Ads.Txt Mislabeling Is Flagrant and Costly. Here's What's Being Done About It

While the technical sophistication of programmatic advertising has helped power the open internet for more than a decade, its complexity has shielded bad actors from scrutiny for just as long, resulting in rampant ad fraud that cost the industry $59 billion in 2021, according to Juniper Research. This fraud directly affects publishers, which occupy the final link in a convoluted supply chain ringed with middlemen. To help combat the issue, last month the team behind Sellers.Guide, a tool for helping publishers maintain compliant ads.txt and sellers.json files, released a document that sheds new light on the opaque ecosystem. Called The State of Transparency, the inaugural report pulled data from 126,000 domains to determine whether or not their ads.txt and sellers.json files were accurate according to the specifications of the protocol. Introduced by the IAB Tech Lab in 2017 and updated earlier this year, these files help reduce fraud by allowing buyers and sellers to cross-reference their authorized vendors. New Updates to the Ads.Txt Protocol Aim to Further Distinguish Owners From Operators The report found tens of thousands of instances of intermediary parties in the supply chain misrepresenting their inventory as direct, said Lior Shvo, the author of the analysis and the managing director of Sellers.Guide. The company, a subsidiary of the video ad vendor Primis, has made the report public. It is an ongoing project and its authors plan to update the document bimonthly. The findings come amidst a larger reckoning in the ad-tech ecosystem surrounding digital privacy and supply chain optimization, both of which incentivize companies to operate more transparent businesses with fewer partners involved. The report, like the protocol it polices, lacks any method of enforcement, but it aims to prompt compliance by empowering the buy-side of the industry to transact only with publishers that properly implement the system. “The objective with the report from Sellers.Guide is to expose things that need to be exposed, such as business practices that take advantage of the lack of transparency in programmatic,” said Jean-Christophe Peube, the evp of delivery excellence at ad-tech platform Equativ. Improperly labeled intermediaries The report buckets its findings into three groups of data: most common direct sellers, most common resellers listed as publishers and––most importantly––top intermediaries listed as direct. The first category simply reflects the sellers in the programmatic ecosystem that have the largest number of direct programmatic pathways.The second group chronicles sellers that are listed as direct publishers but errantly send reseller lines. The third category contains the most consequential findings of the report, as it lists all the sellers represented as intermediaries that send direct lines. But rather than label themselves as intermediaries, or resellers, they label themselves as direct, which allows them to generate higher ad revenues because buyers pay more for direct inventory. The scale at which this misrepresentation occurs is vast: Some of the most prolifically-mislabeled sellers do this on upwards of 70,000 distinct domains. A look at the Sellers.Guide data reveals that these mistakes are not one-off incidents, but rampant among the sellers that commit them. Historically, intermediaries mislabeling their inventory have pointed to a number of potential explanations for the mix-up, including a lack of nuanced terminology, a bespoke agreement between the involved parties or a simple labeling error. But in April, the IAB Tech Lab released an updated version of the protocol, called Ads.txt 1.1, that introduced new terminology designed to eliminate the category issues that had plagued the taxonomy. In doing so, the update removed an excuse that domain-spoofers long hid behind, as a reseller now had very few instances in which it could label itself a direct seller of inventory. “There is nothing wrong with being an intermediary, but this misrepresentation hurts publishers who follow the rules,” Shvo said. “If a buyer wants to only buy direct, they can end up buying from intermediaries who pass themselves off as direct, which ultimately manipulates the buyers.” Empowering the buy-side to transact responsibly The ads.txt and sellers.json protocol have long acted as the carrot––as opposed to the stick––of the programmatic ecosystem: Parties that implemented them properly could boast of their accountability, which would theoretically result in more business. But the system lacks any power to penalize bad actors who, intentionally or unintentionally, mislabel their inventory and profit from it. This imbalance leads to a dynamic in which good actors benefit little while bad actors suffer no consequences, with the bottom lines of publishers withering as a result. This new report aims to arm the buy side of the advertising ecosystem with the information it needs to determine which parties are implementing the ads.txt protocol properly and which are not, Shvo said. This way, demand-side platforms and agencies can choose to buy only from vetted sellers, reducing ad fraud, optimizing their supply chain and putting more money in the pockets of publishers in the process. “That is the underlying issue,” Peube said. “I think buyers should not be allowed to target something that is incomplete in terms of supply-path object.” To Prune Ads.Txt Files, Publishers Are Turning to New Tools