Finding the right app among the 332,000 available on Apple’s App Store isn’t easy. That explains the success of Flurry‘s AppCircle service, which analyzes a user’s phone apps and makes recommendations for other apps that the user will probably like. It’s a way to make discovery less painful for users and less expensive for developers who want their apps noticed.

Flurry has now grown to more than 80 million users per month on both iOS (iPhone, iPad, and iPod Touch) and Android mobile devices. In January, AppCircle completed more than 160 million recommendations, a 1,600 percent increase from September, 2010, when it was formally launched. That’s a sign not only that mobile discovery recommendations are taking off. It also shows that mobile app consumption is flying through the roof.

“AppCircle is filling a massive void in discovery of mobile applications,” said Simon Khalaf, chief executive of Flurry.

The widespread adoption of AppCircle by developers and the acceptance of AppCircle recommendations by users shows how hungry everyone is for a discovery solution that works, Khalaf said.

With AppCircle, Flurry creates a market for promoters, or developers who want to get more users, and developers who want to make more money from their apps. It analyzes a user’s iPhone apps and figures out what their tastes are. Then it recommends other Flurry-based apps to users based on their tastes. Flurry says that, because it knows what apps users like, it can do much better recommendations than other promotions.

San Francisco-based Flurry, which started as a mobile analytics company, already had a huge base of app developers in its fold because it supplied them with analytics. The analytics data measures how much each app gets used and reports the anonymous data back to the developer, who can modify the app as needed to get more usage. Flurry is thus in a key position within a developer’s feedback cycle. Since it is so indispensable, Flurry found that it could provide services such as recommendations on top of its analytics service.

Flurry said today that it is generating big revenues for app developers, paying them as much as $10,000 per day for every 100,000 daily average users. In some cases, Flurry has paid more than $100,000 to app publishers in a single day. In total, AppCircle has already paid out millions of dollars to participating publishers. It has also helped companies acquire high numbers of avid users, and that those numbers have helped apps reach the top 25 ranking in the App Store.

Peter Farago, vice president of marketing at Flurry, said that Flurry now collects data on more than 240 million iOS and Android devices each month. He said that more than 1 million smartphones are being activated every day, which is just as many as the number of PCs that are sold in a day.

Here’s a more in-depth explanation of what Flurry does. Application developers can use AppCircle as publishers, promoters or both. As publishers, developers integrate Flurry into their applications, enabling Flurry to serve targeted application recommendations to their consumers. Publishers earn 60 percent of the price promoters pay for each app download. As promoters, application developers create campaigns and set bids on how much they are willing to pay for a new user. Flurry’s recommendation engine will match relevant promoter apps to display in publisher apps, and then use bidding to rank the order in which impressions are shown.

Integrating Flurry AppCircle is flexible for publishers. The service allows several integration options including adding links to menu pages, settings pages or serving banner impressions. Publishers can also use their own virtual currency to incentivize downloads. Promoters can set up, fund and run campaigns within minutes.

Application developers who act as both publishers and promoters get the best of both worlds: revenue and downloads. Additionally, developers who join as both promoters and publishers receive a 25 percent credit for every dollar they earn as a publisher that is reinvested into promoting their applications, accelerating adoption and revenue generation.

Last week, Flurry said that it was getting so much business that it had to upgrade its data centers in a deal with Arista Networks. Flurry manages hundreds of terabytes of data, and it serves more than 37,000 companies across more than 70,000 iOS, Android, BlackBerry, and Java-based apps.

Since it launched its analytics in January 2009, Flurry’s network has grown at a rapid rate. In December alone, total system reports tracked grew by more than 40 percent. In a day, Flurry handles 2.5 billion data transactions, qualifying the company as a “big data” company. Flurry has raised $29 million to date, including a $15 million round in December. Investors include Draper Fisher Jurvetson, InterWest, First Round Capital, and Union Square Ventures. Rivals include Google AdMob, Tapjoy, Scoreloop, PapayaMobile and OpenFeint.