With its LiveRail acquisition, Facebook has set itself well up to compete with Google and AOL -- two of the largest Internet companies and leaders in the programmatic space -- when it comes to digital video advertising.
LiveRail reached 37.2% of the U.S. population in May, third behind BrightRoll (51.3%) and Specific Media (44.4%), according to comScore’s May 2014 U.S. online video rankings. That was slightly ahead of AOL (35%) and Google (34.1%). LiveRail has been third behind BrightRoll and Specific Media since February 2014. AOL was ahead of LiveRail in January 2014.
Facebook’s desire to be more competitive in the video ad market did not come cheap. TechCrunch has reported that Facebook paid between $400 and $500 million to buy LiveRail, which would make it one of the priciest ad tech acquisitions we’ve seen to date.
In addition, LiveRail was expected to go public at some point in the next six months. It would have been the second supply-side ad tech company to hit the public market, following Rubicon Project.
Real-Time Daily reached out to ad tech and video industry experts to hear some initial reactions to Facebook’s power play.
Mike Shehan, founder, CEO and president of SpotXchange -- which was sixth on comScore’s May 2014 list with a reach of 32.6% -- said:
“We want to congratulate LiveRail on their acquisition by Facebook, and believe the collaboration between these two companies will have a huge impact on how data is used in digital video. This news is very significant for our industry in several ways. First and foremost, it validates that the video sector continues to be a top driver of growth within online advertising.”
David Burch, senior director of global communications at TubeMogul, which was seventh on comScore’s list with 31.3% reach (note: TubeMogul is on the buy-side, not the sell-side), also weighed in. According to their CEO.
“We first partnered with LiveRail back in 2011 and are the largest buyer on their exchange. We’ve been assured that our existing integration and partnership with LiveRail won’t change with this acquisition; if anything, our relationship will strengthen. We believe that the main reason our partnership with LiveRail is so fruitful is because we serve different masters -- LiveRail helps publishers while we’re beholden to brands. This creates a sense of balance and trust for brands and publishers alike that is missing from the market today, where many companies are a one-stop shop and are trying to take money from all sides."
BrightRoll CEO and founder Tod Sacerdoti believes the news “reinforces the importance of video to marketers and publishers globally.”
“As brands and agencies invest more in sight, sound, and motion, buyers and sellers of digital media are realizing the need to have a dedicated video strategy in place along with the technology to enable it.”
According to a Facebook newsroom post announcing the acquisition, Facebook has a similar line of thinking. Facebook’s VP of ads product marketing and Atlas wrote in the newsroom post:
“More relevant ads will be more interesting and engaging to people watching online video, and more effective for marketers too.”
Victor Milligan, chief marketing officer at Nexage, says the acquisition is significant for mobile advertisers, given Facebook’s mobile-first strategy.
“The acquisition affirms what we know in mobile advertising -- that video, and rich media for that matter, are core to brands embracing mobile.”
Nexage recently reported that video was the fastest-growing vertical in terms of inventory growth on mobile; 516% more mobile video ads were available for programmatic buying in Q1 2014 compared to Q1 2013.
“Without doubt, they will soon represent the majority creative.”
Bertrand Quesada, CEO of Ebuzzing, a video ad platform, thinks the news is an “obvious indicator” that Facebook wants to expand its online video presence.
“They have made serious investments into video in the past, and buying LiveRail -- with its programmatic and targeting capabilities -- was a logical next step to advance Facebook’s own technology.”
Quesada is also curious how LiveRail’s existing publisher clients will react to the news.
“The implications of this move for LiveRail’s premium publishers remain to be seen, but publishers tend to be very conscious about third-party access to their data. When Google acquired ad optimization platform Admeld back in 2011, Admeld lost all its big publishers because Google would have access to their data.”
COMMENTARY: Facebook vice president of ads product marketing and atlas Brian Boland writes in an official blog post on July 2, 2014:
"Today we’re announcing that we have agreed to acquire LiveRail, an advertising technology company that helps companies like Major League Baseball (MLB.com), ABC Family, A&E Networks, Gannett, and Dailymotion serve better ads in the videos that appear on their websites and apps. LiveRail was founded in 2007 and offers a comprehensive platform for online video publishers that help them find and serve the best ads possible. LiveRail also helps marketers by providing them with access to premium video inventory and the information that they need in order to decide where to show their ads. What LiveRail ultimately offers is a complete advertising solution for video publishers."
"We believe that LiveRail, Facebook and the premium publishers it serves have an opportunity to make video ads better and more relevant for the hundreds of millions of people who watch digital video every month. More relevant ads will be more interesting and engaging to people watching online video, and more effective for marketers too. Publishers will benefit as well because more relevant ads will help them make the most out of every opportunity they have to show an ad."
In an announcement of its own, RiveRail said that the company now has "hundreds of active customers,” and delivers more than 7 billion video ads each month.
LiveRail was the top U.S. video ad property in March 2014 by number of ads served, at nearly 3.9 billion, according to comScore. LiveRail, which connects publishers and advertisers, has customers including PBS and Sony Pictures.
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It wouldn’t be surprising if LiveRail’s technology and tools are integrated into Instagram as well. In March, Instagram signed its first advertising deal with ad agency Omnicom for $100 million, not too long after finally adding support for video, which commands the highest engagement and monetization, as we reported.
LiveRail was founded in 2007 by Andrei Dunca, Mark Trefgarne, and Sergiu Biriș. The company previously raised a total of $12 million in funding from Pond Ventures.
LiveRail allows its customers to place their video ad budgets on their programmatic video ad marketplace and spread their video media dollars across multiple publishers while many content providers tend to sell directly to the brands that want to advertise around their content.
In late April, Sheryl Sandberg, Facebook's Chief Operating Officer finished up Facebook's Q2 2014 earnings call with news that Instagram and, perhaps even more importantly, online video ads, weren't going to substantially contribute to earnings this year, investors were not amused. Facebook's stock price took a dump. What's the problem? According to both Zuckerberg and Sandberg, Facebook's video advertising platform wasn't ready for prime time.
The recent announcement that Facebook has acquired LiveRail for a reported $500 million reinforces what many investors didn't seem interested in hearing a couple of months ago: Facebook isn't going to rollout video until it can be done right. Like Facebook, one of LiveRail's claims to fame is its utilization of data to better target and deliver video ads. If we know anything about Facebook, it's that it loves, and knows how to utilize, user data.
It now appears very clear that LiveRail was the missing piece that Facebook needed to bring real value to advertisers willing to place video ads on the social giants platform. Facebook has accumulated a huge cache of consumer data about its users, especially the type of digital content they watch, particularly video content, how much time they spend watching videos, their favorite brands, and how much time they spend on the site. When you combine this with LiveRail's ability to match video ads to a viewer's online behaviors, this makes for a dynamite combination.
Courtesy of an article dated July 3, 2014 appearing in MediaPost Publications Real-Time Daily and an article dated July 2, 2014 appearing in VentureBeat and an article dated July 7, 2014 appearing in Motley Fool and an article dated July 3, 2014 appearing in Business Insider and an article dated June 16, 2014 appearing in comScore