It appears that Apple is on track to meet their goal of 10 million iPhones sold by the end of 2008 and might have already eclipsed that number. As more and more consumers move to smartphones and in particular the iPhone, ad companies like AdMob are looking to capitalize on the success of the iPhone by finding new advertising opportunities. The trojan horse to insert relevant ads into your mobile experience appears to be free applications.

According to Apple, more than 100 million apps have been downloaded since the store launched in July. Twenty percent of these apps are free, but they account for 90% of downloads. People love free stuff and software is no different. Add to the fact that some free apps are well written apps that high in demand. Social networking apps, games and location based apps account for a larger percentage of these apps. Advertising companies are finding unique opportunities to deliver relevant ads based upon your location and some developers are looking at ad revenue as an alertnative to paid apps. Larger developers such as Loopt see the ad-subsidized model as method to keep Loopt "free across the board". Pandora Radio now features ads from Best Buy and Beck. 

Applications allow advertisers to better understand a consumer's interests and location based services allow them to deliver ads with a higher relevancy. This of course translates to more clicks and more business. "We're already seeing extremely high returns on this new way of being able to target audiences based on where people are," says Anne Bezancon, CEO of mobile ad network 1020.

It remains to be seen if consumers are willing to accept the intrusion of ads on their iPhone as the cost for free apps. Let us know how you feel in the comments.

Source: Fortune