In a platform power play, publishers see Facebook turning LiveRail into an ad network

Publishers once looked to Facebook as their best hope to serve as a counterweight to Google’s power in the key advertising technology market. Maybe not so much anymore.

Facebook is overhauling ad tech unit LiveRail, leading to the departure of former LiveRail CEO Mark Trefgarne and 40 employees, according to Business Insider. But behind the turmoil in LiveRail, Facebook has been executing what many publishers see as a power play, pushing LiveRail customers into Facebook’s ad network. The moves have led several publishers to lament a loss of control as Facebook treats them as just another place to extend ad campaigns for Facebook customers.

Facebook bought LiveRail for $500 million two years ago. It has slowly been shedding video ad services it has provided for big-name clients like Hulu, Major League Baseball and A+E Networks. LiveRail has shut down its ad server business, which websites used to manage their ad inventory. It also cut its ad exchange down by 75 percent, processing a fraction of the ad inventory it once did.

Facebook is winding down the exchange because it said it couldn’t vouch for much of the traffic, citing widespread fraudulent online activity that has afflicted the industry. (Some see this as convenient spin, naturally.) Now, Facebook has told clients who continue to use LiveRail for premium programmatic ad services that they will have to join its ad network, according to sources.

“They are almost totally folding LiveRail into the Facebook Audience Network, so LiveRail becomes nothing more than an ad network. That’s not good,” said a source close to a LiveRail customer.

Facebook’s LiveRail retreat has been ongoing for months, but in January, Facebook said it would continue to run private exchanges for longtime clients. Through private marketplaces, Facebook could help serve video ads to verified traffic on respectable websites like Hulu and MLB. Facebook is able to confirm massive amounts of traffic to websites when visitors also have accounts on the social network.

Facebook could match Hulu viewers to its user base, for example, and use its data to serve targeted ads. The private marketplace model gives the media companies control over their inventory and sales. In pushing them to Facebook’s Audience Network, the social network gains that control. It represents another area where Facebook is trying to keep all its data on users and advertisers, and dole its riches out to publishing partners as it sees fit. Such is life for publishers in a world ruled by platforms.

“The publishers need access, some way for sales teams to sell against Facebook’s data,” one ad tech source said. “That’s been the promise, that in the future that would happen through LiveRail.”

The websites thought that they might get some ability to bolster their own audience data with Facebook’s and put their sales teams to work selling this powerful combination. Instead, the Facebook Audience Network, which launched in 2014, is an extension of Facebook that it lets publishing partners run ads in their apps or mobile websites. Those ads are basically extensions of orders that brands were already making on Facebook, and not the result of any special relationship the publishing partners develop.

“That puts publishers at the mercy of Facebook,” the source said.

Facebook said that it is committed to developing its platform for publishers, and giving them what they need to handle their ad inventory. “We’ve been focused on building private marketplace tools designed to enable publishers to transact with the advertisers and demand sources they care about. Our goal is to help publishers easily and effectively manage their programmatic sales and operations. In addition, we want to create a foundation for a scalable environment that will give publishers access to Facebook’s people-based marketing,” Facebook said in an e-mailed statement.

The Facebook Audience Network is considered a bright spot in the social network’s ad tech ambitions, as it recently reached a $1 billion annual revenue run rate. “Facebook wants FAN to be the primary mechanism, maybe the only mechanism, by which it works with third-party publishers,” said a top ad tech executive.

Facebook paid a lot of money for LiveRail so that it could potentially challenge Google’s DoubleClick ad platform. A report in Business Insider outlined how the plans have changed, and the LiveRail technology and team have been disassembled.

Some say that LiveRail is shaping up to be another Atlas, which was another ad server project from Facebook. In February, AdExchanger wrote Atlas was stuck in “testing purgatory.”

“It is similar to Atlas in how it’s developing. The strategy LiveRail had in mind is not the strategy it’s going for now,” said Sorosh Tavakoli, svp at Ooyala, a video ad tech platform. “I can’t see them keeping LiveRail maintained and up to date just to help publishers do private marketplaces. It’s just not inline with anything else that they do.”

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