Programmatic advertising automates the process of buying ad space through the following technologies:
- Demand-Side Platforms (DSPs): Platforms that allows you to purchase ad space through an ad exchange, like Google Ad Manager, which features advertising inventory from publishers.
- Supply-Side Platforms (SSPs): Platforms that allows publishers to manage and offer ad space to advertisers, marketers, and other parties interested in purchasing ad space.
- Data Management Platforms (DMP): Platforms that allows organizations to collect and manage user data for digital marketing purposes, such as programmatic advertising.
By incorporating these three technologies, as well as artificial intelligence (AI), programmatic advertising automates the process of purchasing and bidding on ad space. It also makes the process smarter, relying on user data to deliver relevant ads in milliseconds.
How does programmatic advertising work?
Let’s start by looking at an overview of the programmatic advertising process:
- Arrive: Whenever a user arrives on a website involved with programmatic advertising, it triggers the automated advertising process to start. As programmatic advertising happens in milliseconds, users don’t even notice it.
- Send: In response to a user arriving on a website, the website publisher automatically sends the dimensions of its ad space to an Supply-Side Platform (SSP). One way to think about this step is that the publisher lists their product for advertisers to purchase.
- Read: After receiving information on the available ad space, the SSP analyzes a user’s cookies. The goal here is to learn as much as possible about the user, from their demographics to their interests, to deliver a relevant ad.
- Evaluate: Next, the coordinating Demand-Side Platform (DSP) becomes involved. By reviewing the information gathered by the SSP, the DSP can evaluate the user’s worth and assign it a value — or the worth of that user’s impression.
- Bid: With a value assigned to that user, the DSP submits a bid to the SSP. It’s worth noting that this process happens in real-time, which is why some refer to programmatic advertising as real-time bidding (RTB).
- Choose: Once the DSP’s bid arrives, the SSP will review it and any other bids. The SSP will then pick its winner, which is often the highest bidder. Depending on the auction, you may pay your highest bid or the price of the second-highest bid, plus a fee.
- Deliver: With the winner picked, the SSP delivers the ad to the user. As the programmatic advertising process happens so fast, the page will load with the ad displayed — it won’t load and then reload the page to display the ad.
Unauthorized reselling is serious problem in programmatic advertising.
When a brand advertiser buys media programmatically, they rely on the fact that the URLs they purchase were legitimately sold by those publishers. The problem is, there is currently no way for a buyer to confirm who is responsible for selling those impressions across exchanges, and there are many different scenarios when the URL passed may not be an accurate representation of what the impression actually is or who is selling it. While every impression already includes publisher information from the OpenRTB protocol, including the page URL and Publisher.ID, there is no record or information confirming who owns each Publisher.ID, nor any way to confirm the validity of the information sent in the RTB bid request, leaving the door open to counterfeit inventory.
Counterfeit impressions are created when a bad seller replaces the URL of a low-quality site with a premium publisher URL, or a fraudster creates fake impressions and labels them with a high-quality publisher’s URL. Then, the counterfeiters send their fake inventory to auction at multiple exchanges and SSPs, without the knowledge of the publishers they’re impersonating, to trick advertisers into thinking they are buying premium publisher inventory. By hiding in the digital supply chain, counterfeiters are robbing premium publishers of revenue they deserve, and tricking advertisers into buying mislabeled and potentially unsafe inventory.
Ads.txt works by creating a publicly accessible record of authorized digital sellers for publisher inventory that programmatic buyers can index and reference if they wish to purchase inventory from authorized sellers. First, participating publishers must post their list of authorized sellers to their domain. Programmatic buyers can then crawl the web for publisher ads.txt files to create a list of authorized sellers for each participating publisher. Then programmatic buyers can create a filter to match their ads.txt list against the data provided in the OpenRTB bid request.
Example: Example.com publishes ads.txt on their web server listing three exchanges as authorized to sell their inventory, including Example.com’s seller account IDs within each of those exchanges.
#< SSP/Exchange Domain >, < SellerAccountID >, < PaymentsType >, < TAGID >
greenadexchange.com, 12345, DIRECT, AEC242
blueadexchange.com, 4536, DIRECT
silverssp.com, 9675, RESELLER
Note: The seller’s Publisher.ID will be specified in the “SellerAccountID” field in the ads.txt.
A buyer receiving a bid request claiming to be example.com can verify if the exchange and SellerAccountID matches the authorized sellers listed in example.com/ads.txt file.
Why should publishers implement ads.txt?
Advertisers looking to execute efficient, brand-safe programmatic campaigns should start demanding that their campaigns run only on authorised inventory, as defined by publishers’ ads.txt files, or work directly with their preferred publisher brands. If they’re not buying authorised inventory, they risk having their ads appear on counterfeit, low-quality websites, when they think they’re appearing somewhere else.
Sources: https://www.webfx.com/blog/internet/how-programmatic-advertising-works/, https://iabtechlab.com/ads-txt-about/, http://www.digitalmarket.asia/publishers-losing-money-counterfeit-video-inventory-study/