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Why the Ads.txt initiative is a good thing for the advertising industry

Customer Experience

In May this year, the IAB Tech Lab announced the Ads.txt initiative, which has just started to be adopted in earnest by the programmatic ecosystem. The intention is for it to act as a tool to help ad buyers avoid illegitimate sellers who arbitrage inventory and spoof domains.

The idea is very simple: publishers list who is authorised to sell or resell their inventory in a text file on their website. DSPs scan this list to see which ad servers and SSPs are authorised to sell inventory from that website, and can incorporate it into their buying algorithms. In fact, most leading DSPs have made it mandatory: they won’t buy inventory from an SSP that is not listed on the publisher’s ads.txt file.

At Experian, we think this is a great idea.

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In the first place, it is going to considerably improve the consumer experience on these sites by reducing arbitrage and ‘shortening the waterfall’, ensuring that ads will be served quicker and page load times reduced. As the ecosystem adopts, we expect to see better, more relevant ads being served, again improving the user experience.

We expect things to improve for publishers for much the same reason. Removing some of the less savoury arbitrage-focused resellers (or at least, controlling what access they have) will provide more insight and control as to what ads are appearing on their site in what contexts. Managing resellers could also result in a higher proportion of the buying fee being returned to them.

For that reason, we also think this will be good for advertisers: minimising the ‘ad tech tax’ makes digital marketing more efficient, ensuring that media budgets are spent more effectively. We also expect it to help with brand safety and traffic validation: brands can now see the provenance of the inventory they’re buying. It’s not a magic wand, but it is an important step forward. In fact, our media trading team has already incorporated ads.txt into our purchasing processes: we only buy inventory through authorised resellers.

We’ve also integrated this into our Bid Enrichment process. Bid Enrichment is a mechanism that we’ve developed with the exchanges to enrich a programmatic bid request with our data as the auction happens. Again this is something that benefits both publishers and advertisers: publishers’ inventory is enriched with Experian data without accruing a fee; and advertisers can bid on that enriched data without having to pay a fixed data fee. As well as buying from publishers who have implemented ads.txt, we are included on their ads.txt file ourselves to maintain transparency throughout the process.

Of course, ads.txt does have its limitations: there are several other challenges that still need to be addressed in programmatic media trading, especially around brand safety; and there is an argument that all suppliers that are involved in a given transaction should be identified.

The principle of supply and demand would suggest that by limiting the pool of potential purchasers the price of inventory is likely to fall. However, the evidence so far does not support this. It’s too early to give any definite assessment as to why, but it’s likely that any ‘loss of revenue’ that may exist is reseller margin, rather than publisher revenue. And given the monetisation challenges publishers face, anything that reduces the ‘ad tech tax’ is a good thing.

If you want to find out more about Ads.txt or to understand how you can work with Experian, contact us.