You want better YouTube ads? Sell them yourself.

Ad Age reports today on Google/YouTube’s latest idea: Allow content creators to sell ads for their videos on their YouTube channels.

Advertising is now available on the click-to-expand overlays at the bottom of YouTube videos and display units on the page hosting the video player. Revenues from ads would be split between the content creators and YouTube (similar to if YouTube sold them).

It sounds like Eric Schmidt is keeping true to his word on prioritizing YouTube in 2008. Bear Stearns figures YouTube’s revenue this year to be around $90 million, while some others argue its valuation at $200 million. (Shockingly, still only about 1% of Google’s total revenue.)

Controlling the ads on their YouTube videos is a great idea for creators—and will help professional and amateur content creators alike better target and distribute their videos online. Professional creators like Revision3 can now also integrate their sponsors’ ads, pushing those relationships even further. And from the YouTube ad sales team’s point of view, much less work.