It was a simple concept once: bundle third-party ad feeds with your own ads to provide better coverage of inventory for publishers. The advent of real-time bidding (RTB) would differentiate the value of the inventory — high-value, front-page inventory on CNN.com should be priced higher than a bottom-of-the-fold ad on a cooking site no one ever heard of.
But rampant ad fraud, viewability issues and loss of control on ad placements have turned a simple arbitrage scheme into “garbitrage.”
Ad verification software has become a big business, with providers helping advertisers identify fraudulent impressions and undesirable ad placement on risky content. Early on, ad tech companies incorporated blacklists of suspect domains and even shared the data across platforms. However, keeping up with the bad actors was daunting. Whitelisting domains could eliminate the cheap fraud, but it was no match for sophisticated schemes that masked domain addresses. Was the ad truly being purchased and delivered to CNN? It was still too hard to tell.
Enter the next generation of media arbitrage solutions. Two technologies that are ready to disrupt the way ads are bought, sold and resold: blockchain and ads.txt.
The blockchain promise … and problem
Blockchain technology creates an open, encrypted ledger, which allows digital entities to be transferred, but not altered. Blockchain is what makes Bitcoin possible: Users can transfer cash directly, without a middleman, with no fear of counterfeiting.
For digital advertisers, it is a way to share assets securely. At Cannes, Comcast Advanced Advertising Group announced a new platform that uses blockchain technology to allow marketers to buy ads in broadcast and streaming TV. The new platform will allow marketers to anonymously match their data sets with others to target consumers on any device — without compromising any proprietary customer information.
If all of the vetted players in a typical campaign implementation were willing to employ the methodology, blockchain could help eliminate the problem of spoofed inventory diluting campaign effectiveness. Alas, there is a catch: it takes too long. While Bitcoin handles five transactions per second, large ad exchanges process millions of ad calls per second. Until the speed issue is addressed, it is just not possible for blockchain to be viable in the RTB marketplace.
Put your money on ads.txt
More promising is ads.txt, the new standard developed by the Interactive Advertising Bureau’s Tech Lab for filtering out unauthorized sellers of publisher inventory from participating in the ad delivery. Authorized publishers host a text file list of the vetted supply partners authorized to sell their inventory. Buyers can then approve the sites with confidence, as only vetted domains and supply sources get to participate in the delivery of the ad. This solution does not impact the speed and efficiency of RTB, making it a more sustainable solution than blockchain.
While the solution works in theory, it is going to take compliance. Ads.txt is easy to implement, but not every publisher will be eager to do so, since it forces them to be transparent about their resellers.
Arbitrage, the buying and reselling of inventory, does not have to be a dirty word. Problems arise when an advertiser’s ad ends up serving on undesirable domains, subsequently affecting campaign performance and, even, brand safety. If ads.txt achieves widespread adoption, it could provide a welcomed safeguard for advertisers — protection from “garbitrage” — and give arbitrage new meaning in the marketplace.