"On the desktop, search is where it's at, that's where the money is," said Jobs in a keynote speech announcing a new version of the iPhone OS.

"But on a mobile device search hasn't happened, search is not where it's at."

"People aren't searching on a mobile device like they do on a desktop."

"What's happening is they're spending all of their time on apps."

"They're using apps to get the data on the Internet rather than a generalised search."

"This is where the opportunity to deliver advertising is."

"Not as part of search but as part of apps."

The new iAd platform allows software developers to embed ads directly into applications being offered for the iPhone, the iPod Touch and now the iPad.

Ads are built in HTML5 -- allowing for interactive content and rich media including video.

Apple will sell and host the ads -- giving developers 60 per cent of the revenue while keeping the remaining 40 per cent.

The company originally planned to buy mobile ad broker AdMob but Jobs stated that Google 'snatched them from us because they didn't want us to have them.'

Instead Apple paid $270 million for Quattro Wireless, a smaller rival -- it is believed that their existing infrastructure will be the basis for the new iAd platform.

Developers and ad agencies have welcomed the new initiative.

"From a developer point of view it's fantastic," said Magnus Jern, chief executive of Golden Gekko, a mobile applications developer.

"It has lots of advantages because users don't need to leave the app and there would be higher CPM [ad rates]."

"It's a major leap forward from the majority of 'in-app' iPhone advertising formats that have existed to date, which were just simple slabs of text with a logo and a call to action," said Nigel Morris, chief executive of Aegis Media North America.