Application developers who are looking to capitalize on their free apps, have yet another option to generate revenues using the iPhone as an advertising platform. VideoEgg, the latest entry, joins AdMob and Flurry in the battle for precious advertising real estate on the iPhone’s screen.

VideoEgg, an advertising network provider, has just introduced AdFramesSM for mobile, which enables advertisers to distribute video and rich media ads to iPhone users who opt in to receive them. The company says Nikon, Ubisoft Canada and the U.S. Navy already use AdFramesSM.

At the moment, VideoEgg offers the mobile distribution service for iPhone apps and Web pages on the iPhone. The company says it plans to extend its program to other mobile platforms.

VideoEgg’s business model is based on cost per engagement. Here’s how it works: The ads are served up free and advertisers pay only when a user taps the ad. AdMob also offers a similar pay-per-click program but it also sells ads in various formats.

The company’s launch partners include SGN, Jirbo, FlipSide5, Optime Software and Mobclix. Those advertisers will reach 35 percent of iPhone users who have downloaded the top 20 most popular free iPhone apps such as GasBag, Hangman, Scribble, iGolf, TouchHockey, Tic Tac Free and MarbleMash.

The AdFramesSM ad unit is designed to be flexible and mesh with a variety of page, widget and Flash-based environments, VideoEgg says. The company designs the display ad unit and the overlay using the client’s own creative materials.

VideoEgg has a video where you can see AdFramesSM in action.

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category: Breaking News