WTF is ads.txt?

So WTF is ads.txt?
It is an IAB-approved text file that aims to prevent unauthorized inventory sales.

How does it work?
Publishers drop a text file on their web servers that lists all of the companies that are authorized to sell the publishers’ inventory. Similarly, programmatic platforms also integrate ads.txt files to confirm which publishers’ inventory they are authorized to sell. This allows buyers to check the validity of the inventory they purchase.

How can buyers use ads.txt to check who is authorized to sell?
If an exchange and the pubs it represents each adopt ads.txt, bidders can check their tags for the presence of an ads.txt file to verify that the exchange and publisher have a legitimate connection to each other.

Are there any other ways to check which sellers are authorized using ads.txt?
Yes. Let’s say a buyer bought HuffPost inventory but was skeptical of the exchange the inventory came from. If HuffPost used ads.txt, the buyer could head to huffpost.com/ads.txt to see if the exchange is listed as an authorized seller of HuffPost inventory, said Steve Sullivan, vp of partner success at Index Exchange.

Last week, the IAB Tech Lab released a crawler that can rapidly pull ads.txt files from publishers’ websites. For buyers looking to check the ads.txt files for multiple publishers, the crawler helps them accomplish this quicker, said Alanna Gombert, gm of the IAB Tech Lab.

Why does this matter?
Unauthorized reselling is a major scourge in programmatic advertising, and unless buyers contacted publishers directly, they’ve had no way to know which SSPs are authorized to sell a particular publisher’s inventory, Sullivan said. Creating a depository of authorized sellers should help buyers determine which programmatic firms have legitimate access to the inventory they seek.

Are there any drawbacks?
It depends on who you ask. For SSPs that thrive on undisclosed reselling, this initiative could cut into their business if it alerts the buy side to their shady practices.

“Theoretically, what this should do is, if we receive inventory that isn’t labeled as valid, we will kill that request,” said Rubicon Project CTO Tom Kershaw.

What about drawbacks for companies that aren’t shady?
Publishers and exchanges, which are usually already stretching their developer resources thin, will have to allocate a web developer to integrate these text files and monitor them whenever pubs alter their lists of authorized sellers.

“But it is a small amount of work,” said Business Insider CRO Pete Spande, who likened ads.txt files to credit card chips that reduce, but don’t eliminate, fraud. “Unauthorized reselling can be really damaging to publishers’ brands, so we need to do our part.”

This sounds nice, but will it actually matter?
That depends. The success of ads.txt depends on network effects because it will only be a reliable quick check for buyers should publishers and exchanges adopt it en masse. The program is in its public comment stage until June 19 and its integrations into exchanges are still being ironed out, so it’s too early to tell how popular the tool will become within the ad industry.

“I think [adopting ads.txt] is the right thing to do because we want to know whether we should be buying from the people that we are buying from,” said David Smith, CEO and founder of Mediasmith. “But the key will be the IAB getting publishers to sign on.”