What the LiveRail shutdown means for video publishers and the market

By Sorosh Tavakoli on Feb 01 2016 at 2:00 PM
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.
 
I wanted in this post to share my views on this fairly significant market shift.
 
How to best face the bad news
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; now there’s even less choice and competition. 
 
Even though our focus is on broadcasters and O&O publishers, we have been competing (to some extent) with LiveRail over the years and this move is good news for Ooyala. We are now offering a free migration to our Pulse platform for any de(Live)railed customers. Email sales@ooyala.com and we will give you a call. More on this below.
 
A happy marriage, initially
At first I was optimistic for LiveRail at 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.
 
The question was always, what are they going to do with this 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, knowing Facebook had enough resources and expertise to eventually figure it out. Over time though, increasingly the patience of their publisher base was challenged, and with few signs of improvements publishers started to look around for options (read: the Ooyala phones started to ring more frequently).
 
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, a future we at Ooyala are investing heavily in. 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 organization 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 organized 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. 
 
The Facebook strategy forward
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 monetization partner or demand source.
 
With this strategy, shutting down the ad server, and eventually their SSP as we know it today, makes sense – and the next announcement around the SSP will, at least to me, not be as surprising.
 
What does this mean for LiveRail customers?
If you’re one of the ‘hundreds’ of customers that Facebook has said this announcement impacts, the effect is pretty simple. You’ll need a new ad server and I’d think over time, a new SSP partner.
 
The choices are pretty simple. If you are an O&O focused publisher you now have three real options in the market - Ooyala, FreeWheel and Google. If O&O is less of a focus, you syndicate your content heavily and/or sell for 3rd party publishers, you might consider another couple of options. 
 
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 you 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. 
 
If you are still operating your business on LiveRail, you should probably get in touch. And by the way, we offer a free migration to Ooyala Pulse right now. Reach out to sales@ooyala.com to get started.
 
— Sorosh Tavakoli is the Senior Vice President of Ad Tech at Ooyala.
 
 

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