Facebook may soon integrate video ads into the popular social networking website. The social networking giant has acquired LiveRail, which provides monetozation through video ads to publishers.
Rather than working with companies that produce ads, LiveRail works with those who have a place for ads. LiveRail has helped companies like Major League Baseball, ABC Family and Dailymotion place ads before videos to draw in revenue from advertisers. Live Rail doesn't directly sell ad space, but that could certainly change under Facebook's leadership. Under Facebook, LiveRail will likely deliver targeted video ads to Facebook users.
"When we started talking to the team at Facebook about how we could work together, it quickly became clear that we shared a vision for the future of digital advertising," says CEO Mark Trefgarne in a statement. "They believed, as we do, that publishers deserve a new generation of audience-aware advertising technology."
The acquisition of LiveRail would also allow Facebook to reach a large number of users outside the website with video ads. LiveRail already delivers 7 billion ads each month. This also makes the company an expert in the area of video ads, which could help Facebook make ads streamlined and user-friendly.
Facebook has previously been hesitant to roll out video ads due to fears that it would detrimentally affect the user experience. However, with LiveRail's expertise, the company could find a way to make the ads unobtrusive and more effective.
"We believe that LiveRail, Facebook and the premium publishers it serves have an opportunity to make video ads better and more relevant for the hundreds of millions of people who watch digital video every month," Facebook says in a statement. "More relevant ads will be more interesting and engaging to people watching online video, and more effective for marketers too."
Most of LiveRail's financial information is kept confidential, but reports suggest the company was acquired for between $400 million and $500 million. LiveRail was expected to hit $100 million in annual revenue for 2013, a 300 percent increase over 2012 revenue. With the growing reach of video advertising, Facebook's desire to step into the market with a company that has proven its success comes as no surprise.