsoft has apologized for the incident, but it can’t have been very good for the service’s reputation with users, particularly considering there plenty of other options out there. Hotmail has hundreds of millions of users and competitors like Yahoo and Google will be happy to take as many of them as possible. 

The whole thing makes you stop and consider how much users are relying on third-parties for essential communication. Who’s to say people didn’t miss extremely important messages during that period? 

Microsoft’s Mike Schackwitz details exactly what happened on the company’s Inside Windows Live Blog:

In Hotmail, one way we monitor the health of the email service is through automated tests. We set up a number of accounts with different configurations, and then use automated tests to log into these accounts, simulate normal user activity and behavior, and report when errors are found. We use scripts to create and delete these test accounts in bulk. The way we delete a test account is to remove its record from a group of directory servers that route users and incoming mail to the correct mailbox. 

On December 30th, we had an error in a script that inadvertently removed the directory records of a small number of real user accounts along with a set of test accounts. Please note that the email messages and folders of impacted users were not deleted; only their inbox location in the directory servers was removed.  Therefore when they logged in, a new mailbox was automatically created for them on a new storage server that didn’t contain their old messages and folders. This is why the accounts received the “Welcome to Hotmail” message. 

Read the post for further explanation. 

It’s not like Microsoft is the first provider to experience downtime. Google has always bragged about its Gmail uptime (and has a dashboard where users can monitor it), but it’s gone down on occasion too. Facebook is trying to redefine email and electronic communication with its social inbox, but Facebook recently went down for a lot of users itself. Twitter is no replacement for email, but a lot of people communicate with it frequently, and that fail whale appears fairly frequently. 

Microsoft says it’s updating its infrastructure, and changing its alert process, as well as its feedback process to take preventative action against future incidents. Unfortunately, and this goes for any company, it’s usually the issues you don’t think to prevent that end up costing people.

While email is widely considered to still be one of the best marketing tools, and is still a huge part of how people communicate every day, it does have its limitations. Microsoft is hoping to solve some of these limitations with its Active Views platform. Those taking advantage of the platform will be able to deliver users email that stays fresh. 

Microsoft’s Dick Craddock explains, "One challenge is that the content [of general email] is static, so when you open the email, the content may already be out of date. Additionally, most of these messages require you to click out of them to the sender’s website in order to complete a key action or take the next step. In some cases, this works just fine, but it can become a hassle, especially if you’re trying to get through your inbox quickly. You might want to check out that online deal, update your account, respond to a friend request, or browse products, but simply don’t because of the extra time it requires. With the average person receiving more than 200 email messages per week (outside of work), the extra time adds up, and our research shows that about 70% of people who use email regularly think that getting through their inbox takes too long."

Enter Active Views’ features that let users interact from inside the email itself. 

"These enhancements haven’t happened before today due to security concerns by email services," explains Craddock. "There has simply been no way to run JavaScript code within email messages in such a way that it’s isolated and not allowed to do malicious things on your computer. Hotmail is solving this problem with its new Active Views platform, technology that allows senders to run code securely in their email messages. It protects you AND gives you access to information on the sender’s website through forms and inline actions built directly into the email itself. This keeps the content up to date and provides a more engaging and time-saving experience."

Monster.com and Orbitz are the first to partner with Microsoft on the initiative. Users will be able to book travel arrangements and look for jobs from within the emails. Microsoft suggests things like managing your Netflix account or accepting LinkedIn invitations from within an email as future possibilities.