As fraudsters target ads.txt, industry calls for uncluttered supply chain

Industry leaders want a "two-hop" model at most to fight fraud

There's a new kind of ad fraud, essentially the advertising world's version of money laundering.

DoubleVerify found fraudsters are launching bot networks to circumvent ads.txt protections, which are designed to allow publishers to list authorized sellers of their inventory.

The botnets are scraping content off websites, adding new ad slots to falsified versions of the scraped pages, and then selling the fraudulent ad slots under fake URLs through authorized resellers listed on a publisher's ads.txt file.

Chris Hallenbeck, director of traffic quality operations at OpenX, told The Drum that scammers have gotten more clever as fraud protections have advanced.

"The fraudsters have gotten smart enough to realize that they're going to have to pipe that fraud through platforms, mostly ad networks, that are listed by the publisher as an authorized reseller," said Hallenbeck.

This scheme targeting ads.txt protocols could have cost advertisers between $70m to $80m, as reported by The Wall Street Journal.

Ian Trider, a member of the IAB working group that developed ads.txt, told The Drum that there's nothing fundamentally wrong with the fraud-prevention standard; the industry just needs to adopt more streamlined practices that make less room for fraud.

"One of the things that buyers could do is limit their buying to only supply paths that the publisher has listed as direct in their ads.txt file," said Trider, who is also the director of RTB platform operations at Centro.

Both Trider (talking on behalf of Centro's business strategy) and Hallenbeck said the ad supply chain should not be longer than two hops: publisher, to ad network, to exchange.

Ad exchanges, they said, should ideally source inventory directly from publishers. If not, exchanges should source inventory from one ad network that sources directly from a publisher.

"To work with us, we had to guarantee that any inventory we sent for [DSPs] to potentially buy was no more than one hop away from our exchange," said Hallenbeck.

Dallas Lawrence, chief brand and communications officer at OpenX, said the company has invested $25m in its ad quality, and that he's hoping to shine a light on the "many players that are all too willing to scoop up" suspect inventory.

"There are very simple questions a buyer and a seller can ask that can clear out the ecosystem of the bad actors. Asking questions about how large is your ad quality team, how much money are you actually investing... [or] mandating that you will only represent ads.txt inventory," said Lawrence.

Trider and Hallenbeckboth stressed, however, that ads.txt is not an all-encompassing protection against fraud.

"It only addresses one specific sort of fraudulent activity. I do feel that some people have sort of developed the hope that ads.txt is the magic solution to all fraud in the industry. It isn't, and it never was designed to be, but it is part of the solution," said Trider.

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