Google Executive Chairman Eric Schmidt (along with others) has invested in Spongecell, an online display advertising company.

Spongecell announced this morning that it has completed a new round of financing led by Schmidt and Jim Pallotta, Chairman and Managing Director of Raptor Group. Pittsburgh Steelers Board member Brian Rooney and Silverhaze Partners also participated in the round, the amount of which was not disclosed.

So what exactly is Spongecell all about? Its technology turns standard banner ads into dynamic flash ads with rich media-like functionality. The company says the ads engage audiences longer, while using no more real estate than standard banners – keeping users on the publisher’s page.

Spongecell also says that “nearly every major brand” in industries like CPG, auto, financial services, entertainment, and politics are using its platform. Volvo, for example, is running an ongoing campaign for dealers using Spongecell ads that change dynamically from market to market, throughout 13 markets.

So far, the company says, there’s a 10x lift in the number of times people find dealer locations in its embedded mapping technology, compared to how many people clicked through a flash banner and then looked up their dealer location on Volvo’s site.

“Spongecell’s growth has been extraordinary, gaining more than 200 major brands in 2010 alone. Founding CEO Ben Kartzman and his team are at the forefront of API-enabled technology that is pushing the boundaries of the next generation of display advertising,” said Pallotta. “We look forward to a bright future for Spongecell.”

“Since the introduction of Spongecell’s dynamic advertising technology in late 2008, we have been very fortunate to have been able to grow the business rapidly from profits rather than additional capital investment” says Mr. Kartzman. “The new funds will be used to accelerate sales growth and further bolster the product development team. Clearly, we are very excited to have the advice and counsel of Eric Schmidt, Jim Pallotta, and Brian Rooney.”

It says a lot that Schmidt is backing the company, given Google’s success in display advertising (one of the high points CEO Larry Page pointed to in a call with Google shareholders the other day).

On a related note, Eric Schmidt has also reportedly invested in BackPlane, which was founded by Lady Gaga’s business manager.