Ads.txt is a relatively new but successful initiative by the IAB Tech Lab to bring transparency and reduce fraudulent activities in the digital advertising ecosystem. Ads.txt is a simple solution to the rampant problem of ad fraud, confusion and reselling of inventory without a publishers knowledge that has been plaguing the adtech ecosystem since inception.
Here’s how ads.txt works: A publisher that has decided to enact this initiative will create a simple web page url.com/ads.txt. on the page will be a list of approved demand partners, ad networks, resellers and companies that are manually approved by the publisher to sell ad inventory on behalf of the end publisher. Not only does it show the partners and a unique identifier, but also will show the types of ads that they are allowed to serve and if the demand is direct or resold.
See Example,Business Insider ads.txt file:
Why is ads.txt necessary?
The reason why ads.txt became popular as of recent is pressure from DSPs and agency trading desks to simplify the supply chain for the buy side. Since header bidding has been adopted by the larger publisher community, puiblishers are surfacing the same inventory on multiple exchanges. (and sometimes multiple ad networks reselling on the same exchange)
The fundamental problem here is that this is unsustainable for advertisers because they are bidding against themselves, having to submit exponentially more bids for the same inventory and in many cases, publishers are also confused on who to work with to access specific demand. Supply Path Optimization is going to be very important for the future of DSPs who spread their ad budget on multiple exchanges and are trying to maximize quantity and quality of the inventory/users they are purchasing.
Stages of ads.txt
Stage 1 of implementing ads.txt involves publishers simply putting the text file on their page, showing the care about the buy side and what channels buyers should use to purchase their inventory. Ad networks, SSPs and any vendor representing programmatic demand, should get their publishing partners on the phone to educate them about ads.txt and formulate a game plan for the future.
Stage 2, which could come to fruition very quickly will be when exchanges and buyers add algorithyms to their buying logic to only bid on inventory with ads.txt and approved partners listed. DSPs in an extreme case may only buy inventory on publishers that have the ads.txt file. This could put many companies that are middle men out of business if they are not truly providing unique demand.
Overall, while ads.txt is still a new and simple innovation, it has a promising future ahead to clean up the digital advertising ecosystem and will be a hot topic for years to come.