Contests are your friend.

Here's some suggestions on how to realize such.

First, figure out a percentage of your profit that you are willing to reinvest as a contest budget.

Then, deduct the cost of any of your own services that you would be willing to offer as prizes, at cost if need be, and deduct the cost of any additional prizes that you would like to purchase to offer. For the latter, try to work out product-for-ad space deals with as many sponsors as will have you to minimize out-of-pocket costs. If this can be done, make sure that your sponsors are willing to offer you a reduced "rate" on their product when tallying the value to be exchanged for ad space to maximize your potential, but be prepared to do the same in exchange for them. This has the potential to counter itself out, so be cautious not to overextend. Any leftover from your budget should be pooled together for grand prize contests (quarterly, end of year, etc).

Then design contests for existing visitors and customers, such as best new site design of the month, best traffic increase of the month, etc.

Once those are up and running well and bug-free, then start designing contests for prizes that you can offer in the message boards of your sponsors (with their permission), such as trivia contests.

There are countless ways to promote your hosting site, just be creative, logical, effective, and determined and you will have no choice but to succeed.


EDIT:
Please note, this requires common sense.

Don't expect good results if you plan to reinvest 100 percent of your profit into buying coffee cups with your site name on them that you give away on a message board for people that hate coffee cups.

Treat each prize and contest as a new target audience and test the market before getting in deep. Sometimes more than one test is required.

Interesting concept. Can you name some successful examples? I haven't really seen this utilized anywhere on the net.

Any update on this? What have you try so far?

We have been considering running contest for our customers and non customers for some time now and I think year we will reveal a couple.

For our current customers we will run contests for such things as the most affiliate sales in a month, a graphic or banner design contest, or anything else that might cross our mind.

To attract non customers we will run contents that will include prizes that contain free domain names, free hosting, and cash prizes just to name a few.

I few other things in mind, but I do not want to let the cat out of the bag on those quite yet.

Interesting I've used contests in my favor to when building a fourm. Who knew a 100$ could get me 10,000 posts?

I love iPod contests which seem to be what a handful of hosts are offering during summer months. I think this summer you'll see gaming consoles like the wii being promoted.

I'm afraid they already do that
the bigger the price is the more succesfull. Wouldn't onder ifthey start throwing with iphones in a little time.