In July 2014, Facebook acquired LiveRail, for an unconfirmed amount of USD$500m (£347m). Known as a prominent video ad exchange at the time, what was less known about LiveRail was that it also housed an ad server. In January 2016, Facebook announced that it would no longer be accepting any new customers to it. This came a couple of months after Facebook shut down approximately one-third of its ad server customer base. The thoughts at the time were that Facebook was making way for a new focus on larger, more premium publishers. Now it seems their plan all along was to exit the ad server business completely. ExchangeWire speaks exclusively to Sorosh Tavakoli (pictured below), SVP of adtech, Ooyala, about what this move means for LiveRail, Facebook, and for the customers of the LiveRail ad server.

ExchangeWire: What is the background of the LiveRail business?

Sovosh Tavakoli: LiveRail was founded at a similar time to Videoplaza (which I founded and is now Ooyala’s ad tech business), focusing on providing ad serving and monetisation tools for publishers. Their products became predominantly popular with ad networks and publishers working heavily with third-party monetisation partners. The proposition over time evolved into a combined ad serving and SSP proposition, which saw great momentum in the market.

What does the shutting down of LiveRail mean for video publishers?

It means that publishers using their ad serving product must now find new alternatives. I, personally, believe the writing's on the wall also for their SSP product, as we know it today. This leaves publishers with less choice in the market, as it comes to tools built and designed to help them run and operate their business.

As a competitor of LiveRail, how is Ooyala affected by it being shut down?

There’s the obvious answer that there’s now one less competitor in the market. It also means a clear opportunity for Ooyala to provide services to the hundreds of customers that Facebook is no longer servicing. As a response to that, Ooyala is currently waiving all migration fees for previous LiveRail customers that are in need of a new ad server and/or programmatic solution for their video inventory.

Many expected Facebook to build out a publisher display network with its acquisition of LiveRail and Atlas. So, why have Facebook chosen to step away from video ad serving?

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 Facebook-driven budgets. The play is NOT to offer them products and tools for managing complete monetisation (ad serving 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.

Given that LiveRail's core business is centred around automated video ad sales, how big an impact does this announcement actually have on the market?

A big part of LiveRail’s success came from its strategy to combine the ad serving platform where you manage your direct sales, together with their SSP, where publishers manage programmatic sales. This resonated really well with how the business of publishers is evolving; and LiveRail shutting down the ad serving part makes the whole proposition so much less attractive. The announcement also acts as a reminder that so many companies lean on other companies whose core business isn’t providing the technology the customer is buying. As it pertains to Ooyala, our strategy, DNA, and focus is crystal clear. We are in the business of providing software and tools for publishers, empowering them to build out a profitable and sustainable business. We don’t have a media business challenging our focus. We believe publishers should build their business on a platform that can do both ad serving and programmatic trading as they continue to merge and blend.

What do you think Facebook are going to do next?

I think Facebook is on the right strategy here by shutting down the ad server, and eventually their SSP, as we know it today. They will continue to expand their market share in the video advertising market using their unique data assets etc. But, as it comes to publisher platforms, they will leave this market completely and the next announcement around shutting down the SSP will, at least to me, not be a surprise.