Why Facebook Wanted a Video Advertising Intermediary

NEW YORK (TheStreet) -- Fresh off of playing mad scientist with your emotions, Facebook  (FB) is delving deeper into the online advertising racket in its purchase of LiveRail, a company specializing in video advertising. It's little wonder Facebook wanted LiveRail as the company boasts an impressive client list the likes of ABC Family, Gannett, Dailymotion and Major League Baseball.

The startup acts as something of a middleman, its video supply-side platform (SSP) helping to connect video publishers with suitable and relevant advertising material. The company currently facilitates seven billion video advertisements to online audiences each month.

Facebook could not be reached for comment for this story.

The crown jewel of a LiveRail acquisition is its bidding network, a real-time solution for marketers to seek relevant open spots for their content on sites at the lowest price-point. It achieves this through programmatic means (read: low overheads), similar to how Facebook already uses algorithms to determine what advertising content is relevant to its users.

"Our platform sits at the heart of the video advertising ecosystem," said LiveRail cofounder Mark Trefgarne in a statement.

"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 VP of ads product marketing Brian Boland added in a blog post.

It's those hundreds of millions of people Facebook is eager to connect with. Video advertising is one of the fastest-growing and lucrative market on the web; it's expected to increase 41.9% in the U.S. this year, amounting to a $5.96 billion industry, according to estimates from research firm eMarketer.

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