Spotmixer-Google deal fattens the midtail

New partnership streamlines video ad creation and distribution for Mom and Pop shops.

Tell a VC that you plan to make money with online advertising these days, and a trap door will open beneath your chair, plunging you into a firey furnace below. Tell them it's video advertising, and they'll turn up the thermostat. But online ad spending continues to grow, and a huge midtail ad market is opening up, albeit too gradually for VC tastes, as millennials take over the business world and plunge small companies into new media advertising.

With the rise of location-based and behavioral targeting, and the continued drop in video production costs, small businesses may one day make up the bulk of video advertising. This week, Spotmixer, Google's automated video ad maker of choice for its Google TV ad platform, announced integration with Google Adwords. Spotmixer also launched a YouTube contest for small business online video ads. The company has a kind of Animoto technology for online ads, now plugged into the biggest online ad network--making it an attractive solution for mom and pop shops that want to get do the video thing. Their "success stories" are the typical small businesses you might find advertised on your local TV station--companies like Cotton Blossom Flower Shop in Maricopa and Innovative Window Fashions of West Palm Beach.

I spoke with Spotmixer CEO John Love on Monday about the video ad marketplace. He says video advertising is now 4.5% of all online advertising, and that's expected to grow to over 12% by 2012. Below is his rundown on the company and the new offering.