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Cleaning up the in-app supply chain: Supply Path Optimization and app-ads.txt

This is the first in a series on in-app fraud and supply path optimization.

Sometimes it’s easy to get lost in the jargon that surrounds advertising, especially for marketers not deeply involved in programmatic buying. It’s even easier to not fully understand all of the benefits that may come from new industry standards that are put forth from organizations like the IAB. 

In March of 2019, the IAB tech lab issued app-ads.txt guidelines which specifies a mechanism for publishers to list their authorized digital sellers, in order to fight against fraud and misrepresented domains. 

What is Supply Path Optimization?

With the proliferation of Networks, SSPs, DSPs, and ad tech layers buying and reselling inventory, the journey of an ad from agency to delivered impression has become opaque and confusing. Over the past year, many in the supply chain have called for a focus on Supply Path Optimization (SPO) to rectify the problems in the marketplace.

In the simplest terms, SPO is the process by which buyers make sure they have the most optimal path to each impression they’re buying - which means that they are appropriately pricing the impression and only buying through partners who add value at each “hop” of the buying process.

For advertisers, this means demanding clarity around who is buying and selling of inventory, and information on where it’s being bought.

How does app-ads.txt help?

App-ads.txt is a protocol through which developers list all the approved direct sellers and resellers of their inventory. Anyone can go to a publisher’s app-ads.txt file and see who has been approved to sell what kinds of placements, so DSPs and agencies know that they are only buying from approved partners. 

Why buying from direct sellers matters.

While app-ads.txt helps provide transparency to a previously opaque marketplace, shortcoming of app-ads.txt is that it still leaves room for abuse by bad actors. 

The value of ‘DIRECT' indicates that there is a direct business contract between the publisher and the seller.

Nothing is inherently wrong with ‘RESELLERS’, especially if they are an approved reseller. However, app-ads.txt doesn’t reveal the entire path to purchase for in-app inventory - only whether the last “hop” was from an approved seller.

But the app-ads.txt file doesn’t reveal what happens between the publisher and the reseller. There is still room for fraud, markups, and unauthorized buying and selling in the supply chain when advertisers buy from resellers.

Takeaways 

If you’re an advertiser looking to implement SPO on your in-app advertising, keep these things in mind:

  • Learn about the differences between inventory coming from “DIRECT’ and ‘RESELLER’ partners
  • Understand where approved resellers are sourcing their inventory
  • Whenever possible, buy inventory from direct partners which will drastically increase your SPO, drive efficiencies, limit exposure to fraud and the blending of traffic sources, and ultimately drive better performance
  • Ask your DSPs about their approach to app-ads.txt enforcement