- TikTok revealed as a significant counterfeiting hotspot in exclusive guest post
- Insights include use of live streaming to promote sale of fakes on major retail days
- Rights holders urged to request TikTok owner ByteDance improve IP environment
Last month, WTR identified Chinese social network TikTok as a brand protection risk that should be on the radars of rights holders. Now, in an exclusive article, digital brand consultant Steven Ustel from Ustels Ltd reveals the scale of counterfeiting on TikTok and its Chinese equivalent Douyin – and recommends strategies that brand owners can implement to mitigate the risks on the platforms.
One of the key messages from our initial article was that, generally, brand protection service providers are paying little attention to TikTok. During the INTA Annual Meeting, WTR reached out to a number of IP service vendors to see if they are monitoring it. The results were startling. At least two representatives from IP monitoring firms weren’t even aware of TikTok (with one bluntly saying, “I’ve never even heard of it”), and others claimed that their clients have never asked about it.
With that in mind, Ustel has penned an article to highlight some of the significant issues he has personally witnessed on TikTok, especially in regard to counterfeiting, and what tools brand owners have at their disposal to monitor and take down such activity.
TikTok has fast become the killer app dominating the screen time of Gen Z. This user-generated short form mobile video app is reportedly valued at $75 billion, with over 800 million combined downloads from Google Play and the Apple App Store and over 600 million monthly active users in China alone. In fact, TikTok is so popular in China that the government forced parent company ByteDance to introduce usage limits, restricting Gen Zers' dose of dancing, lip syncing and prank clips to only 40 mins per day.
The rapid growth of TikTok raises an immediate question for brand owners: how has the app slipped under the radar of IP service vendors?
There are two main reasons causing the lack of awareness about the app. The first is because parent company ByteDance is viewed as a media company and is not involved in the business of e-commerce. Therefore, TikTok has been developed with a content-first strategy, building a large user-base through a deep understanding of how users want to express and interact. With the short video format and easy-to-use editing tools, anyone with a smartphone can become a content creator. As with most social platforms, the challenge is to monetise this captured user-base. The obvious answer is to follow the Facebook model and run ads, however, ByteDance has also been moving towards integrating e-commerce into the app. As the digital economy becomes more mobile-led, the line between content and e-commerce companies is increasingly vanishing.
The second reason is because the app is actually two platforms: a Chinese version and an international version. TikTok is the international version of the Chinese app Douyin (“抖音”). Released first, in September 2016, Douyin fast became a viral success in China, leading to TikTok’s international release a year later to people outside of China.
Users of Douyin do not see content from TikTok and vice versa. Due to strict Chinese regulation of online service providers, ByteDance took the pragmatic decision to segregate the international version, so data collected from international users on TikTok is stored outside of China and therefore not subject to domestic Chinese regulations (although ByteDance has still been fined for the inappropriate use of data from minors in the United States).
For both of those reason, IP service vendors conducting initial intelligence gathering on TikTok are not seeing the full scale of infringement on the app, with the world’s largest counterfeit producer excluded from the evidence. Without the full picture, it is easy for vendors to overlook TikTok in favour of platforms they are more familiar with in terms of best practices to detect counterfeits and enforce IP rights.
Why is TikTok a significant brand protection risk?
TikTok has been incorrectly identified by IP service vendors as a ‘low risk’ media app which is not facilitating the sale of counterfeit goods. Brand owners on the other hand have recognised the potential of the app to engage a younger demographic with campaigns designed to build brand awareness and drive sales. For example, Chinese TikTok’s core demographic is Gen Z females in top tier cities; a very appealing segment for luxury, fashion and cosmetics brands. International names including Louis Vuitton, Chanel and Michael Kors are already using the immersive experience of TikTok to connect with potential customers in a way not possible through other social media or content delivery platforms.
Whilst the app experience may be new, old-style brand protection issues are prevalent on the platform. For example, e-commerce is being integrated natively into the app, but this feature is currently restricted to verified stores (primarily well-known brands). This presents a significant opportunity for brands to capture sales, particularly after strongly executed campaigns. However, broader e-commerce opportunities are available which enable counterfeiters to tarnish and dilute the platform as a sales channel, including:
Influencers are being given the opportunity to utilise a feature which connects their account with a Taobao store. This feature can be used for an influencer’s own store or can enable them to leverage their following with a third-party brand and deliver promotional content. Opening e-commerce features to Taobao stores presents an obvious risk of counterfeits entering the TikTok platform, as any experienced brand protection professional will attest to. Taobao sellers are often very knowledgeable in exploiting new distribution channels and avoiding IP enforcement efforts.
TikTok users without the e-commerce features apply another common tactic – adverts showcasing their infringing wares combined with a WeChat ID. In this tactic, potential customers of fakes are directed to WeChat to discuss and complete the transaction. Chinese consumers are very familiar and comfortable with this process. Weaker IP regulation on WeChat has made it a haven for counterfeiters to conduct business without fear of disruption. Agile counterfeiters are always looking for new platforms with an untapped user-base to exploit given the existing intense competition on mature platforms such as Taobao or WeChat.
Physical stores advertising on TikTok
Digital e-commerce giants are heavily investing into connecting online and offline experiences, from Amazon to Taobao. Physical stores are not oblivious to this trend and are using digital channels to drive footfall to their store. Infringers are appropriating the reach of TikTok by using the app as an interactive online catalogue to promote counterfeits. Customers of counterfeit luxury items often want to inspect the look and feel of the product, to ensure the counterfeit will go undetected by their peers. An online-only enforcement approach has little impact on these counterfeiters, as a deleted account does not disrupt their key sales channel.
As TikTok continues to develop e-commerce offerings, counterfeiters will adapt to take advantage of the vast user-base, given the strong levels of engagement and key demographic the app attracts.
Detecting counterfeits on TikTok
The growth of TikTok has not only been recognised by brands owners and counterfeiters, but also governments. Content governance has been pushed to the forefront of politics in China, the United States, Russia, India and across the European Union. With high profile issues being widely reported, ByteDance has responded by hiring sways of additional content moderators in key locations including China and India. Combined with powerful AI-led automation, it must be noted that finding counterfeits on TikTok has increased in difficulty – for a number of reasons.
TikTok has done a reasonable job at keeping key branded search terms clean of counterfeits. However, scratching a little under the surface reveals a world of counterfeit activity. Searching for the term “名牌包包” – which translates to “branded handbag” – brings up the range of knock-off staples, including Gucci, Hermes, Louis Vuitton, Fendi and others. The English translation works equally well on the international version. Counterfeiters quickly spot the keywords which led to content being detected and removed, either proactively by the platform or at the brand owners request. Therefore, monitoring and updating search terms is vital to track changing patterns of infringers, ensuring listings for fake goods are removed before reaching a wide audience.
On top of that, the international popularity of TikTok along with the use of generic terms necessitates the use of localised knowledge, to flow with the shifts in keywords employed by infringers in the languages of key sales territories.
Algorithmic delivery of content
Testing a variety of keywords will help detect counterfeits for enforcement, however, TikTok follows the social-commerce trend of prioritising the algorithmic delivery of content. When the app is launched, the user is immediately displayed the results of the algorithm, being presented with a video based on user preferences as determined by previous interactions with the app (and potentially data gathered elsewhere). Videos are full screen, leaving no dedicated space for a search bar. A search icon and icons to engage with the video float over the video periphery, keeping eyes firmly on the content. Users simply flick through content, double-tapping the video to send a heart (TikTok’s version of the ‘like’ button). Content-centric platforms rely on users creating content which encourage likes, follows, secondary content creation and shares. However, IP service vendors are more attuned to detecting content via text and image searches. For the early detection of counterfeits on TikTok, which prioritises the spread of viral content, AI must be employed alongside a nuanced understanding of the app’s culture.
Live streaming in e-commerce, particularly in China, has become a powerful channel to connect with customers and engage on a personal level. Counterfeiters on TikTok use influencers and live streaming to quickly generate large volumes of traffic to their sales channel. With live streaming, traditional brand protection tactics of relying on automated scraping tools to collect data which is then reviewed before enforcement action is taken becomes obsolete. Live streaming requires live monitoring; an ability to detect the infringement when valuable enforcement action can still be taken. The smart counterfeiters will typically remove any traces of infringing content from the platform used to complete the transaction once the live stream traffic spike fades. This approach mirrors tactics employed by counterfeiters on Instagram, whereby they build a strong organic following, then use short ad campaigns featuring counterfeit items to drive traffic to web-stores.
The shortened time-frame for when a counterfeit is publicly available on a live stream significantly reduces the chances of detection and removal. With high volume sale periods such as Singles Day in China and Black Friday in the US condensing significant chunks of e-commerce activity into a few days, the potential loss of sales from these short bursts of IP infringement represents a substantial risk.
TikTok IP enforcement best practices
It is clear, then, that detecting infringements on TikTok is a significant challenge – but the app has taken some steps to strengthen content governance, including IP rights protection. ByteDance has placed a high value on being an attractive platform for brand partnerships, as the company seeks to overcome the tech unicorn hurdle of converting users into profit. For that reason, then, it appears to be willing to improve its brand protection regime. For now, there are a number of steps that brand owners can take.
Build an official TikTok presence
Maintaining an official presence on a platform is one of the best defences against would-be infringers. Building and exciting a loyal fanbase helps crowd-out knocks-off and brand abusers. TikTok now provides a verification badge for official accounts and is working hard to attract major brand owners onto the platform. With integrated e-commerce being rolled-out, engaging content can lead customers directly into the sales funnel without any points of friction in the process.
Use of influencers
So while TikTok delivers content, influencers can deliver the audience to see it. The power of influencers is amplified in an environment where content is served, rather than searched. Users are not searching for brands, although brand messages can still be powerfully delivered through the platform. Whilst having an official channel is vital, a corporate account can never invoke the level of authenticity of an influencer. Users rely on the platform to deliver content and adapt to their preferences, which typically leads to a decentralising of content production, followed by a re-centralising around influencers who understand the platform culture and respond with engaging content. Influencers then become the curators of the platform. However, brand owners must look beyond account followers when selecting influencers, evaluating how authentic the influencer will be in promoting the brand.
Monitor both versions of the app
A fundamental mistake often made by rights holders and service providers is to only monitor or research one version of the app. The users and content on TikTok and Douyin are different, therefore both versions of the app need to be taken into account. Also, whilst the core functionality is the same across both versions, user culture differs. Therefore, localised knowledge of the market is required to fully investigate brand protection issues.
Think like a customer
As well as ensuring there is an official, verified brand account, rights holders should create an account purely for monitoring purposes, with a realistic user profile which follows relevant content. If the account is configured appropriately, the algorithm should serve up infringers directly to the account, ready to be actioned.
Report infringements and issues
It goes without saying that counterfeit goods should be reported to TikTok for removal. However, it is my view that brands should go further in discussing their issues with the platform. As mentioned previously, ByteDance has applied both human moderation and AI automation to keep branded terms relatively clean of IP infringements. Providing further keywords which are dominated by counterfeiters can help train the AI to better detect and remove infringements, or at least flag to a human moderator. Building a strong relationship with a platform, assisted by having an official commercial presence, is always a best practice for conducting anti-counterfeiting action online.
Increased monitoring around sales periods
All major online sales periods should be marked in the calendar with a brand protection action plan ready to go. Brand owners should ramp up enforcement in the build-up to the sales period, starting earlier for major events such as Black Friday and Singles Day. For the key sales days, resources must be ready to action live issues for immediate removal to prevent loss of sales.
Enforce linked platforms
If, for example, an infringer is diverting customers to a Taobao store, screenshots of the infringing Taobao listings should be recorded and takedown notices sent immediately to Alibaba. Restricting the channel where the sale is conducted is the most important link in the chain.
As mentioned in the previous point, disrupting the point of sale is vital to the long-term reduction of counterfeits. If TikTok is used to promote an offline store (such as a bricks-and-mortar establishment), offline enforcement should be considered. Of course, that approach can be difficult, especially as a specific location can be difficult to identify in a short TikTok video. But captions and comments will often reveal clues that can aid with enforcement.
Infringers will simply migrate to another digital advertising channel or create a new account and start over on TikTok, unless action is taken to undermine the profitability of selling counterfeits.
TikTok: the opportunities and risks
TikTok presents an unusual challenge for brands and IP service vendors. It is one of a limited number of Chinese tech platforms which has achieved success appealing to users both domestically and internationally. Apps built around mobile consumption are increasingly dominating screen time. Counterfeiters have adapted to the trend, applying a range of tactics to generate a profit from TikTok’s users. However, a lack of awareness has left many brands and vendors behind the curve in their IP protection strategy.
A reason for that is because monitoring brand abuse is more challenging on a mobile device, and so it is incumbent on the platform to provide brand owners the tools necessary to effectively protect their intellectual property rights. The prevalence of counterfeits will continue to grow until effective measures are taken by the platform, working alongside brand owners, to create a digital environment conducive to brand engagement. As the app continues to integrate e-commerce and monetise users, now is the time for brand owners to make the case to ByteDance to ensure IP protection policies meet industry best practices.
With the right measures in place, TikTok can become a key element in brand building through the delivery of playful and inventive content directly into the hands of customers. Until then, it is a risk that all rights holders must be aware of.