Facebook has announced that it has acquired San Francisco, California based online video advertising company LiveRail. LiveRail offers premium publishers with technology to sell video inventory across all devices. Around 7 billion video ads are served to visitors per month using LiveRail. The terms of the deal were undisclosed, but TechCrunch reports that Facebook paid between $400 million and $500 million.
LiveRail will continue to run as a wholly owned subsidiary under Facebook. After the deal closes, Facebook and LiveRail are going to integrate data with each other to improve user targeting and serve better ads. LiveRail has over 200 customer, including PBS, ABC, CBS , Univision, MLB, A&E Networks, Dailymotion and BET. LiveRail has 170 employees and raised $12 million in total funding. Pond Ventures invested over half of that amount, which means that the San Jose, California based venture capital firm saw a huge return. Facebook will be required to notify the Department of Justice and the Federal Trade Commission of the deal, but it may not need formal approval.
'When we started talking to the team at Facebook about how we could work together, it quickly became clear that we shared a vision for the future of digital advertising. They believed, as we do, that publishers deserve a new generation of audience -aware advertising technology,' said LiveRail co-founder Mark Trefgarne in a blog post. 'We realized that by joining forces we'd be able to draw upon our respective strengths to move even faster towards our shared vision of creating the advertising platform of the future.'
LiveRail was reportedly on track to hitting $200 million in gross revenue for 2014. Revenue grew 300% year-over-year and the company was considering an IPO this year. Selling to Facebook instead of going public may have been a less risky move because some of LiveRail's competitors are struggling to gain traction on Wall Street. For example, Tremor Media opened at $10 per share in its IPO and is now trading below $5.
Founded in 2007 by Trefgarne and Andrei Dunca, LiveRail connects publishers to all major ad networks, demand-side platforms, trading desks and exchanges. LiveRail's optimization technology is a combination of real-time bidding and proprietary market data. Using LiveRail, demand sources all compete for each impression to maximize fill rates and CPMs.
LiveRail runs a Video Private Exchange (VPX), which lets users create invitation-only programmatic connections with strategic buyers like agency trading desks. Users can create a bidding environment with strict inventory access and pricing controls so that preferred buyers can have weighted-priority. It uses price floor algorithms to analyze historic bidding patterns, audience segment values and business rules to dynamically set optical price floors for inventory. LiveRail's real-time bidding technology can monitor the open ad inventory available with the publishers and connect it to marketer clients to find the best ad opportunities.
CheckPoint by LiveRail lets publishers block ads from specific advertisers or ad categories. For example, some children's brands may prefer to block alcohol-related ads or violent content. Premium video publishers can utilize real-time bidding without having to worry about sales channel conflicts with CheckPoint.
This past March, Facebook unveiled 15-second video ads that automatically play as users scroll down the News Feed. Videos ads are more lucrative for Facebook, compared to display ads and they have better click-through rates. The acquisition of LiveRail will definitely optimize this experience for users and marketers.
Facebook launched a service called Audience Network in April, which is a way for advertisers to extend campaigns beyond the social network. The Audience Network service has the same targeting available as Facebook display ads, including Custom Audiences and lookalike audiences. Ads in the Audience Network enable marketers to drive app installs and engagement. Audience Network ads are available in three formats: banner, interstitial and native. Facebook will likely integrate LiveRail's ad serving technology into the Audience Network after the acquisition closes.
By combining LiveRail's targeting technology with Facebook's massive collection of user data, ad revenue and user engagement will surge, which will boost the bottom line. What are your thoughts about Facebook's LiveRail acquisition? Let us know in the comments.
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