• by Gavin O'Malley  @mp_gavin, February 17, 2010

Video ad network YuMe has closed a $25 million round of funding, led by new investor Menlo Ventures. Existing investors Accel Partners, BV Capital, DAG Ventures and Khosla Ventures also participated in the round. Shawn Carolan, a managing director for Menlo Ventures, joins YuMe's Board of Directors.

YuMe ranked as the third-largest U.S. video ad network last November, with 73.4 million unique viewers and a potential reach of 43% of online video viewers, according to comScore. YuMe said it served more than 2.5 billion in-stream ads in the fourth quarter of 2009 -- its highest quarterly total to date.

Along with YuMe's own performance, Carolan said he was encouraged by the broader adoption of online video.

"Video is the largest advertising category on the planet and the shift from broadcast to Internet went into high gear in 2009," Carolan said.

Today, 71% of the U.S. online audience watches video online, while Forrester expects the number of streams consumed to more than double by 2013. Driving this growth is an explosion of video content from users, professional studios, and marketers.

Publishers including MSN, Msnbc Digital Network, IDG Entertainment and Glam Media use YuMe's ad management platform ACE.

The additional funds will help the company to expand its footprint and client acquisition efforts, according to Michael Mathieu, CEO of YuMe.

YuMe presently offers about 20 different ad units spanning different types of pre-, mid- and post-rolls, overlays and page takeovers that advertisers can customize further by choosing different features. The company's broader efforts include encouraging marketers to experiment with different formats and features in video advertising.