Facebook Inc (NASDAQ:FB) Acquires LiveRail, And It Could Mean More Accurately Target Ads


LiveRail, a video ad tech startup, has just been bought by Facebook Inc (NASDAQ: FB). Supposedly the social media site paid somewhere around $500 million for the startup. Facebook refused to disclose the terms.

LiveRail is a video ad tech startup that connects marketers to publishers on web and mobile devices, targeting 7 billion ads to visitors per month. Facebook plans to invest in LiveRail to keep the company running, and is currently exploring methods of how to merge their data. One likely option is that Facebook will use its data to aid LiveRail, and use LiveRail’s data to do the same for itself. Now that Facebook owns the 170-person company, it could acquire a much bigger portion of video advertising – the rising superstar ad medium on the Internet.

LiveRail has a great number of clients on the supply side of the market, including ABC Family, A&E Networks, Dailymotion, Gannett, and Major League Baseball. LiveRail helps marketers reach sites and apps with open video ads, and provides publishers and clients with technology for video ad targeting so they can route their messages to relevant customers, thus getting them a higher return on their investment.

The unique selling point of LiveRail is that it has a real-time bidding center that can evaluate the open video ad inventory across the publishers it works with, and help find its clients the best ad opportunities. Facebook recognizes the value of LiveRail’s relationships with publishers and marketers, and seeks to use those relationships to propel itself into an advertising tycoon across the web.

LiveRail also has its unique Checkpoint software that ensures ads for alcohol, tobacco, and other age-limited products are not displayed to underage users. The company’s data management procedure calculates fluctuations in video ad inventory, so ad buyers can plan their campaigns. LiveRail then lets publishers, who sell ad space, know what kind of content is giving them the highest rates.

The startup had raised $12 million thanks to San Jose’s Pond Ventures, and reached Series C round in its venture round. This buyout by Facebook for $500 million means a huge payout for Pond Ventures.

LiveRail was by no means slipping in its performance. In 2013 LiveRail made $22 million in net revenue that year. It was on track to do $200 million in 2014. Its revenue had grown by 300% year over year. Had it not been for Facebook’s appealing buyout, LiveRail would have opted for an IPO in late 2014.

Facebook Audience Network mobile ad network, which launched May, helps mobile apps target their initial ad units as well as customize native units. Facebook could use LiveRail to create precisely targeted video ads to these apps as well.

However, Facebook already has a video ad system. Launched in March, the social media plays 15-second auto-play video ads that are very similar to TV commercials. LiveRail’s expertise could help Facebook match its video ads to the right viewers.

More and more companies are switching to online advertising as television and print ads become more out dated. This creates a competition for whoever can target ads most accurately. LiveRail is an asset that will give Facebook a huge advantage in this market. If that means anything for consumers, hopefully your brother will stop seeing tampon ads and your daughter won’t see ads for life insurance.

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