I was curious on which kind of software I'd need to use to offer FREE webhosting but have some kind of ad's posted on customers website. I'm thinking of offering FREE and PAID services to my customers and just trying to gather as much information as needed.

Hi there as you are looking at running a free web hosting service you may have more luck over at Free Web Hosting Talk (http://freewebhostingtalk.com/).

I use iPanel for one of my free hosting sites, and Layered Panel on the other.