Advertising may make up an even bigger part of location-based revenue in the future. Judging from the value that location information adds to advertising, it's not hard to see why. LBS helps advertisers reach nearby consumers and then follow their response to an ad all the way to their front door, some panelists said.

Surveys by Google have found that 95 percent of consumers use their phones to make local decisions such as where to eat, and 90 percent of those users took action within 24 hours on the basis of those searches, said Jay Akkad, product manager for mobile local ads at Google.

LBS advertising platform provider xAd provides an API (application programming interface) to mobile app developers that lets them build geographically targeted advertising into their software, according to Ted Babitz, director of business development at xAd. The closer a consumer gets to a purchase, the more the app developer (and xAd) collect. For example, if a consumer performs a search for hotels on a mobile app, a nearby hotel can place a well-marked sponsored search result at the top of the list. If a user clicks through to that entry and calls the hotel's phone number, and then books a room, the hotel may pay up to $50 for the referral, Babitz said.

Likewise, location services provider Telenav can detect when a mobile user sees an ad and then walks through the doors of the advertiser's business. For the proven effectiveness of that ad, the advertiser will pay three to five times the rate they would pay for a standard mobile banner ad or sponsored listing, said Sal Dhanani, co-founder and vice president of products.

"That predictability and that transparency all the way through he door is that makes that ad really valuable," Dhanani said.