The small-business market is always attractive to vendors in terms of volume, but many give up in frustration because of its fragmentation, low margins and high-service needs (and churn). Many of these vendors typically seek to move up the value chain to medium- and large-sized businesses. With these, they get both larger contracts and more security.

Among these vendors is Seattle-based Mixpo, the online video specialists that track video effectiveness and embed actionable information, such as click-to-call and e-mail buttons.

The 30-person company started three-and-a-half years ago with the idea that many SMBs would use online video as a new channel for advertising. But the company is now squarely focused on working with larger companies that basically want to extend their existing TV advertising.

“There is a fundamental reason to move up-market — it is so simple to put ads together and easily customize campaigns for creative versioning,” says CEO Anupam Gupta. An auto manufacturer, for instance, could quickly create local versions for 2,000 dealerships. “They can promote their sale next weekend,” says Gupta.

Gupta adds that “we’ve learned that customer segmentation is really, really important. The common base is TV ads. But we [use online to] get people to engage; to do things they can’t do with TV,” such as order brochures or click to call.

Mixpo has not only focused more on larger advertisers, but it has also started working closely with agencies and marketers, in addition to media partners such as Comcast and Belo Interactive, which remain an active channel. “It is strategic for us to expand into the demand side,” says Gupta, who notes that more than half of Mixpo’s revenues now come from agencies.

In talking with agencies, Mixpo focuses on how to use video to drive awareness and create more engaged users. “You can use it all the way down to a direct response campaign,” he says. “That’s not SMB.”

Hot categories for Mixpo currently include automotive, political and entertainment. “Political is huge,” says Gupta. “They get video. There is lots of advocacy work.” On its site, Mixpo shows success stories for tea party candidates such as Sen. Scott Brown (R-MA) and Rep. Michele Bachman (R-MN).

Entertainment mostly consists of “tune in” advertising promotion TV shows. A number of local TV stations and cable franchises are utilizing Mixpo services for their Web sites. “They can change the content very rapidly based on day of the week, time of day or whatever audience they are in front of,” he says.

Ultimately, Gupta says the most successful Mixpo campaigns are run by those that have video assets (especially TV); a time sensitive element (i.e., political campaigns); or some interactive needs with their advertising (i.e., coupons).

The transition to an agency-focused approach has also changed the competitive parameters for Mixpo. Previously, when it was focused on SMBs, it competed largely with companies such as TurnHere and Jivox — both of which still report strong results in their sectors, and have evolved their own strategies. But now Gupta feels that the company competes mostly against companies doing rich media campaigns, such as is EyeWonder and Pointroll. It also competes against companies engaged in dynamic ads, such as Tumri.