Facebook's publisher-facing ad-tech arm LiveRail is shutting down the ad server business that you might not have known it operated.

Known best for being one of the top video ad exchanges when Facebook agreed to buy it in July 2014, LiveRail also offered a way to help publishers pick out which video ads to serve on their desktop sites. But that ad-server work was never a big business for LiveRail and detracted from its primary focus post-acquisition on automating the sale of publishers' in-app mobile video and native display ads.

"LiveRail's ad server business is tiny. You're talking well under a hundred -- you're talking tens of clients on it," said David Jakubowski, Facebook's head of ad tech.

Facebook didn't buy Liverail for its ad server business, Mr. Jakubowski said. It bought the company to gain a foothold in automated video ad sales and keep pace with competitors like YouTube owner Google and AOL, which bought LiveRail rival Adap.tv in 2013, as they all jockeyed for advertisers' growing video ad budgets. "In particular their private marketplace business is the business that we were interested in," he said.

Private marketplaces, or ad exchanges, are where companies like Facebook, Google and AOL see a lot of opportunity to entice TV advertisers and top-tier publishers to jump into the programmatic pool. Unlike a regular open ad exchange, these private exchanges limit which advertisers a publisher can sell to and which publishers an advertiser can buy from, which can mean bigger-ticket deals than those conducted in the open ad exchanges. They are typically used so that publishers can cordon off their most prized and often priciest inventory for deals with big-budget brands that may span more than a single ad slot, and so advertisers have more control over where and how they're spending their money.

In effect private exchanges look to marry the direct dealings publishers and advertisers conducted for TV and print ad buys with the processing efficiency and targeting that programmatic ad technologies offer.

Not that Facebook is only looking at privatized programmatic dealings. The company also runs a mobile ad network, Audience Network, that syndicates the ads that brands buy from Facebook across an undisclosed number of third-party apps, including publishers running LiveRail-powered private marketplaces.

"Audience Network is the one-stop shop that brings all the demand [from advertisers] to app developers for quick self-serve monetization, and LiveRail has become the enterprise technology that incorporates the Audience Network but addresses the private marketplace and more sophisticated needs of some of the larger publishers," Mr. Jakubowski said.

Mr. Jakubowski declined to discuss how much money LiveRail and Audience Network are generating for Facebook.