Apple Bans Location-based iPhone AdsApple Bans Location-based iPhone Ads

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Apple has told developers it will not accept iPhone applications that use the smartphone's global positioning system to distribute location-based advertising.

The company did not give a reason for the ban, but in an announcement posted Wednesday on the iPhone Dev Center, it said that applications with features based on an iPhone user's location must provide "beneficial information."

"If your app uses location-based information primarily to enable mobile advertisers to deliver targeted ads based on a user's location, your app will be returned to you by the App Store Review Team for modification before it can be posted to the App Store," Apple said.

Delivering ads based on a mobile phone user's location is expected to become a big revenue generator for advertisers and publishers. Retailers and restaurants, for example, could advertise specials or distribute coupons to lure nearby potential customers into their businesses.

While Apple is preventing developers from entering the market via the iPhone, the computer maker appears to have its own plans. Apple in January bought Quattro Wireless for $275 million. Quattro offers a platform for distributing advertising to mobile devices.

Apple's acquisition followed by about two months Google's announcements that it would buy AdMob, a mobile display advertising provider, for $750 million. Among the key areas Google is focusing on is the ability to deliver relevant ads when people use their phone for search queries.

Users of mobile devices are downloading applications at a phenomenal rate, setting the groundwork for developers to use some of those apps in the future to deliver advertising. Gartner predicts more than 4.5 billion mobile applications will be downloaded worldwide this year, bringing in $6.8 billion to online app stores. Downloads and revenues are set to more than quadruple by 2013, with a rising proportion of that revenue increase linked to advertising.