Facebook announced this afternoon that it has purchased the video ad tech company LiveRail in a move the company says will make its nascent video ad format more relevant to users.
TechCrunch's Josh Constine reports that an unnamed source told him Facebook paid between $400 million and $500 million for the company, but that Facebook refused to confirm those figures.
LiveRail helps online publishers like MLB.com, PBS, and Conde Nast make money from the videos they produce by connecting them to advertisers who want to buy their ads via an automated bidding process. Then, LiveRail helps the publishers sell their ads to the highest bidder and provides them with analytics to optimize their performance and show people the ads that will be most relevant to them.
The acquisition seems to have two main purposes:
1. LiveRail's technology will help Facebook improve its own autoplay video advertising product, which launched in March. This way, Facebook will be able to show people ads they want to see, thus generating higher clickthrough rates and persuading advertisers to spend more money on its ads.
2. Facebook could very well be planning to use LiveRail to help it build out a video advertising network that would allow customers to use Facebook's user data to purchase targeted ads, served by Facebook, on LiveRail's publisher sites. This would be similar to the Facebook Audience Network, announced in April, which allows mobile app developers to use Facebook's targeting to extend their ads to other apps.
According to LiveRail's site, it currently serves 7 billion ads each month.
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