The State of Ads.txt: Not a Big Clean-up Yet

Photo credit: Foter.com

Ad tech is not immaculate, let’s face it. The ecosystem is inhabited by bad actors and digital transactions are intervened by shady intermediaries. Tricky fraudsters like Methbot generate invalid traffic and get away with it.

Programmatic has long lacked a mechanism for buyers to verify whether a supplier is legitimate to sell a publisher’s ad inventory. On the open exchange, buyers think they’re buying inventory from reputable publishers like NBCUniversal but often end up purchasing from impostor sites instead. As a result — the advertiser’s money wasted, the brand image misrepresented, the publisher blacklisted, and the credit to programmatic undermined.

Magic bullet

To address this big problem of domain spoofing — that’s the name for the worst-case scenario given above, — the IAB Tech Lab got inspired by the robots.txt and has come up with an ads.txt standard. It’s a publicly available text file where a publisher lists partners authorized to sell and resell its digital inventory.

The idea is simple and its implementation requires no extra development efforts. Publishers simply make a list of their account IDs on the SSPs, networks, and exchanges they work with and upload this text file to their root domain. Buyers can then crawl the web for those lists to check the validity of the inventory they purchase. DSPs can set filters to assure they transact with the legitimate exchanges.

After the public comment period the final ads.txt spec was released on June 27th and is now ready for wide adoption. The standard bodes unprecedented transparency, and the programmatic community — marketers, publishers and adtech vendors — have sounded strongly supportive of the initiative so far. But how many of them are really ready to adopt it?

Headcount

Getintent has done a research to check how many publishers have already hopped aboard the ads.txt bandwagon. The findings show it’s early to speak about widespread implementation. It’s been a month since the specification was released, and as of July 26th we have identified only 13 websites among top 1,000 domains on Getintent’s available inventory that have put up ads.txt.

Interestingly, only two out of top ten programmatic publishers — Business Insider and The Washington Post — are on the list of the early adopters. Another big-league publisher that has joined the transparency club is The New York Times. The rest of the pioneers come mostly from the entertainment legion.

Since the text file lists identifiers associated both with seller and reseller accounts within the advertising system, now it’s publicly available how much of the publisher’s ad space is being resold via authorized partners.

The most quoted adtech companies on the text files are Index Exchange, AppNexus, and OpenX. Others include AOL, Pubmatic, Rubicon Project, Sovrn, Taboola, Teads, TripleLift, and Yieldmo. Many of the publishers partner with Amazon, Google, and Facebook.

Why so humble?

It seems like everyone should benefit from the initiative. It promises a more trusted marketplace and should reassure the advertisers who have steered clear from programmatic over brand safety concerns. Moreover, weeding out unauthorized sellers adds value to the supply chain, which means higher conversions for advertisers and bigger revenue for publishers.

However, there’re still some concerns. The current spec fails to cover the whole supply chain. First of all, ads.txt doesn’t specify the authorized ad format yet. This leaves a loophole for an arbitrage scheme where display inventory is disguised as video inventory. Secondly, the standard is not applicable to mobile apps, anonymous inventory or syndicated content. Finally, there are a lot of influential players who rely greatly on undisclosed reselling and are unlikely to give up on arbitrage as one of the pillars for their business.

Whether ads.txt will take over depends on the network effect. The digital industry recognizes that the standard will work only when adopted collectively. So, we’ll probably see more peer pressure put on the programmatic players to join the game.