The recent kerfuffle over iPhone tracking and other privacy concerns will barely be a speed bump in the evolution of location-based services (LBS) because there is simply too much money at stake.

The Strategy Analytics ( wireless media strategies (WMS) report, “The $10 Billion Rule: Location, Location, Location,” predicts consumer and advertiser expenditure on LBS to approach US$10 billion by 2016, with search advertising accounting for just over 50%. Although location providers will have to offer greater transparency to users about how they capture, manage and store user location information, this requirement won’t deter growth of consumer LBS.

Amid fears that location data is being misused and that user privacy rights are open to abuse, location services have recently made headlines. However, mobile users are increasingly demanding search, map and navigation services, for which location information is either fundamental or provides greater context, utility and appeal. For advertisers, location data provides opportunities for targeting and optimizing ads.

“Strategy Analytics sees strong evidence of consumer demand for LBS in line with rising smartphone and data plan penetration,” says Nitesh Patel, senior analyst in the Strategy Analytics Wireless Media Strategies service. “In fact, Google recently stated that 40%of all Google Map use occurs on mobile phones.”

According to this report, the rising consumer and advertiser spend on LBS will be primarily driven by location-enhanced search, accounting for 50% of spending by 2016 as advertisers target ads based on user location and desires.

— Dennis Sellers