Google has quietly released new functionality for its Google Maps API that lets developers add AdSense text ads to Google Maps they create.

The mashup adds a revenue component to Google’s popular Maps application, which is available not only on the Web but via many smart phone devices. Google Maps provides an interactive, Web 2.0-fueled way for users to find addresses and business locations as well as map out directions. AdSense, in turn, is the search giant’s program for enabling publishing sites to add contextual Google text ads to their content mix.

Announced on the Google Maps API mailing list and first covered by the blog Programmable Web, the new advertising layer lets developers add text advertising within the “more info” markers on Google maps (see screen shot). While the API release is a “testers” release, according to Google, the functionality works with live AdSense accounts and code.

As always with Web apps, it’s easier to experience than explain; check out this Google-created demo of the Maps/AdSense mashup. Click on the white/blue arrow marker to see the text ad.

The impact on local search and advertising services—in particular those delivered to cell/smart phones—is obvious. Adding a monetization component could incent content sites to build more Google Maps-driven applications—while providing those publishers with a bit of revenue in the process. Telcos, in particular, have longstanding interests in both the print and online information service and local advertising markets.

Worth watching as this mashup API matures: whether Google might eventually add contextual advertising as a standard component on the maps it delivers from the main maps.google.com site.