Last week Facebook announced in a blog post that they intend to retire LiveRail’s ad server business. Alvin Bowles, Facebook’s Head of Global Sales and Publisher Operations said the product was being shuttered so the company could focus more heaving on its Audience Network and on LiveRail as a monetisation platform for publishers.
The move took many in the industry off-guard. “This is certainly a surprising turn of events,” said Scott Braley, General Manager of Programmatic Advertising for Ooyala, who are a competitor with LiveRail on both monetisation and ad serving. “One probable motivation for this move is LiveRail’s recent spate of platform stability challenges and the lack of alignment with the fundamental needs of premium broadcaster and video publishers. It’s not unlikely that Facebook decided to simply scrap the legacy product in order to focus its efforts on a new, home grown solution. This would mirror the approach taken in their acquisition of Atlas where they decided to completely rebuild the platform. In this case, it seems they’ve decided that managing the legacy system wasn’t worth the distraction in the meantime,” he said.
Braley also said he believed that publishers might have been concerned about entering into a strategic relationship with the social giant. “Another motivation could be that big publishers were not terribly comfortable relying on Facebook for such a structurally critical solution such as ad serving. Given the amount of access to inventory and pricing insights that would be ceded, arguably their largest competitor for ad dollars, it wouldn’t be surprising to hear that Facebook decided to focus on other areas where they had a greater short term opportunity,” he added.
The ad serving business is a difficult nut to crack. In some respects ad serving has become something of a commodity – particularly in display and mobile – although video ad serving has always been considerably more complicated. This is partly because video is simply more technically complex, but also because video publishers often require custom solutions. For example, an online publisher might simply require pre-roll and perhaps some in-text ads for desktop and mobile. Whereas a broadcaster might require pre-roll, mid-roll, ad-podding (for clusters of more than one ad) and delivery across OTT, desktop and mobile. Delivering these custom approaches requires the kind of direct service and support levels that are unlikely to appeal to a company with Facebook’s scale.
Matt Prohaska,CEO and Principal at Prohaska Consulting, believes that it’s a logical move for Facebook. “This appears to be the classic dual reason of an acquiring company wanting to invest more into the larger entity they invested in for overall ad serving, which is Atlas in this case. On the one hand, focusing on Atlas will allows Facebook to concentrate its resources in one place, whilst also enabling them to maintain a best of breed product and to better align where it can win. What percentage breakout goes to each of those two reasons is just speculation for anyone outside of Facebook, since we’ve heard and seen anecdotal evidence of each with publishers and other ad tech companies we work with. In the long-term, it’s a smart move and a bigger win, despite the short-term disruption and smaller hit to the business.”
Yoav Naveh, CEO & Co-Founder of ConvertMedia, said he too could see a clear rationale for the move. “Facebook’s primary advantage is their data and their reach, rather than as an ad serving platform, so the decision to shut down LiveRail’s ad serving functionality better aligns their business with their core competency. I expect that Facebook will continue to innovate in the video player space, as they have done with their in-feed unit, leveraging the LiveRail technology that enables them to focus on private marketplace demands.”