Below is a general observation and summary of the reality of developing a mobile advertising based revenue stream from the perspective of a small iPhone app developer [ the majority of iPhone and Android developers fall into this category].
Simply put the problem is that as a small iPhone and Android developer it is too hard to grow your User base to be large enough where you can build a significant revenue from Admob or Google Mobile Ad sense, quattro , etc . The reason is because unlike the web user acquisition is constrained to a single place the App Store, which has huge Discoverability issues.Both are very crowded and only getting more crowded.
What i am starting to realize that from an App studio's perspective the way to build out a mobile advertising business is not through selling CPM or CPC based ads inside your app. iPhone apps and Android apps are not the web.
You need to change the way you perceive "mobile advertising". The Whole APP IS THE ADVERTISMENT. Not the impressions of tiny banners inside the app. I believe that a business model of "App as a monthly service" makes the most sense for small App Studios.
Example based on TMD's iPlacemarks apps:
For instance take iPlacemarks for example. Instead of launching a flagship iPhone app or making 26 Android apps that appeal to users and depending on them floating high up enough in the app store rankings to get a lot of downloads and then impressions , What if we went out to restaurants and had each one pay $29 per month for us to launch and operate their app ?
The Existing "App as a Service" market Niche: