I am in Austin, Texas at the SXSW Music, Film and Interactive Festival this weekend attending panels and moderating one of my own. I had a chance to sit in at a panel about “App-vertising.” The premise of the panel was the large and increasing amount of money spent (and revenue gained) on mobile applications and their means of monetization.

The panel consisted of Alexander Muse Jake Marsh from Big in Japan, Allison Mooney from MobileBehavior, Garrick Schmitt from Razorfish, Sean Galligan from Flurry, Inc. and Tristan Walker from Foursquare. The panel had a good breadth of opinions from marketers and developers alike.

The panel focused on a few methods of advertising with mobile applications: the typical “banner” type ad within an existing application, the company “sponsored” application and the brand awareness “advertorial” application.

Some key ideas from the panel: App-vertising is a relatively new method of advertising. Many companies want to get into the space for a first-mover advantage. Advertisers should think about engaging their audience in novel ways. During the panel, App developer Alex Muse asked for a show of hands for how many people have actually clicked on a mobile “banner” ad and got something from it. Almost no one raised their hands.

In terms of defining success for the mobile app-vertisement, the panel agreed that the user experience should come first. Create something that people get excited about. Integrate trusted brands with a novel application to bootstrap and generate interest. While there are no clear heuristics or formulas for a successful mobile app with advertising, people will always respond to something that is either useful or entertaining.

App-vertising is still in its early stages, but this means the space is ripe for innovation and growth.