Facebook just laid off about 40 people - here's why

Facebook told around 40 people late last week they had 45 days to look for new roles within the company or else there would not be jobs for left them.

Those staffers were part of the account management and sales teams within the company's "publisher ad tech group."

That recently formed division works across several products, including the Facebook Audience Network that lets brands extend their Facebook ad campaigns on sites and apps other than Facebook, the LiveRail video supply-side platform, and Instant Articles.

The layoffs hit the LiveRail side of the division.

Mark Trefgarne, the former CEO of LiveRail, which Facebook acquired for a reported $400 million to $500 million in July 2014, left the company on Friday.

He had become Facebook's director of product management for its ad tech group in the August following the acquisition, but he had not been working on LiveRail for some time, sources told Business Insider.

Business Insider understands he was offered a severance package.

Facebook declined to discuss individual personnel changes, but provided Business Insider with this statement:

Over the past few months, we have communicated our desire to build advertising technology products that create the most value for advertisers and publishers. That meant removing certain parts of the LiveRail business that weren't creating value: we depreciated the LiveRail ad server and removed LiveRail publishers that did not reach our quality standards. Those decisions resulted in the need to re-purpose several roles. While organizational change can be difficult, we are confident that these moves will allow us to continue to grow our publisher monetization efforts with Audience Network and LiveRail

This is not the first time Facebook has asked staffers to look for new roles within the company. And Facebook's publisher ad tech group is not shrinking: It is continuing to hire for other positions across that team in areas such as product marketing, working with small-to-medium businesses, and in the APAC region. But nevertheless, it is unusual that Facebook - which crushed all analyst expectations for its Q1 earnings on Wednesday - is letting staff go.

The backstory

As Business Insider reported back in March, Facebook's acquisition of LiveRail didn't take the route first charted for it.

Facebook bought LiveRail in order to marry together Facebook's level of accuracy when it comes to advertising targeting with the serving of video ads, on Facebook and beyond.

But Facebook's vice president of ads product marketing Brian Boland admitted to Business Insider back in March that the integration of LiveRail's technology "frankly took longer than we would have hoped."

At the turn of 2016, Facebook relocated all of LiveRail's engineers to its London office and what was previously "LiveRail" became part of more of a merged product within the newly-formed "publisher ad tech group." That group aims to provide a suite of solutions for publishers - and the team works across them all, rather than being wedded to specific brands.

Boland explained to Business Insider in March that ad fraud and viewability issues changed the course of LiveRail. Ad fraud is the practice of deliberately serving ads that have no potential to ever be seen by a human user, while viewability concerns measuring whether an ad was actually seen by a real person and for how long. The video ad supply in the market was rife with these issues, Boland said.

Products that used to exist within LiveRail that relied on the open web - like its ad server and its real-time bidding marketplace - were phased out. The account management and sales staff laid off were responsible for managing and selling those products.

LiveRail's technology was instead put to use on private marketplaces (PMPs): invite-only auctions where publishers make their premium ad space available to a select group of advertisers. Some LiveRail engineers and staffers are also lending their expertise to non-LiveRail products, such as the thriving Facebook Audience Network, which generated a $1 billion revenue run-rate last year.

When we spoke to people close to the company and ad tech sources about LiveRail's change of course back in March, some people suggested Facebook underestimated how challenging it is to build at a meaningful ad tech business with enterprise-level marketers.

However, another source within the industry said it was probably too soon to say whether the LiveRail acquisition was a success or failure. Remember, people thought Google's acquisition of YouTube was bonkers. And there were naysayers that said Facebook's IPO was a failure after it first went public.

Unless Facebook releases revenue or growth numbers for its new publisher ad tech group - as it did with Facebook Audience Network - it's too soon to make that call.