Flurry is announcing today the launch of AppCircle Rewards, an iPhone marketing program that rewards users who agree to download recommended apps.

The program is an expansion of Flurry’s AppCircle cross-selling program, which recommends apps to users based on their own personal tastes. AppCircle analyzes the apps that a user has on his or her iOS device and then recommends apps that the user will most likely enjoy.

With AppCircle Rewards, Flurry will give developers another way to incentivize users. It allows developers to integrate their own virtual currency systems into AppCircle. Developers can give virtual currency to users who agree to install new applications on their devices.

Peter Farago, vice president of marketing at Flurry in San Francisco, said in an interview that the company has been testing AppCircle Rewards since earlier this month. He said the eCPM (an industry term that means effective Cost Per Mille, or average revenue per 1,000 users) is $68. David Tsai, co-founder and CEO developer Zhurosoft, tried AppCircle Rewards on his company’s High School Hero game. The eCPM was above $60, based on tens of thousands of downloads. He said adding his company’s own virtual currency to the Flurry system was easy.

“Advertisement has become a strong revenue stream for social games on iOS devices,” said Simon Khalaf, president and chief executive of Flurry. “In addition to generating record eCPMs for performance-based networks, AppCircle Rewards delivers a great app discovery solution to iPhone game developers.”

According to eMarketer, a market research firm focused on digital media, marketers will spend $220 million worldwide to advertise within social games and applications during 2010. That will grow to $293 million in 2011. That revenue is in addition to sales of virtual goods inside apps.

Flurry is targeting game publishers with virtual currency systems. But it says the solution works well for any app developers using virtual currency. Publishers earn 60 percent of the price that promoters pay for each app download.

Developers can reward users for downloading AppCircle-recommended apps with any virtual item they choose. They can make offers such as time-based promotions, weekend deals, and loyalty reward offers. AppCircle is available on iOS devices and is in beta testing for Android phones. Rivals include Google’s AdMob and Mobclix.