In a deal rumored to be worth $500, Face­book just made its ad busi­ness a whole lot big­ger after acquir­ing video ad tech start­up LiveRail.

Soar­ing success

The San Fran­cis­co-head­quar­tered start­up was found­ed in 2008 and has built con­sid­er­able suc­cess for itself since then. Its sup­ply side plat­form links mar­keters with pub­lish­ers on mobile and web to tar­get video ads to a colos­sal 7 bil­lion vis­i­tors every month. Even the most bat­tle-worn account man­ag­er and sea­soned art direc­tor would con­cede that that’s a pret­ty impres­sive reach (Liv­eRail is wide­ly con­sid­ered the third largest video ad sell­er out there at present).

Just over a year ago, the start­up raised $4 mil­lion in Series C, large­ly through its lead investor San Jose-based Pond Ven­tures, bring­ing in its total invest­ment to $12 mil­lion. And it’s been doing exceed­ing­ly well, hit­ting a $100 mil­lion rev­enue run last year, a fig­ure rep­re­sent­ing year-on-year growth of 300 per­cent. Again, even the most hard-nosed account man­ag­er might expe­ri­ence an invol­un­tary drop of the jaw at num­bers like that.

Although Face­book has so far remained but­ton-lipped about the price-tag for the deal, with a busi­ness record like that, the $500 mil­lion fig­ure seems more than cred­i­ble, mean­ing that Pond must be uncork­ing the cham­pagne and that Face­book had to come up with a seri­ous cash offer for the dealt to go ahead.

A safer bet than IPO

LiveRail’s cus­tomer base includes ABC Fam­i­ly, A&E Net­works, Dai­ly­mo­tion, Gan­nett and Major League. Its pub­lish­ing clients make mon­ey by using its plat­form to rout rel­e­vant video ad mes­sages to prospec­tive cus­tomers (as well as pub­lish­ers, the plat­form also helps mar­keters link with apps and sites with open video inven­to­ry). LiveRail’s sys­tem approach­es buy­ers through real-time bid­ding auc­tions, pro­cess­ing com­plex upfront deals sans all the tedious paper­work that so often slows cam­paigns down to a crawl when a sprint is need­ed. It also deft­ly block.

The Face­book inter­ven­tion has spared Liv­eRail the prospect of an IPO, which it was report­ed­ly con­sid­er­ing this year. And after the IPO mul­ler­ing of com­peti­tors like YuMe (which bebuted at $9 and crashed to $5.95) and Tremor Media, which IPO’d at $10 and nose­dived to $4.61, the new deal has safe­ly avoid­ed a far riski­er alternative.

LiveRail’s exec­u­tives are prob­a­bly at the cham­pagne, too.