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Google is testing video ads, suggesting that it might be interested in moving from a paid content model to an ad-supported one that could be integrated with AdWords.

In addition to testing the software, Google is no doubt testing the waters of user preferences, and their threshold for enduring ads. As we’ve said in the past, there is no clear-cut monetization strategy for online video, and we are very much in a wild west phase of experimentation when it comes to business models. Truveo‘s (AOL-owned video search company) Tim Tuttle said as much during an online video panel at Drilling Down on Local.

So far, the ads have mostly been hyperlinked banner ads that appear above video windows, as well as 15 to 30 second post roll video ads from Netflix and Pepsi among other companies. Google has revealed it will likely employ an auction model to sell ads and split revenues with the video owners (sound familiar?).

Online video ads have a long path of evolution ahead, and we’ll see a great deal of experimentation like this. Eventually it will reach a local level — most likely driven by companies like Spot Runner that put video production within the reach of SMEs — and that’s when Google will really be able to tap into the long tail in the same way it has done with paid search.

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