Arbitrage has been a thorn in advertising’s side, allowing bad actors and fraud to flourish, Ariel Napchi, CEO & Founder, HIRO Media shares why he thinks Ads.txt can make things right
The current system of arbitrage has made it all too easy for bad actors to participate in the programmatic ecosystem. Just like a house party where the invite is distributed too widely. Everybody shows up to your house and you lose track of who is who. Inevitably, some bad guests wreck your house.
For context, we can take a look back at 2017, which showed us that it is much easier for these bad actors to manipulate advertising and cause more harm than we previously thought. Until now, questionable behavior has frequently gone unchallenged. I believe that is finally changing.
Mass industry adoption of Ads.txt will perhaps be the final deathblow to arbitrage and its side-effects. This standard will give publishers more transparency into who buys their inventory and advertisers more confidence that the impressions they bid on coming from a legitimate source. It will limit the practice of domain spoofing, as well as reduce inventory arbitrage. In fact, we encourage all our publishers to adopt it, especially as buyers now actively trade against it.
The ramp up was slow as with the first 100 days of Ads.txt’s release, only 13 percent of the 10,000 most popular websites on the internet adopted it, according to research from Ad Ops Insider. Few publishers adopted Ads.txt early on because their tech teams were over committed to other projects, they didn’t understand how Ads.txt would benefit them or didn’t want ad buyers to know the publishers used unauthorized resellers to help sell their inventory.
Then came Google. The percentage of the 10,000 most popular websites using Ads.txt jumped within a month after Google announced in September that its most popular ad products would begin filtering for Ads.txt. Other platforms were adopting Ads.txt filters during this time, so this increase can’t solely be attributed to the search giant. However, Google throwing their weight around clearly had a positive impact.
The publisher is stating who is authorized to sell their inventory, and the unauthorized re-selling of publisher inventory is one way to define arbitrage. So, great! Two birds, one stone, right? This ought to really throw a wrench in the process of buying premium publisher inventory at a competitive rate, then turn around and sell it for more money—it would limit the number of buyers for arbitraged inventory. Is that right?
A December study lead by the 15 leading programmatic publishers highlighted the extent of damage bad actors are causing, with publishers losing up to $1.27bn a year due to fraudsters impersonating their inventory on ad exchanges, with such bad actors conducting up to 700m false ad requests per day. This has to stop.
Fraud may never entirely go away. Bad actors are smart and ever-evolving in their deceit. However, it is up to the industry to do all it can to make it as difficult as possible for fraud to take place. The push toward transparency which Ads.txt aims to provide is a positive step in that direction.
Originally published in Read It Quik