What is Ad Verification and How Does It Work? – Clearcode Blog
In the age of ad fraud, an increasing amount of advertisers’ money is wasted on ad impressions that appear on fraudulent sites, don’t reach the desired audiences, or are not properly displayed in the user’s browser.
These issues effectively decrease the advertisers’ return on investment, and because an increasing number of ads are being displayed to Internet users each day and brands are pouring more and more money into online advertising, programmatic advertising is becoming a very lucrative target for the fraudsters.
Ad fraud is only one area eating away at advertising dollars, however. There are many variables at play when it comes to verifying whether an ad was seen by the intended user, such as ad placement and context.
Ad verification has emerged as a partial remedy to the problem and consists of spotting the areas that stop the ads from reaching the widest possible audience.
Ad verification is a process which allows advertisers to check if their ads are displayed in the right context, on the right websites, in the right area of a website, and seen by the right audiences. This area of digital-advertising technology is gaining traction; it may soon change how marketers buy media and how impressions are valued in the marketplace. This is evident with movements such as guaranteed viewability and the time-spent purchasing model.
Ad verification is typically used by advertisers to verify that the designated attributes of a served ad match their specified terms laid out in the ad campaign settings (e. g. site, geographical, or content parameters). To do this, verification tags, or beacons, are deployed along with the ad (inside the ad markup) to analyze the content of the publisher’s page and ensure the site is appropriate for the ad.
The ad-verification vendor then sends reports back to the advertiser or agency so they can analyze data about placement, performance, etc. Typically the agency/advertiser will have a separate login to the ad verification vendor, although some may be more seamlessly integrated, with a demand-side platform (DSP), for example. The whole point of ad verification is to have a third party that is impartial and can independently verify the delivery of the campaigns.
The goal of verification is not to prevent suspicious ads from showing altogether—especially since when the ad is displayed, the RTB auction has already happened—but it can help fend off the publishers with low viewability or high fraud traffic early in the campaign by excluding them (blacklisting) in the DSP.
Here is what’s happening in the image above:
A user accesses a website containing an ad slot.
An ad request is sent to multiple DSPs via supply-side platforms (SSPs), ad exchanges, and ad networks. In the case of a direct deal between the publisher and advertiser, the ad markup consisting of the creative, impression-tracking pixel, and ad-verification code would be configured directly in the publisher’s ad server.
The winning ad (from the DSP that had the highest bid) is sent to the publisher via ad markup (creative, impression-tracking pixel, and ad-verification code).
When the ad loads on the page, the ad-verification code collects data about the website and user.
The ad-verification vendor then provides the advertiser with performance reports, including details about ad placement, audience, engagement, etc.
Ad markup containing the ad-verification tag is returned to the browser by the supply-side platforms, ad exchanges, and ad networks, or configured directly in the publisher’s ad server if the media transaction is a direct deal between the advertiser and the publisher.
While ad verification is typically used by advertisers, it also benefits publishers.
For advertisers, it helps save their precious advertising budget and improve the efficiency of ad campaigns. It allows them to verify that the ads are displayed as contracted with the publisher. Ad verification also urges publishers to maintain transparent practices with regard to how they achieve and represent site traffic.
There are a number of factors that can not only affect the performance of an ad, but also impact the advertising brand’s image. As an example, if an ad was displayed next to inappropriate content (e. hate speech), then users may associate that brand with that content and may even get the false impression that the brand endorses the content.
For publishers, on the other hand, ad verification helps to minimize the risk of running fraudulent ads on their sites and have better control of the ads displayed on the site.
In the past, reviewing ads before publishing was the responsibility of the publishers’ ad ops, but as the number of network partners grew, the number of ads became unwieldy, making it difficult to consistently manage ad quality.
By implementing automated ad-verification technology, publishers can avoid displaying certain kinds of content on their sites, including:
Malicious ads (auto-redirects, phishing, drive-by downloads, and malware integrated into the pre-click or post-click)
Inappropriate ads (e. pornography)
Ads for illegal products
Badly targeted ads
Fake Traffic Detection
Today, even though a publisher may work with just a few intermediaries, they may actually connect to hundreds of demand partners through exchanges, making ad verification even more important. No method to detect fake traffic guarantees full success, but there are a few methods which vastly curtail the fraudulent practices.
Some publishers resort to elaborate methods to detect fraudulent bot traffic that may impact and misrepresent audiences in front of advertisers:
Bot traps: These are 1×1 pixel images on the page, or links that use the same color as the background. While they are invisible to the human eye, a bot might fall for them. However, because some bots are smart enough not to “click” the links in the same color of the background, it is recommended that the trap uses only a similar color (but not exactly the same).
Redirects using Javascript: Because many bots don’t understand Javascript, making a Javascript redirect will stop the bot from actually reaching the advertised offer.
Timed redirects: These are bot traps that automatically redirect users clicking an ad to the actual offer through a blank 200ms-redirection landing page. This pause (200 milliseconds) is way too small a time frame for a human to react and click anything, but the bot will automatically click a “trap” link placed there (bot traffic is typically “too fast to be true”).
Typically, we see implementations of combinations of the above methods.
As mentioned above, ad verification is focused on checking if the ads displayed on the website meet the criteria set out in the campaign settings. The most common areas checked by ad-verification tags include:
Site context
Ad placement
Viewability
Competitive separation (to ensure the ads are not displayed next to competitive brands)
Fraudulent activity
Frequency cap
Geotargeting (IP-lookup)
It is possible to verify IP addresses and check if they have been infected, are proxies, or are simply data centers, for example, where no human traffic can be originating from. Below we go in more detail about why these particular areas are important for digital marketers.
Viewability involves checking whether the ad was contained in the viewable space of the browser window based on pre-established criteria, such as the percent of ad pixels and length of time the ad is in the viewable space of the browser.
Now, with ad verification, advertisers have the ability to calculate reach based on actual views. This gives them information about which media buys and publishers perform best and offer the most value.
To track viewability, verification vendors use ad tags which can look outside of the iframe to assess where the ad is on the page and how long the user was active on the page. While this provides a point of reference, it is not a complete measurement because viewability can also be determined by measuring whether the intended audience viewed the ad impression.
Just because an ad doesn’t load “above the fold” doesn’t mean that it’s not a viewable impression. For example, if the content which the intended audience is interested in is at the bottom of a page, then it might be more impactful for your ad. This may be where the most relevant content is, and where the audience is spending more time.
Fraudulent Activity
Activity connected with fraudulent click traffic and ad impressions has been plaguing the industry for many years. It can take multiple forms:
Ad Fraud Technique #1: Invisible and hidden type of attack makes the ad invisible on the website, even though the impression will be reported.
Ad Fraud Technique #2: Impression type of attack conceals the real website where the ad is displayed.
Ad Fraud Technique #3: Hijacking so-called ad-replacement attack refers to the event in which the malware hijacks the ad slot on a website and displays an ad, generating revenue for the attacker rather than for the publisher (the owner of the website).
Ad Fraud Technique #4: Hijacking milar to hijacking ad placements, an attacker can hijack a user’s click. When the user clicks on an ad, the attacker redirects the user to a different site, essentially stealing a prospective client from the advertiser.
Ad Fraud Technique #5: Popunders. Popunders are similar to pop-up windows, but the ad window appears behind the main web browser window, rather than in front. It can be combined with the impression-laundering technique to generate additional revenue.
Ad Fraud Technique #6: Bot lishers can use botnet traffic, which either consists of compromised users’ computers or a set of cloud servers and proxies in order to generate revenue by faking clicks and gaming attribution models.
Ad Fraud Technique #7: Fake as in the case of desktop and laptop fraud, fraudsters also use mobile apps to imitate human-like activity. It typically involves a combination of methods like bots, malware, and click or app-install farms, all with the goal to build large audiences of fake users, and consequently feed on the online advertising ecosystem.
Ad Fraud Technique #8: Fake stall farms are another way to imitate human-like behavior. They install apps using real people as dedicated emulators. Like in the case of fraudulent ad clicks, fraudsters use teams of real people who install and interact with apps en masse.
Ad Fraud Technique #9: Attribution are pieces of malicious code that run a program or perform an action. Bots aim to send clicks, installs, and in-app events for installs that never actually happened. Fraudulent clicks, for example, are sent to an attribution system, gaming attribution models and falsely taking credit for user in-app engagement. While they can be based on real phones, most of them are server-based.
Contextual Brand Safety
Contextual brand safety is making sure a brand’s ad doesn’t appear next to inappropriate content.
Keyword verification is used in specific campaigns to ensure ultimate brand safety based on the specific content or keywords found within the content of the pages where the impression is being served.
Using ad verification may be especially important for advertisers promoting pharmaceuticals and alcoholic beverages, as these categories of ads have many restrictions tied to them about where the ad can be featured. Failure to uphold this level of protection can result in costly fines for the brand.
Many ad-verification providers and some ad servers have already introduced more granular categories to help advertisers decide whether the ad should be displayed on the page. This can include categories, such as:
Adult material
Copyright-infringed content
Weapons
Violence
Hate and profanity
By blocking an ad in these categories, brands are assured that their ads will not be displayed in undesired contexts.
The Main Ad-Verification Vendors
There are many different ad fraud companies on the market that detect certain types of ad fraud, like the ones listed above, for both advertisers and publishers.
Below are just some of the main ad fraud companies that you’ll likely come across:
Integral Ad Science (IAS)
Moat (acquired by Oracle)
CHEQ
DoubleVerify
White Ops
Pixalate
Confiant
The Media Trust
Fraudlogix
Forensiq (now part of Impact)
comScore
Ad verification is not a temporary whim of advertisers. An increasing number of media and advertising companies implement ad-verification solutions.
GroupM, the world’s largest advertising media company in terms of billings (and parent company to WPP media agencies including Mindshare, MediaCom, Wavemaker, Essence, and m/SIX) already implements ad-verification tags. This is an effort to ensure better enforcement of compliance with ad specs with publishers.
A number of major networks and exchanges have also jumped on the ad-verification bandwagon. Networks like Visto (formerly Collective), Undertone, and Tremor Networks have all added verification analytics to their reporting to ensure better efficacy of the ads displayed within their networks.
On top of that come other AdTech vendors, including AudienceScience, Rubicon Project, Sizmek, that have partnered with some of the ad verification companies listed above.
Google’s DoubleClick also provides advertisers with a unified platform which allows ad verification as an extension of their services.
Final Thoughts
Ad verification is part of a growing movement towards improved transparency in AdTech that’s being pushed forward by brands, publishers, and advertisers. We’ve already started to see progress in some areas, especially around fees and commission, so it won’t be long before brands and advertisers start asking for more clearer insights into where their ads are shown and to who.
List of Ad Verification Companies – Know Online Advertising
Adometry:
Adometry, formerly Click Forensics, Inc., redefines marketing analytics by combining and interpreting previously silo-ed sources of big data to generate actions that improve return on advertising spend and increase sales. Through its SaaS-based attribution platform, Adometry processes tens-of-billions of marketing touch points from online and offline media channels for some of the world’s largest advertisers to identify the true consumer purchase journey. Adometry’s scientifically proven methodology and flexible, easy-to-implement solution generates the industry’s most accurate insights, in the shortest amount of time.
Its clients include Microsoft, Hyundai, Tory Burch, Havas and AT&T.
Company Website: AdSafe Media/Integral Ad Science:
AdSafe Media is now properly known as Integral Ad Science. It is a global media valuation platform that is integral to the buying and selling of quality media. The company focuses on a comprehensive solution set that enables advertising to appear in quality environments where they receive quality exposure–and rewards the sell side for providing quality media. Their platform drives improved visibility and ROI for players across the digital media landscape.
Company Website:
AdXpose:
AdXpose acquired by ComScore is the leader in digital advertising analytics solutions and uses same technology as adometry i. e. SaaS technology which provides advertisers and publishers with greater transparency and confidence in the quality, safety, and performance of their digital advertising campaigns.
AdYapper:
AdYapper is an MRC accredited ad viewability specialist focused on working with marketers and agencies to increase the efficiency and effectiveness of their digital advertising. AdYapper’s proprietary technology is able to detect where digital ads are appearing, if they are being seen by consumers and for how long. By arming marketers with these insights along with actionable recommendations AdYapper unlocks major gains in campaign performance and increases budgets for digital ’s is a platform that provides real-time detection and elimination of wasted ad spends. They enable brands and agencies to understand in real-time, if their ads worked, if their ads were ever seen (viewable impressions), and what people really think of them. Additionally, AdYapper’s consumer-facing platform empowers users to rate and respond to ads, when and where they experience them.
AdYapper tracks display and mobile ads, generating detailed verification data, consumer sentiment, and viewability monitoring on 95% of all ad impressions. They generate real-time analytics across the entire ad buying ecosystem and centralize the data into one platform to identify wasted ad spend and provide direction on how best to reallocate the recovered ad spend to make in-flight campaign decisions.
Double Verify:
Double verify a well-known ad verification company which provides online media verification and campaign effectiveness solutions for brand marketers, agencies, advertising networks, demand side platforms, exchanges and digital publishers looking to ensure quality advertising environments, campaign transparency and performance.
Company Website: GeoEdge Analytics:
GeoEdge analytics is an awesome ad verification company and has proved to be the ideal ad verification solution. They offer ultimate malware protection on top of a host of compliance and operational alerts. Their best part is that they are simple to work with and gives best solution. GeoEdge Analytics is fast and easy to set up, requires no integrations with the ad server and is entirely seamless (no tags). Operating the system is as simple as implementing it. With an extremely friendly user interface and short learning time, GeoEdge Analytics makes it simple to search through the collected data, filter it according to multiple criteria, generate accurate on-demand reports and receive real-time alerts.
They help to view, monitor and analyze ads that are displayed on any web or mobile site, for any user, in any geo location to ensure compliance, streamline ad operations and maximize monetization.
Company Website: Proximic:
Proximic helps media traders grow revenues through improved online ad placements by supporting their transactional decision-making with real-time page-level contextual, brand protection, and audience interest data. We do this by providing the most complete, fresh, and transparent real-time assessment of value-impacting data, such as a web page’s content, its appropriateness for specific advertisers, and its visitors’ interests.
The company helps brand advertisers assess the quality of ad environments for their brand messages. This leads to higher acceptance of online ads for users and advertisers and ultimately brings more revenue into the online ad market place.
Company Website: Peer39:
Peer39 is an online semantic advertising company which has the technology that provides page level intelligence that accurately and efficiently matches online ads to content. The company’s patented natural language processing and machine learning algorithms are able to derive Quality, Safety, Language, and Category attributes from web pages, thus empowering networks, exchanges, publishers, SSPs, DSPs and emerging advertising platforms to boost monetization.
They claim to improve the relevance of advertising on Internet publisher websites and also does not use cookies or web beacons in deriving their attributes.
Company Website: Project SunBlock:
Project Sunblock is one of the world’s leading Content Verification tools dedicated to providing the best in brand safety for digital advertising. Their real-time monitoring and threat assessment technology paired with their intelligent decision engine which provides the type of online brand insurance that is required in today’s complex internet marketing landscape.
Project Sunblock functions in tandem with client’s existing ad server platforms to minimize exposure to ad placements that conflict with their values or endanger their reputation. They monitor and block at a page level rather than just at domain level, something which isn’t available with the first generation tools currently in the market
Company Website: RealVu:
RealVu develops viewable impression technology for measuring digital ad performance and offers RealVu platform, a multifunctional on-line media and advertising manager for the delivery, tracking, and reporting of advertising and media based on viewable impressions. It is the only premium distribution platform dedicated to transparent brand safe Viewable Impressions (CPMv). Their marketplace is built on a proprietary ad serving platform that actually determines if an ad space is viewable before the ad is requested. Then based on a number of parameters including viewabilty, contextual, geographic and behavioral targets, RealVu serves the display advertising.
Company Website: The Media Trust:
“Trust, But verify with us” is their company slogan. It is a verification company which is the leading provider of transparency and ad verification solutions to over 300 companies in the online and mobile advertising ecosystem. Their proprietary web monitoring technology identifies malvertising and data leakage occurring in ad tags and content running through the entire advertising value chain- from agencies and DSPs, to ad exchanges and networks to sell side platforms and web publishers.
They supports display, rich-media, video and search advertising on behalf of some of the most well-known brands on the internet including AdMeld, AdMob, AOL, Burst Media, Comcast, OpenX, Toyota, Yahoo and YouTube.
Company Website:
Vendor Validation 101: What Is It and Why It Matters – Customodal
Your company cannot and does not want to supply all business essentials in-house, and you realize that it is time to start outsourcing tasks and procuring supplies so that you can direct more time and effort to the core function of your business. The problem is that now that you are using suppliers, you are incurring a lot of expenses as a result of outsourcing inefficiency.
What is vendor validation, and why does it matter? Vendor validation is the process that confirms a supplier as a legitimate entity. It can save your company significant money by ensuring that you are not contracting with fraudulent vendors and that your existing vendors have not been renamed, relocated, or gone out of business.
The process for vendor validation becomes increasingly complex the larger a company becomes, with many multinational businesses requiring entire procurement departments to handle the vendor validation process. However, it is a necessary task, as roughly 30 to 40 percent of suppliers change information on any given year.
Why Is Vendor Validation Necessary?
Vendor validation is a necessary part of any business because you are likely to need to acquire supplies, materials, and/or services from outside entities to maintain your business function.
Let’s say that you are a manufacturer of laptop computers and rely on a vendor to supply you with semiconductors. If the semiconductors do not get to your business on time, you will not be able to make the computers, and any delays in production will certainly hurt revenue, putting your entire business operations at risk.
While you may have a trusted vendor of semiconductors who has served your business well over the years, it is not enough to trust that the semiconductors will continue showing up year-after-year, as any of the following may happen if you are passive in the procurement process:
Your vendor goes out of business
Your vendor has a change of address
Your vendor changes names and/or is acquired by another company
Your point of contact or person handling your account is changed
As the vast majority of payments today are handled online or via credit card, any of the above scenarios could keep payments from processing and delay and/or cancel the shipment. And while it should be considered common courtesy or “good business” to contact partners with any changes, it cannot be assumed. Therefore, vendor validation must be actively managed.
In addition to these considerations, vendor validation is necessary because, in the Internet era, there are many scams out there and businesses that are less than reputable. As such, your company must make sure that it is partnering with a real entity prior to using a vendor for the first time.
On top of confirming that the vendor with whom an organization does business is real, vendor validation is necessary to ensure that all end of year tax documents reconcile.
How Does Vendor Validation Work?
If you have ever worked for a large organization, especially a government agency of any sort, then you are most likely familiar with a “purchase request” or a “procurement request. ”
This is generally some type of form or online submission in which the party of your organization desiring to do business with a vendor fills out all of the relevant vendor information, such as company name, address, and contact information of the responsible vendor agent and submits it to the procurement department.
After this step is taken, the organization’s procurement department will use this information to vet all potential and returning vendors through the following process:
Verification of tax information, such as an active Tax Identification Number
A public domain search
Direct telephone contact
Assessment by a third-party service, if necessary
Once the procurement department has validated the vendor along these lines, then a purchase requisition is submitted, or the original request is stamped and sent to accounting. This essentially is a green light from procurement services, saying that the vendor is a legitimate entity, and the purchase can be made, as long as funds are available.
In addition to the initial vendor validation, this process must be completed on at least a yearly basis for most organizations.
The Importance of Vendor Validation: A Detailed Look
Now that you understand why vendor validation exists in an organization and have a basic understanding of how it works, let’s take a look at some specific areas in which vendor validation can improve business performance.
Increased Efficiency and Decreased Costs
Many companies think that the key to increasing efficiency and decreasing costs is to find the right supply, get it at the right cost, and have it delivered at the right time.
While this is certainly an important business practice, any savings found in this area can be quickly erased and/or negated if vendor data is bad.
How A Company Loses Money From Bad Vendor Data
Take the example of the company that updated its terms and services and had to send out a letter to all vendors notifying them of this change, only to have a significant portion of these terms of service letters returned as undeliverable.
Not only did the company lose money on wasted postage, but efforts subsequently had to be redoubled in updating vendor data, slowing other business functions while the company waited for this information to get up to date.
This example is not an isolated exception. Research shows that average mid and large market companies are losing millions of dollars in potential savings annually due to inaccurate supplier records.
Not only does inaccurate vendor data lead to increased costs at the source of the business/vendor relationship, but it will create inefficiencies for all company employees involved in the supply chain, including those in accounts payable, legal, and other areas.
It has been proven that functional silos (leaks in the system) in organizations that require more than two levels of authorization for purchase orders are at an increased risk of loss or duplication of data, both of which will lead to costly errors.
What Happens to Vendor Data Without a Validation System?
Let’s consider our previous example of a computer manufacturing company to demonstrate how vendor data can get lost, confused, or duplicated if an appropriate vendor validation system is not in place:
The research and design department (R&D) learns of a new, high-efficiency semiconductor that they want to use for an updated laptop set to release next year
After quickly filling out the vendor information and part specifications, R&D sends the proposed semiconductor over to production, asking to see if the company’s manufacturing equipment is compatible with the alternated semiconductor
Once checked with production, the proposal is sent to the legal department, asking to do some research as to whether there is any liability in making the semiconductor switch and if there are potential breach of contract considerations when switching suppliers
The legal department then sends the request to accounts payable to see if there are sufficient funds to place the order at the requested quantity
Using this model, it is easy to see where vendor information can get lost in translation without a designated procurement department to validate all information, especially when taking into consideration that the supply chain is not this simple for most companies, with added layers and a higher degree of outsourcing added to the process.
By aggregating supplier data in a standardized way, whether it be through a procurement department or specialized vendor validation software, an organization can improve operational efficiency and see increased returns at the bottom line.
Competitive Advantage
Many organizations like to use analytics to boast about the performance of their firms and use it as the groundwork for their competitive advantage. For example, you may hear any of the following statements regarding a company’s performance:
“We were able to increase year-over-year revenue by 5%. ”
“We sold 100, 000 more units than the next leading competitor. ”
“Our price to earnings ratio has improved for three straight years. ”
However, over time, data output will only be as good as data input, making strong data readiness and cleansing protocols essential in attaining optimal competitive advantage.
To get very technical, some vendor validation firms and software programs are able to assign values to pieces of input data, increasing competitive advantage by allowing companies to see just exactly how vendor information can influence output analytics.
The Data Readiness Level
The Data Readiness Level (DRL) is the quantitative measure of the value of a piece of data at a given point in the processing flow. The DRL is a vigorous assessment, based on quantifiable and relevant metrics, of the value of data in various states of readiness.
Therefore, accessing and utilizing the correct data will increase the DRL, which will ultimately result in better output analytics. To prepare this data in the context of supply chain management requires a number of distinct processes:
Data acquisition – the first step in any vendor validation process is the collection of the “raw” data. This may come from a customer’s materials management information system (MMIS), group purchasing organization (GPO), or local suppliers. All relevant data of potential interest is collected in this step
Data cleansing – the data is checked for completeness and accuracy. Accurate and properly coded data is foundational for category management, allowing for leveraging, pricing agreements, quantity discounts, value analysis, and other cost management opportunities. This step ensures the data is organized logically with no duplicates
Data classification – in this step, data will be coded to correspond to different segments and products. This often involves some kind of automatic process augmented with manual verification to ensure efficiency and accuracy
Database population – finally, coded data is then loaded into the appropriate application. This allows data to be leveraged by benchmarking and cross-referencing with other data forms
While implementing DRL processes into supply chain management is very complex and more prevalent in very large, highly competitive industries, such as healthcare, it does clearly demonstrate the value supplier data can have on company output analytics, reinforcing why vendor validation is necessary for businesses of all sizes.
Diversity Reporting Needs
There is increasing pressure on procurement professionals and sourcing managers to show diversity when reporting their supply partners. Specifically, businesses in the public sector require small business set-asides, meaning that a certain percentage of suppliers come from a diverse pool of small businesses.
In addition, some federal contracts may mandate that those companies operating in the private sector choose a specified percentage of vendors from small businesses, as well.
Regardless of any mandates, leading companies choose to have supplier diversity policies in their company protocol, as there are numerous benefits to using small business vendors and choosing from a diverse pool of suppliers.
While the economic impact of local sourcing can be significant, small businesses have a tendency to be more unstable than more established corporate suppliers, so scrupulous vendor validation needs to be undertaken when fulfilling diversity reporting needs.
Vendor Validation and Vendor Management: The Intersection
As mentioned earlier, the need for vendors arises when a company cannot or does not want to source all supplies and/or labor in-house and must outsource in order to better focus its efforts on its core competency.
Going back to the example of our hypothetical computer manufacturing company, the firm’s core competency would be building computers–not manufacturing semiconductors, plastic for the keys, or any of the pencils, paper, or infinite list of cleaning and office supplies that may be necessary to keep the firm operational.
As such, the computer company can more efficiently use vendors to supply all of these products and allow it to focus on what it is good at–making computers.
While the selection of vendors may be more or less involved based on the size of your company or the scope of the need that you are outsourcing, many organizations know that successful vendor relations can make or break their firm, so the vendor selection process can become quite involved.
The vendor management process involves four basic steps that allow companies to fulfill their supply needs, of which vendor validation is an essential component.
Step Number One: The Need to Outsource Arises
The vendor management process starts when the need to outsource a supply or task arises. The organization will then begin an extensive search of vendors who can fulfill their outsourcing requirements. Potential vendor candidates may be located from any of the following sources:
Internet searches, such as through business networking platforms like LinkedIn
Professional references
Industry fairs and other in-person networking events
Once a sufficient pool of vendors is obtained, the firm will perform the following steps:
Negotiate contract terms
Receive a price quotation from each prospective vendor
Do an in-depth performance evaluation of each vendor’s previous work
Prepare all necessary vendor related documents
Negotiate payment processing methods
Step Number Two: Evaluation of Vendor Pool
After the potential vendor pool has provided the firm with all of the aforementioned requirements, the organization will then proceed with an extensive vendor evaluation process.
The following considerations are weighed and ranked by the firm prior to coming to a conclusion on who to select as a vendor:
Who has the best track record of quality performance?
Which supplier can give us the terms we are looking for?
Which vendor is the most affordable?
What is the vendor’s reputation in terms of ethicality?
Does the firm have a past history with the vendor, and, if so, is it positive or negative?
Step Number Three: Vendor Validation
After a quote has been accepted, and the best vendor has been chosen, the vendor validation process starts.
The firm will check all references and perform an extensive online search of the vendor’s particulars. The firm will scrupulously check all of the vendor’s financial documents, where available, to make sure that its financial solvency is not in question, and the selected vendor can meet the firm’s supply needs for the life of the contract.
During the validation process, all contact data and tax information is carefully inputted to the company’s records. In addition, the firm will also give careful consideration to ensure that the vendor has all of the proper certifications and the required level of insurance to be able to supply the company as needed.
Finally, if the company has any confidential information to which the vendor may be exposed as a result of the partnership, any and all appropriate non-disclosure agreements must be signed.
Step Number Four: Vendor Begins Supplying the Firm
After a vendor has been chosen, all of the required vendor information has been vetted during the vendor validation process, and a contract has been entered, the vendor enters into the company’s network of suppliers and must be managed by the sourcing manager or procurement department.
In addition to the ongoing validation process through updating any and all information that may change for the vendor, the sourcing manager or procurement department should be performing ongoing evaluations of the vendor’s performance and ensure that the agreed-upon contract terms are being met.
Again, major organizations will have a large network of vendors that will provide a variety of functions for the firm. Through the ongoing evaluation of each vendor, secondary and tertiary options should be taken into consideration if a primary vendor is no longer willing or able to perform at the required levels.
Vendor maintenance requires huge documentation. Significant investment needs to be made in vendor management software, with some firms even employing entire IT departments specifically for vendor relations.
The Costs Associated with Vendor Validation
As with anything in the business world, it costs money to make money.
However, the costs of vendor validation can often be begrudgingly spent, as the investment in vendor validation is not necessarily a means of making money, but, rather, a means of saving money.
While it is easy to see that buying a bunch of computer components and manufacturing them together to sell as a computer whose final cost is greater than the sum of its parts is a profitable enterprise, investments in vendor validation can seem like unnecessary expenses if you do not have a proper understanding of the value of data.
The following are some, but not necessarily all, of the costs that may be associated with a successful vendor validation program.
Personnel Expenses
Any way you want to look at it, vendor validation is going to cost your business some money. It will be manifested in a number of ways, depending on the size of your business:
Small businesses – if you run a sole proprietorship or any other small business that does not have a specifically assigned procurement department, vendor validation still has to occur. The cost will often come in the form that you or your partner cannot focus on production, marketing, or sales efforts as you commit time to verify vendor data
Mid-size businesses – these organizations are large enough that the list of suppliers cannot be managed by an associate and/or employee who is expected to provide other functions for the business, so a sourcing manager must be hired, requiring a salary, benefits, and any other commensurate perks of the position
Large businesses – for corporations and government agencies, entire procurement departments are established, requiring a full staff of employees of various responsibility levels. Not only does this increase the direct costs of compensating these employees, but an additional strain is placed on payroll and HR to maintain this department
Office Expenses
While this may not impact small businesses significantly, any business that needs to hire additional employees to conduct vendor validation will have to invest in more offices and office materials for these employees.
For those large entities that need to create procurement departments, this could even lead to increased rent expenses due to needing additional buildings, floors, and/or wings to house this department.
Technology Investments
At the very least, a solid database software will need to be purchased, even for small businesses, to ensure that vendor records are properly maintained and organized.
For larger organizations, the technological investment will be even steeper, with additional computers, servers, and storage space likely to be required.
For those firms in very large, competitive industries that rely on DRL analysis to optimize output analytics, specialized software will need to be purchased to aid in data acquisition, cleansing, and classification. Some popular vendor validation software includes ConnXus and SmartScrub.
The Necessity of Vendor Validation: Final Thoughts
Despite the many costs that may be associated with a successful vendor validation program, preventing the multitude of losses that can result from inaccurate and/or unvalidated vendor information makes vendor validation a necessary undertaking for any business.
Studies have shown that some 30 to 40 percent of vendor information can change on a yearly basis. The following are ways that a lack of vendor validation can hurt an organization:
Incorrect information – as many payments are conducted with credit cards or other online transfers, missing, or incorrect information such as billing addresses that have changed or credit cards that have passed their expiration date can delay scheduled shipments
Duplicate information – vendor information that is not properly organized and maintained can create situations in which purchase requisitions are duplicated throughout the procurement chain, creating a situation in which too much supply is ordered and cannot be used
Defunct suppliers – as many companies are required or choose to choose from a diverse pool of local, small business vendors, there is a chance that some suppliers may go out of business between shipments, causing the business to have to scramble to find a secondary supplier in order to keep production on schedule
Change in agents – you may have relied on a specific agent in the past as your point of contact with an important supplier. If this person changes for any reason, your contract may be at risk of being left unattended or falling through the cracks, putting the shipment of your supply at risk
Fraudulent vendors – as much business is conducted online nowadays, the prevalence of scams and illegitimate business practices has skyrocketed. Not only will trying to use a fraudulent supplier lose a business money in the form of missing supplies, but some costly tax implications could arise, as well
Diversity penalties – public businesses and companies involved in large government contracts are required to use a diverse pool of suppliers. Inaccurate vendor information can lead to penalties as a result of a company thinking it had an equitable proportion of diverse suppliers
Low competitive advantage – many companies rely on output analytics as a means of measuring organizational performance. However, over time quality output can only be attained by ensuring quality input. Well organized and cleanly acquired vendor data will give a business a competitive advantage over its peers
Vendor validation is a complex process that has become additionally nuanced in the information age, with the prevalence of online commerce and a proliferation of data presenting increased challenges for businesses.
These challenges become increasingly complex for large companies and corporations, as the difference between good vendor data and poor vendor data can create a significant difference in a firm’s bottom line.
As such, vendor validation is a necessary undertaking for a business to verify its suppliers as legitimate entities, creating a smooth, uninterrupted supply chain.
Frequently Asked Questions about ad verification vendors
What are ad verification vendors?
Ad verification technology companies collect a range of information about the campaigns they monitor. This is typically used to provide reporting and insights about the advertising campaign that is being measured.
What is a verification vendor?
Vendor validation is the process that confirms a supplier as a legitimate entity. It can save your company significant money by ensuring that you are not contracting with fraudulent vendors and that your existing vendors have not been renamed, relocated, or gone out of business.Jun 22, 2020
What are the 4 core pillars of ad verification?
The four pillars are Invalid Traffic (IVT) detection, viewability, audience reach and brand safety.Mar 30, 2016