• by Gavin O'Malley  @mp_gavin, November 13, 2008

Intent on boosting its presence within the white-label video technology space, Digitalsmiths has closed a second round of financing worth $12 million.

The round was led by .406 Ventures, and included existing investors The Aurora Funds and Chrysalis Ventures--the two of which helped the startup raise $6 million last year.

"We're focused on how to approach and solve publisher challenges, helping them better monetize their resources--that's where we're going to invest this money," said Ben Weinberger, CEO of Digitalsmiths. "We'll also continue to build out our engineering team, and we're looking for a senior sales executive based out of L.A."

Based in Raleigh-Durham, N.C., Digitalsmiths provides publishers with video indexing and ad-targeting technology bundled with a white-label video service.

It faces stiff competition from a long list of video platform and indexing providers, including Brightcove, blinkx, thePlatform, Ooyala and Fliqz.

Brightcove, in particular, appears to be dominating the industry--having recently signed a number of top publishers, including Time Warner's AOL, The New York Times Company's NYTimes.com, and 16 Condé Nast Web properties. Overall, Brightcove is now the online video platform of choice for 93 magazines across 21 publishing families.

But according to Weinberger, Digitalsmiths' indexing technology is second-to-none, and is fast attracting a number of top Web publishers.

"There are a lot of people providing the plumbing and the guts of video delivery, but our technology and the power of our data is driving consumption for publishers," Weinberger said.

For one, Time Warner's hugely popular and video-heavy celebrity gossip site TMZ recently dropped Brightcove for Digitalsmiths. The startup also previously reached a deal to power Time Warner's TheWB.com.

Going forward, said Weinberger, Digitalsmiths is facing the same problems as the industry at large: the slow standardization of video distribution technology, and the matter of collecting and then correctly responding to video search and usage online.

"The important thing is not wasting our clients' resources," Weinberger said.