The LiveRail Central open real-time bidding marketplace, which took supply from anywhere on the Web and became the connective tissue between the buyer and the seller, was where Facebook found a lot of the lower-quality supply.
There was also another issue: When Facebook data was taken to the open Web, it became a lot easier for other people to steal it. Trust is one of Facebook's "core tenets" when it comes to user data, so this was a "nonstarter," Boland said.
So now the parts of LiveRail that focused on the open Web are slowly being phased out. Facebook publicly announced in January that LiveRail's ad server was being wound down. Customers are also migrating away from LiveRail Central. Meanwhile, the mobile native ad platform and mediation product announced at the F8 conference last summer have yet to clear the testing phase. It's unclear when they will launch and where they will eventually sit.
In January, Facebook's head of ad tech, David Jakubowski, described LiveRail as "the enterprise technology that incorporates the Audience Network but addresses the private marketplace and more sophisticated needs of some of the larger publishers."
In essence, Facebook is hoping that while less inventory is flowing through LiveRail now than there was before, LiveRail is allowing publishers to sell their ads at much higher prices than through open marketplaces because advertisers are buying up better-quality supply.
Below: Where LiveRail competed before it exited the video ad-serving business:
And what of LiveRail's staff?
Boland said he couldn't get into the specifics of how many people were currently working on LiveRail. At acquisition, LiveRail had 170 employees, according to the company's website. Boland said the engineering team had doubled since acquisition and the business side was also "significantly bigger."
But what's now very different is that Facebook has a "unified customer solutions team" that works for publishers across lots of different areas, including LiveRail and the Facebook Audience Network, Boland said.
A LinkedIn search shows that most former "LiveRail" sales employees have transitioned to "Facebook Publisher Ad Tech" roles. LiveRail's CEO and cofounder, Mark Trefgarne, became director of product management for Facebook's ad-tech group after the deal closed in August 2014.
"The thing that used to be LiveRail — very few people are working on that now," one source close to the company said.
How competitors have reacted
LiveRail's decision to move away from becoming a fully fledged video supply-side platform "has thrown the video ad industry into a little bit of turmoil," according to a person close to the company who asked not to be named.
"A lot of mid-tier to lower-tier syndicators or aggregators of inventory who had questionable businesses in the first place are going to be in a lot of trouble," the person added.
As LiveRail exits, competitors have been quick to take advantage. A Google search for "LiveRail," for example, brings up a search ad from Ooyala, reading: "Dropped By LiveRail? — Ready For a LiveRail Alternative?"
The advertising trade title AdExchanger wrote earlier this month: "New Video SSP From AppNexus Is Lapping Up LiveRail Customers." Later this month AppNexus announced that more than half a dozen major DSPs and bidders had integrated into its video marketplace — a move that happened so quickly most likely because of LiveRail's pullback.
Then there's Google, which dominates the ad-serving market with its DoubleClick ad platform.
When Facebook first started venturing into ad tech, many people thought there was finally a deep-pocketed player with the scale and technology prowess to give Google a run for its money. This apparent submission to Google — which recently announced a big enterprise-level update to its Analytics platform and which owns other popular ad-tech platforms including DoubleClick for Publishers, AdWords, AdSense, and DoubleClick Bid Manager — runs the risk of Google's software remaining the first choice for marketers when it comes to deciding which media to buy and how to evaluate their media spend. It's unlikely that being subservient to Google's ad-tech products is where Facebook, or any ad-tech company, wants to be.
Boland says he "doesn't get too stressed" over headlines about competitors picking up where LiveRail left off: "Kudos to them. The thing I get stressed about is whether the conversation moves more toward value and quality or not. Every headline I see about viewability and fraud, I feel happy."
What's next for LiveRail?
Most people we talked to within the ad-tech community speculated that LiveRail would ultimately be folded into Facebook's big ad-tech success story — Facebook Audience Network — and that the LiveRail brand name would no longer be used.
The transition of LiveRail roles to a wider publisher-solutions team would suggest that this is the next logical step, though Facebook wouldn't confirm this to be the case.
Instead, Boland said: "We think less about standalone products, but we think completely about the customer. We will have a suite of solutions that make the publisher's business better."
One ad-tech industry source, who asked to remain anonymous, predicted that LiveRail would "totally close up shop here within six months and onboard any video publishers still left into the Facebook Audience Network offering."
Looking at the big picture, taking on board the Atlas DSP U-turn too, he believes "Facebook underestimated the complexity and investment required to build out a meaningful ad-tech business."
Was the LiveRail acquisition a success or a failure?
It's probably too soon to say whether Facebook's estimated half-billion-dollar bet on LiveRail paid off.
A person close to the company who works within the ad-tech industry told us: "Sometimes we make the mistake as an industry in trying to gauge the success of an acquisition too soon. I think the greatest example is YouTube, [which Google bought in 2006]. Shortly after acquisition, lots of people were questioning it, and definitely questioning the $1 billion-plus purchase price. But with the benefit of time, it was a bargain and a really smart acquisition."
In time, our source thinks, Facebook will look back on the LiveRail acquisition and say it was a good deal.
"I think, ultimately, Facebook bought LiveRail because they thought it had the best tech platform, a strong tech team," he said. "They've leveraged those tech assets, and they're pointing them in the direction that makes sense and is most consistent with the Facebook brand."
What is certain is that LiveRail didn't take the path Facebook originally charted for it.
Another person close to the company said: "An acquihire was never the plan. The plan was never to kill the product or shut it down. The plan was to grow it, and I don't think that's the plan anymore."
Boland, meanwhile, has two key takeaways from the acquisition. First, that it exemplifies the "fearlessness" of Facebook in moving into new areas.
He said: "It shows we are fearless in our execution, fearless in questioning our assumptions and really empowering the team to make decisions to serve our publishers rather than, 'Hey, does this deliver on some top-down mandate I gave you two years ago?'"
Boland is also hopeful that the high-profile clawbacks Facebook has recently pulled with both Atlas and LiveRail will help ignite the debate about the quality of the digital advertising ecosystem.
"I think that's been hard for people to process ... the technology steps that we are taking, that's different from the run-of-the-mill ad-tech business today," Boland said. "People look and compare and say, 'Hey, you don't match up neatly with other ad tech.' Well the reality is: We are pushing towards this next generation of ad tech, which is really about quality, about value, and about a programmatic ecosystem that delivers real ROI [return on investment] to advertisers."
