Apple is calling this new technology iAd. It will come out this summer with the iPhone 4.0. The mobile ads are like mini aps, complete with video and interactivity.
When it comes to advertising be it on TV, on a computer, or on a phone, not everyone is a fan.
"I don't want any ads, anywhere. No," says iPhone user Mary McCarty.
Apple CEO Steve Jobs however wants the mobile ad experience to be interactive and emotional, using iAd. The technology will allow developers to embed ads in applications that don't yank the user away from what they're doing.
"The ads keep you in your app so you're much more likely to click on them and want to go explore them because you can always get back with just a touch," says Jobs.
For years Google has dominated the $24 billion online ad revenue market, but with an explosion of mobile devices, mobile advertising is expected to climb to $1.5 billion by 2013.
Chris Tolles is the CEO of Topix.com. His company has an iPhone app and says he will use IAD to embed ads in his site.
"This isn't going to put a dent in Google's current revenue because they do most of their stuff not on mobile, but I think it's good for the industry to have both Google and Apple pushing at this," says Tolles.
Apple will host and sell the ads giving 60 percent of the revenue to developers which could mean more free or low cost apps for users. Jobs promises a rich ad experience from movie trailers to clothing and shoe lines, to building your own dorm room with a store's products.
Jobs modestly calls Apple "a babe in the woods" when it comes to advertising, but many analysts and iPhone users are calling the upcoming iAd technology revolutionary, like it or not.
"I believe iAd will be a game changer," says iPhone user Ravi Vinayak.
Google is certainly not resting on its laurels. The Mountain View company beat out Apple in buying AdMob, a mobile advertising service and that deal is currently under regulatory review.