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.
“We first partnered with LiveRail back in 2011 and are the largest buyer on their exchange according to their CEO. 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,” Milligan added.
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.”
"Play button" image from Shutterstock.