Facebook has acquired video advertising firm LiveRail, a tech start-up that helps companies place more relevant ads in the videos that appear on their websites and apps. LiveRail also provides a real-time bidding platform for marketers looking to place ads on online videos.

The firms did not reveal the financial terms, but some reports indicate that Facebook paid between $400m and $500m (£233m and £291m) to buy the firm.

Facebook did say it will invest in keeping LiveRail running and is evaluating how to intermingle their data, but it plans to use its data to aid LiveRail with its targeting and vice-versa. The acquisition of the 170-person company could help Facebook own a bigger chunk of video advertising, the fasting growing Internet ad medium.

Founded in 2007, LiveRail’s supply side platform has a large base of customers including Major League Baseball, ABC Family, A&E Networks, Gannett, and Dailymotion. LiveRail provides publishers with video ad targeting tech so they can make money routing messages to customers they’ll be relevant to, and helps marketers connect with sites and apps with open video ad inventory.

"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," Brian Boland, vice president of advertising at Facebook, said.

"More relevant ads will be more interesting and engaging to people watching online video, and more effective for marketers too. Publishers will benefit as well because more relevant ads will help them make the most out of every opportunity they have to show an ad."

LiveRail, which according to TechCrunch reported revenues of $60m last year, had been considering floating on the stock market in late 2014.

Mark Trefgarne, the company's co-founder, said: "When we started talking to the team at Facebook about how we could work together, it quickly became clear that we shared a vision for the future of digital advertising.