There’s been a lot of chatter about ads.txt in the programmatic industry. Ads.txt is the new platform from the Interactive Advertising Bureau’s (IAB) Tech Lab that allows publishers to whitelist, in a public text file, their authorized resellers.
I’m a Manny Puentes fan, back to his days at Lijit. I love the guy. I read his recent article where he outlined the weaknesses he’s identified in ads.txt. Meanwhile, revered advertising journalist Mike Shields heralded ads.txt as the solution to media supply chain fraud issues in his Business Insider article.
As much as I love Manny, I have to say he was a little off base in his assessment. But, Mike Shields wasn’t 100 percent accurate either. Ads.txt is neither savior nor snake oil. It’s a fantastic, innovative solution with great promise. But it’s incomplete.
The Issue with Ads.txt
Manny was right when he zeroed in on this point in his article: “As a fraud prevention model, ads.txt collapses when an ‘authorized reseller’ works with a network or supply-side platform (SSP) trafficking illegitimate inventory, either intentionally or inadvertently. As long as the reseller is listed in the ads.txt file, the DSPs will then see the reseller as ‘authorized’ to sell that publisher ID, regardless of where the inventory actually came from.”
The fact is that ads.txt presents the only authorized resellers of SomePublisher.com. But the issues are threefold:
- First, what if the authorized reseller came by the inventory from an illegitimate source?
- Second, if the authorized reseller puts their legitimate inventory into another exchange or SSP, buyers have already lost track of the provenance of the inventory.
- Finally—and most controversially—nothing in ads.txt addresses the buyer incentive to buy cheap (potentially fraudulent) inventory. The buyer incentives are not changed.
How to Solve the Issue
The key to fulfilling ads.txt’s potential as an industry wide solution will lie in the efforts to commercialize, innovate around, and enforce the technology. There must be two vital components:
1. Full chain visibility. Regardless of how many hops exist between advertiser and publisher, there needs to be visibility into the entire chain. With full chain visibility, if the person reselling a publisher is not a known, approved reseller, the inventory is fraudulent and the entire ad chain is invalid. This allows authorized resellers to maximize the yield on behalf of publishers and themselves while simultaneously eliminating spoofed inventory.
2. Payment enforcement. Once a fully transparent supply chain has illuminated a non-approved reseller, the next step is to deny payment. Anyone participating in an invalid transaction at any level does not get paid. If you are the DSP that bought from an exchange that bought from an SSP who sourced inventory from an unauthorized reseller: you don’t get paid, and neither does anyone else in the supply chain, including the fraudulent publisher. Furthermore, the economic incentive to even attempt to spoof inventory goes away. Why pretend to be Publisher.com when payments for that inventory only go to Publisher.com’s bank account?
“Control the payment, you control the problem.”