What the LiveRail Shutdown Means for Video Publishers and the Wider Market

Sorosh TavakoliIt’s rare to see an industry leader suddenly bow out gracefully to pursue other things. However, LiveRail’s break-up with ad serving was very much a case of ‘it’s not you, it’s me’. ‘Me’ being Facebook, LiveRail’s owners, whose success in other parts of the video advertising world appear to have rendered significant swathes of the sell-side ad tech play redundant. Here Sorosh Tavakoli, SVP Adtech at Ooyala and a longstanding competitor of LiveRail’s, discusses the impact the move will have on LiveRail and the wider market.

On January 7, to my surprise, Facebook announced the shutting down of LiveRail’s ad serving product. A couple of months earlier when Facebook shut down roughly one third of their non-desired customer base (smaller and less known and probably questionable publishers), I thought the focus would shift towards larger and more premium publishers. The signs now clearly show Facebook is leaving the business of providing software and tools for publishers altogether.

Less Competition isn’t Good for Video Publishers

LiveRail leaving the video ad serving business is bad news for video publishers. They don’t have much choice when it comes to video-dedicated platforms on which to operate their business, and now there’s even less choice and competition.

Even though our focus is on broadcasters and O&O publishers, Ooyala has to some extent we have been competing with LiveRail over the years and I’m not afraid to admit that this move was welcome news to us and I assume to our competitors too.

A Happy Marriage, Initially

At first I was optimistic about LiveRail’s prospects as part of Facebook (and concerned as a competitor). After all, they have the fastest growing ad business on the planet with plenty of resources, as well as their unique asset: arguably the most relevant data for video buyers and sellers – individual-based demographic data across devices with an unbelievable global reach.

But there always a question about what Facebook intended to do with their acquisition? Facebook was not in the business of providing software to publishers. This deal was positioned as Facebook’s play on the sell side, similar to Google’s DFP play, hitting Google where they were weak – video, mobile and native. And this business would be the Yang to their previously-acquired Yin, Atlas, on the buy side.

But as time passed, we sensed the market was not responding well to how the business was developing. Numerous platform stability issues were reported, including service issues and lack of progress in the product. With Facebook as an owner, the market initially exhibited great patience and even excitement, knowing Facebook had enough resources and expertise to eventually figure it out. Over time though, it seems that increasingly the patience of their publisher base was challenged, and with few signs of improvements publishers started to look around for other options.

All of that aside, I did not expect them to throw the baby out with the bathwater.

An Inconsistent Announcement

LiveRail had in my opinion made an interesting play early on to combine programmatic trading capabilities into their ad server. It wasn’t perfect, but it was clearly built for a future where direct sales through IO’s and programmatic become increasingly integrated. As such, announcing they will sunset ad serving altogether made really no sense to me. This goes against their master play and against where the market is heading. And how can you shut off parts of an integrated platform? My read is, the broader product is at risk here.

Facebook has around 2.5 million advertisers buying on their various properties – Facebook, Instagram, WhatsApp etc. They service larger agencies, trading desks, they have some ad tech partners whom they help more efficiently retarget and buy advertising on their properties.

Facebook is NOT in the business of providing enterprise-grade software and support. That means they don’t sell complex software, they don’t have an organisation supporting a few high-touch users, they’re not used to sharing roadmaps, and so on. This is what LiveRail’s business was all about, and it was the business model for which their company was organised prior to their acquisition. Shortly following the  acquisition however, the team was dispersed within Facebook with sales reporting into sales, product into product, engineering into engineering. etc. And with this, the LiveRail culture and enterprise-grade support was diluted.

Facebook’s Future Strategy 

Putting all of these pieces together now, Facebook’s strategy and actions become clearer. With its unique identity data set and three million advertisers, Facebook is expanding its footprint beyond their owned and operated properties. The cornerstone of that is the Atlas buying platform that will natively access Facebook data for buyers wherever they buy. The other side will be more about expanding the toolset for publishers, allowing them to best tap into the Facebook budgets. The play is NOT to offer them products and tools for managing complete monetization (ad server and SSP), but rather SDKs or specific PMP-type capabilities that will unlock more Facebook budgets, with Facebook acting as a monetisation partner or demand source.

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