AT&T is set to release tools for app developers which would allow them to use location based advertising. Up until now, app developers had to rely on national ad campaigns and often, those ads were of little value to users. With the new location based advertising, the in app ads suddenly become more viable to the app user and provider more income since companies tend to pay more for location based ads. It’s a huge development which strikes right at the heart of Google’s dominance with AdMob.

“The average CPM [cost per thousand impressions] for a display ad is under a dollar,” said David Krantz, the Chief Executive and President of AT&T Interactive. “We do a lot better than that.”

The location based in-app scheme is currently being tested in private beta through various sports apps which often have a local theme. AT&T plans to release it later this year in a nationwide roll-out once they confirm they can absorb ad space for thousands of apps. AT&T is confident they can go head to head with AdMob since, thanks to it’s long history with Yellow Pages, and a nationwide sales force of 5,000, they are the largest local ad network overall.

It offers both text search and display based image ads. Rates will vary according to the ad and format, but AT&T believes that developers will enjoy a greater revenue from in-app advertising than national options. In fact, AT&T says that developers could offer their apps for free since in-app ads will offer a goldmine of local revenue. And AT&Ts plan will be cross platform, meaning they won’t be limited to just AT&T phones, but also T-Mobile, Verizon and other Telcos who operate smartphones.

“As a business, we are cross-carrier and cross-handset,” said Krantz. “Our strategy is to be everywhere…having really relevant ads works for everyone.”

[via Forbes]