For years Facebook has considered itself a mobile-first company, so it's perhaps not surprising that the company's first attempt to automate the sale of ads running outside of Facebook will be limited to mobile.
Mobile app publishers can now sell their in-app display and video ad inventory through real-time auctions run by LiveRail, the company's video ad exchange. To boost sales prospects, Facebook will also open up some anonymized user data to target those ads, as well as the browser-based video ads that LiveRail has historically helped sites sell.
Mobile app developers will be able to use LiveRail to pool their in-app ad inventory -- including regular banners, video slots and even so-called "native" placements designed to look like any surrounding editorial content -- into an ad exchange that holds real-time auctions for advertisers to programmatically place bids on that inventory.
LiveRail isn't making a full-blown entry into the banner business. While it will handle display ads within mobile apps, it will not be handling display ad sales for browser-based sites. LiveRail CEO Mark Trefargne declined to comment on any plans to eventually extend into the browser banner business.
When Facebook bought LiveRail last summer, the ad-tech firm specialized in facilitating the sale of online publishers' video ads through real-time auctions. However, in the months after the acquisition closed in August, LiveRail execs began polling publishers on whether they'd be interested in LiveRail handling their non-video display inventory as well. Some publishers took that to signal Facebook's plan to use LiveRail to counter Google's publisher-facing ad tech business.
With its LiveRail mobile in-app ad exchange, Facebook is taking on Google's AdMob mobile ad network, as well as mobile ad networks from Apple, Amazon and Yahoo and Twitter's MoPub mobile ad exchange. To varying degrees, each of these companies is trying to become the go-to for mobile developers looking to make money from all the people who used to spend time only on the web but now split that time between the web and apps, and for advertisers looking to market to those people.
All that jockeying means Facebook will have to compete with Google and the others to win over app developers. It's unclear how many apps have signed on to sell ads through LiveRail at launch; a Facebook spokesman said it's starting with a small test group of apps. Bringing Facebook user data into the fold may help matters, especially if more of that information becomes available.
Facebook isn't opening up all of its user data for ad-targeting outside of Facebook. For now, the LiveRail ads can only be targeted based on Facebook users' anonymized demographic information: how old they are and whether they're male or female. That may sound anticlimactic considering all the other data Facebook has around what things people are interested in. But it's not.
"For us as publishers and programmers, it's a very big deal," said Jason DeMarco, who oversees programmatic partnerships for A&E Networks. Advertisers are pressuring the TV network to measure their digital ads against Nielsen's Online Campaign Ratings metric to measure whether the intended audience demographic saw their ads. Problem is, that reporting occurs after the ads have run, which can lead to wasted ads and a need for the network to compensate for ads that were seen by the wrong people. Incorporating Facebook's demographic data into LiveRail will help to ensure the ads only run in front of the intended audience demographic in the first place, he said.
Advertisers will be able to buy LiveRail's mobile in-app ads through various programmatic-buying means, including automated ad-buying tools (or demand-side platforms) that advertisers use, agency trading desks and ad networks, such as Facebook's own mobile ad network Audience Network. That helps to explain how the new LiveRail in-app ad exchange and Facebook's Audience Network will coexist, even though they're ultimately designed to do the same thing: sell mobile in-app ads through Facebook.
As Mr. Trefargne explained in an interview, the Audience Network will continue to be a way for advertisers to extend their on-Facebook ad buys to off-Facebook mobile apps, similar to how advertisers can extend their Twitter ad buys to mobile apps through MoPub. That is, brands will still be able to place a mobile ad buy with Facebook, and those ads may be syndicated through Audience Network to run within a mobile app targeted to the same audience that were intended to see them on Facebook. Now with the addition of LiveRail's mobile app exchange, those buys could be converted into bids placed on LiveRail's exchange.
"We view Audience Network and LiveRail as essentially being complementary. They're not replacements for each other," Mr. Trefargne said. He described LiveRail as an "ad-management platform for publishers" and Audience Network as "a pipe that connects publishers to Facebook's 2 million advertisers."