Digital channels – websites, email, search engines, social media and mobile – have fundamentally changed the face of business. E-commerce now accounts for over 16% of total global retail sales. Of course, where consumers go, fake products and services proliferate. The hard and soft costs to brands are staggering.
Counterfeits in the digital world account for almost one-third of all counterfeits by volume. Brands are losing hundreds of billions of dollars a year to online counterfeiting and pirated content. That does not include the negative impact of online brand impersonation on customer experience, long-term loyalty, marketing investments and campaign performance. While digital strategy is a key component of business today, many brands still prioritise the physical world and lack a comprehensive brand protection strategy for digital channels.
An effective online brand protection strategy allows you to recapture revenue, enjoy direct cost savings and safeguard your marketing campaign spend. Ensuring authentic brand experiences has the added benefit of solidifying brand reputation while reducing instances of online fraud and unauthorised channels.
Smart brands recognise this and craft specific brand protection strategies to address the risks presented by the digital world. By elevating online brand protection within their organisations and partnering with experts who set the standard for protecting brands online, executives see demonstrable return on investment (ROI).
$320 billion in revenue lost per year
Brand impersonation runs rampant online, with fully functional websites and authentic-looking emails imitating their legitimate counterparts with incredible accuracy. No industry is immune – you will find everything from pirated music and movies to travel scams; fake pharmaceuticals to automotive parts, apparel and accessories. By leveraging your content and imagery, URLs that appear authentic and other techniques that aim to steal traffic, imposters can easily hijack your brand, hook your customers and steal your profits.
It is so easy to hijack brands online, taking advantage of their good names, that in 2017, brands lost more than $320 billion to online counterfeiting and piracy. Brandjackers are taking advantage of changes in digital channels and consumer behaviour – a scenario which will only become more serious.
The impact of digital transformation on retail purchases is multifaceted and facilitated by the explosive growth in smartphone ownership. Nearly 80% of luxury sales today are digitally influenced, that is, consumers had one or more digital touch points prior to purchase. In emerging markets, it is expected that by 2022, digitally influenced retail will surge to 47%, up from 33% in 2017.
Search first, shop later
Take a moment to think about how your customers search for goods. The vast majority of in-store activity begins with a search, not brand websites or official mobile apps. Today, 82% of smartphone users consult their phones on purchases that they are about to make in store. Over 40% of consumers consider mobile an important resource for a purchase decision. Most find brand websites through search engines, email, social media and mobile or online ads, rather than by typing a URL directly into browser address bars. This means that even when a customer visits a retailer, businesses can no longer rely on face-to-face encounters for brand experience, customer service or sales. As search continues to be the centrepiece of consumer activity across mobile, web and social media, it is crucial to ensure that your brand protection strategy addresses the risk of lost traffic that affects the success of your digital marketing investment.
Brandjackers threaten your marketing dollars
By using your branded keywords, imposter sites syphon your organic search traffic. Another common practice is for counterfeiters to run their own search advertising campaigns to tout their fake wares. Not only do you lose valuable traffic, but you are also forced to compete against your own branded keywords, driving up digital marketing costs and compromising campaign performance.
How big is the problem? Two different international surveys found that a quarter of online shoppers have bought a product that turned out to be fake. Many consumers are directed to sites selling counterfeits via search engines while attempting to seek legitimate goods. In 2018, a survey carried out by IFOP at the request of UNIFAB found that 47% of people who had bought a trademark infringing product had typed the name of the product in a search engine.
This calls for investing in a comprehensive online brand protection strategy which includes effective enforcement.
Degrading customer trust and confidence
When counterfeit products disappoint buyers, it leaves a bad taste in customers’ mouths directed at your brand. Discord only increases when customers file a warranty or customer service claim regarding that counterfeit product and you cannot help.
The power of word-of-mouth advertising can now be used against you. Consumers are more likely to trust online reviews than advertisements. The collective voice of the Internet is eclipsing the persuasive power of family, friends or colleagues when it comes to influencing purchase decisions. When someone unknowingly buys an inferior fake product and posts a negative online review or complains to their social network, the impact on a brand can be devastating.
Despite the efforts of leading social media sites to provide a secure environment for online commerce, spoof social media accounts are a threat to overall brand health, undermining engagement and preying on consumers who associate social networks with transparency and trust. The endgame of the people behind these accounts is to tarnish your reputation and make your brand appear less viable, rather than to directly steal revenue. It can take years, even decades, for a business to repair a damaged reputation and recover from a decline in consumer confidence and satisfaction. It is important not to delay your response to these challenges.
Increasing liability risks
Where unsafe products are concerned, the risks are much higher. Products such as counterfeit medications and automotive parts, for example, pose a grave threat to customer health and safety and substantially increase liability risks. The majority of counterfeit medications are purchased from websites that look authentic, not from pharmacies or street dealers.
Partner compliance risks
Many companies suffer the costs of misguided promotions by their partners or sales outside of authorised channels. The risks include:
- paid ad trademark bidding – inadvertently increasing pay-per-click (PPC) spend;
- unauthorised promotions and discounts;
- landing page violations; and
- logo misuse or improper co-branding.
The best defence is a good offence
Given the risks to your brand associated with brandjackers, it is easy to become overwhelmed. However, developing a comprehensive strategy can make a significant difference and deliver measurable benefits.
Today, considerable investment goes into designing hard-to-duplicate packaging, supply chain management and other brand protection strategies in the physical world. However, a more comprehensive brand protection strategy – linked to your risk management framework and corporate policies – is needed to safeguard brands across both digital and physical channels.
By prioritising online brand protection within their organisations, businesses position themselves to mitigate risks and financial impact resulting from stolen web traffic, brand impersonation and fraud. They are also more effective at preventing damages to customer experience, increasing long-term brand health. With the right strategy in place, companies see significant ROI.
Optimised marketing investments
One area where increased vigilance pays off is in increased efficiency of digital marketing investments. For example, one European jewellery brand experienced tremendous results when it implemented and enforced its online brand protection strategy. The company was running up against counterfeiters who were purchasing branded terms in paid search marketing, competing with the brand for site traffic. By acting against these imposters, the brand was able to:
- reclaim about one million site visits;
- increase search traffic by 50% without increasing ad spend; and
- decrease PPC for paid search ads by 41%, driving more traffic without increasing budget.
The ability to detect and monitor for unauthorised sales, promotions or trademark abuse can pay dividends. Beyond monitoring for partner compliance, trademark and copyright abuse, businesses will ensure that their brand is being represented appropriately while avoiding paying unnecessary commission.
However, it is important to recognise that fighting online brandjackers and achieving results takes concerted effort. Many businesses find it beneficial to establish a cross-functional team to develop proactive, integrated brand protection policies.
These teams monitor online, as well as physical, channels where brand infringement is prevalent. The online channels include social media, business-to-business and consumer marketplaces, e-commerce and auction sites, paid search and email. Physical channels include any of the bricks-and-mortar retail locations, flea markets and market squares where the average consumer would shop. When brand infringement is detected, these teams are empowered to take appropriate action guided by company policy, threat severity or level of risk, all within a framework of legal guidelines.
Online brand protection strategy
Success hinges on having a well-thought out brand protection strategy that addresses the specific risks faced by a brand and use of best practices. Many businesses call in a brand protection expert to craft the strategy and guide implementation and enforcement. Specific enforcement tactics may include:
- shutting down counterfeit and digital piracy sites en masse;
- halting the sale of unauthorised products by identifying and terminating counterfeit listings on exchanges;
- enforcing policies with resellers, agents and franchisees so that you do not pay commission on misdirected traffic;
- identifying counterfeiters competing against you in paid search;
- reporting spoof social media sites to ensure authentic interaction and drive engagement; and
- taking down illegitimate and cybersquatted sites to minimise customer confusion.
By taking a strategic approach to brand protection across digital channels, businesses can expedite implementation, cut costs and improve their bottom lines sooner.
Physical or on-product authentication strategy
While the online retail industry is experiencing unprecedented exponential growth, many consumers still choose to shop through traditional bricks-and-mortar retail stores where the product can be seen and instantly obtained. Therefore, it is imperative that brand owners use a product authentication strategy in conjunction with their online brand protection strategy.
Product authentication refers to marking the product or its packaging to identify it against unauthorised counterfeit products. While there are advantages to the end consumer, product authentication is mostly designed for various stages of the product supply chain to verify legitimacy. Those supply chain stages may include wholesalers, consolidators, shippers, retail distribution facilities and even investigators and Customs or border control.
When developing an authentication strategy, it is best to follow one or more proven best practices used successfully by thousands of brand owners. Best practices may include:
- using visual authentication technologies with both overt and covert security features, such as holography (and other optically variable techniques), liquid crystal or colour shifting pigments;
- marking each product with a unique identification that allows each product to be tracked back to its point of manufacture;
- deploying a permission-based system that allows the supply chain to verify authenticity but providing detailed information on a need-to-know basis;
- educating local customs officials where products will be crossing a border on how to
- determine the products’ legitimacy; and
- creating a consumer engagement programme that covertly allows the brand owner to track proliferation of legitimate and illegitimate goods while providing valuable marketing information.
Although any one strategy is significantly better than doing nothing, the combination of online and product authentication brand protection significantly increases both your product security your market share.
Intelligence provides a competitive advantage
Massive amounts of information are collected in the fight against digital brand abuse. There is no need to limit this information to brand protection enforcement alone. By approaching your data from different angles and making it available to various teams throughout your organisation, you can optimise marketing, pricing, products, promotions, customer service, distribution and other areas of your business.
Below are several examples of how monitoring online counterfeiting activity yields intelligence to inform business decisions, drive development and grow profits. Simply study the brandjackers’ business so you can improve your own.
Geographic trends revealed
One strategy is to use business intelligence gathered from monitoring counterfeit marketplaces to quantify illegal distribution and form responses that capitalise on the wants and needs of customers.
Chances are you do not have the complete picture of everything that your customers want from your brand. By evaluating geographic purchase patterns in alternative channels, you gain a deeper understanding of consumer behaviour and buying patterns at global, regional and local levels.
Counterfeiters are often the first to identify and capitalise on market gaps, so look for how brandjackers meet demand. For example, when one denim company experienced slow sales in the Asia-Pacific market, it began inventorying activity on counterfeit sites. Analysis of site visit patterns, sizes in inventory and items frequently added to shopping carts revealed that customers were looking for smaller waist sizes and shorter inseams. The company found the missing piece of the puzzle and used it to make more informed manufacturing and merchandising decisions for this market.
Regardless of location, pricing on counterfeit sites and discounting practices are noteworthy, especially when evaluating demographic data. Yes, you will identify price point gaps, but you will also have a better idea of where you are missing opportunities to market to various customer segments.
Seizing seasonal opportunities
Brandjackers know that they can make easy money by imitating limited edition or licensed products such as fan gear. For instance, when one company that makes limited-edition shirts decided to study demand for a sold-out shirt, it found that customers were looking for the product far beyond its window of availability. By increasing the number of shirts in production and lengthening the run, the brand was able to prevent direct losses to counterfeiters and enjoy extra revenue.
Another sales opportunity is through additional licensing opportunities, especially for ‘hot market’ special events, such as a championship match or high-profile sporting and cultural events. Brandjackers will often offer pieces that appear to be from major brands, even if authentic licensed products were never created. This kind of gap analysis can result in ideas for new product offerings, leading to revenue growth.
Building a better keywords list
Turn the tables on counterfeiters in paid search by studying the keywords that they are buying. Get your marketing department to identify keywords that are driving traffic away from your site. Are any of them missing from your own keywords list? Which sponsored ads associated with them are related to your product and brand? These are like neon signs alerting you to where counterfeiters are making their investments, a clear indication that consumers are searching for products using those terms.
Remember, many buyers of counterfeit products are your customers.
Improved brand health
These are only a few examples of how monitoring counterfeiting trends online and using the resulting business intelligence can augment your market research and deliver compelling ROI. Your competitive advantage will extend far into the future as you spot new opportunities and strengthen the health of your brand while continuing to build your integrity in the marketplace.
Elevate your brand protection strategy
The continued convergence of physical and digital commerce makes it essential for brands to minimise their risk by employing comprehensive brand protection strategies. While consumers rely increasingly on the Internet for everything from price comparison to final purchase, brands must be ready to deliver trusted, credible brand experiences across digital channels, whenever and wherever customers look for them.
Yet online brandjackers can undermine these experiences by impersonating brands. While some companies consider this the cost of doing business online, smart executives and managers recognise the intrinsic value of developing brand protection strategies for the digital world.
An effective online brand protection strategy allows you to recapture revenue, enjoy direct cost savings and safeguard your marketing investments. Ensuring authentic brand experiences has the added benefit of solidifying brand reputation while reducing instances of online fraud and unauthorised channels.
Adding product authentication to a brand protection strategy further allows brands to benefit from supply chain transparency, easy verification of authenticity and consumer engagement, ultimately enhancing trust and loyalty for the brand.
Partnering with brand protection experts can yield even greater returns, using best practices to guide effective enforcement and providing deeper intelligence into counterfeiters’ activities. Every department across your organisation – from manufacturing and marketing to branding, customer support, IT and legal – can leverage this information to produce measurable results with compelling ROI, further boosting your bottom line.
This chapter includes research conducted by the MarkMonitor Brand Protection Services before the OpSec Security acquisition in January 2020.