News

POV: Facebook’s LiveRail Acquisition

Mindshare Point of View

On July 2nd, Facebook agreed to acquire LiveRail, the 3rd largest online video advertising management platform that operates across desktop, mobile devices and IPTV (behind leaders Brightroll and Specific Media). While the transaction hasn’t closed yet, the total deal size is estimated to be around $500m.

Details/Implications

Facebook’s is a nascent player in the video space, having only launched Premium Video Ads and expanded video targeting capabilities within the last few months.

The acquisition of LiveRail will significantly bolster Facebook in the video marketplace, positioning it as a viable competitor against the likes of Google and AOL (which acquired ad exchange company Adap.tv last year for $405m in cash and stock), by enabling Facebook to extend the purchase of video inventory to outside the walls of the Facebook environment.

Additionally, the acquisition of LiveRail gives Facebook access to technology, namely LiveRail’s Real Time Buying (RTB) platform that could be leveraged more broadly as a tool internally across its social network. LiveRail’s CheckPoint ad blocking technology that can help publishers to block inappropriate or competitive ads from appearing on their site could also be incorporated into Facebook’s infrastructure.

The motivation for the move is likely to be the desire to accelerate delivery on a video product; an area where Facebook has been slow to deliver. The acquisition of LiveRail gives Facebook an opportunity to learn about video consumption from publishers, an additional revenue stream off the main platform, technology advancement where it is required and a learning platform to use across its expanding product suite. Facebook’s acquisitions have been focused in areas where the company lacks expertise (e.g. Atlas - what Facebook will do here still remains to be seen) and where it has looked to gain more mobile share (e.g. Whatsapp and Instagram). It could also be that Facebook is focused on gaining a larger share of TV dollars, with a video network the most immediate way for it to try to compete with YouTube.

Summary

The combination of Facebook’s audience scale and LiveRail’s real time buying platform and scale (delivering five billion ads a month) will make Facebook a formidable leader in the video space. It will be worth watching the integration of this acquisition to see how it creates new opportunities within the scope of our existing global Facebook relationship.