Counteracting the counterfeiters with online brand protection
The growth in the number of consumers shopping online is showing no signs of slowing down. In fact, the latest figures from the IMRG Capgemini e-Retail Sales Index, published in mid-January revealed that £104bn was spent online in 2014, an increase of 14% from 2013. The figures also revealed the first time annual spending has broken through the £100bn barrier, and is expected to continue to increase further in 2015, as IMRG and Capgemini forecast that total e-retail sales could be worth £116bn by the end of the year.
This is extremely positive news for the nation’s brands, who rely on their online presence to showcase and sell their goods and services. However, together with all of the outstanding advantages of ecommerce – there is still an alarming number of online risks facing today’s businesses. Therefore, while companies should celebrate their internet sales success, it is more important than ever that they also recognise the urgent need for an appropriate and effective online brand protection strategy.
The potential risk to brands in the online space has grown alongside the evolution of the internet itself. Whether it is counterfeiting, cybersquatting or brandjacking, regardless of the threat or the method used, the common outcome for the targeted victims can lead to loss of revenue, damaged reputations and diminished customer trust.
One of the biggest threats to brands is the scale of counterfeit goods online, with both consumers and the retail companies themselves falling prey to this growing practice. Counterfeit sales are estimated to represent five to seven per cent of international merchandise trade, and to put this into perspective we carried out our own MarkMonitor Shopping Report during 2014 which showed a marked increase in the number of shoppers seeking online fakes.
We released the results of the Shopping Report at the end of last year, looking at consumer purchase intent and the demographics of those who acquire counterfeit goods online. It surveyed almost nine million shopping sessions in the apparel and luxury goods sector during a nine month period, focusing on the search terms employed by consumers in order to understand what they were looking to purchase. Terms such as “cheap,” “discount” or “outlet” were classed as bargain-hunting terms, whereas terms like “counterfeit,” “fake” or “replica” were dubbed fake-seeking terms. The aggregated traffic for shoppers was then looked at using both sets of terms, to see if shoppers visited sites selling legitimate merchandise or rogue sites.
The study found that the number of bargain-hunters has reached a ratio of 28 deal-seekers to every one fake-seeker in the U.S. and Europe, a substantial increase from an earlier study which found a ratio of 20 deal-seekers to every one seeker of fakes. Whether we like it or not, counterfeiters are clever, and it is clear that an entire supply chain, parallel to legitimate distribution channels, is flourishing around fake goods. As a continuing testament to the increasing professionalism of rogue sites, the findings revealed that 1 in 6 bargain hunters were actually duped by the perceived “quality” of the rogue sites and 1 in 10 online deal seekers land on rogue sites.
Fortunately, businesses and brands can adopt their own proven best practices to successfully combat online counterfeit sales. As the evidence suggests, it is now vitally important for companies to develop proactive strategies to ensure their brand integrity, marketing investments and customer trust is not undermined by any unauthorised digital activities. There are a number of best practice approaches that can be incorporated into a strategy to help preserve the health of a brand.
All brands, even luxury ones, should consider buying bargain-related terms such as ‘discount’ and ‘outlet’, then design landing pages to point brand-seekers to sale items or appropriate retailers. Even if the brand in question doesn’t discount as a matter of policy, this could be an opportunity to educate shoppers on the brand’s philosophy and about the risks of buying from unauthorised sources. Counterfeiters and other brandjackers will use domain names like “brandoutletstore.com” or “disocuntbrand.com” so businesses need to get in there beforehand and register domain names with these bargain-related terms to ensure potential customers find theirs or their channel partners’ sites when searching.
Close to four million new gTLDs have now been registered, and as expected well-known brands are being registered in top TLDs by private individuals. In fact, one study by World Trademark Review, showed cybersquatting rates of up to 50% for high-profile brands. The sheer number of new gTLDs being launched means it no longer makes business sense to register every key brand term in every new extension. This may force a change in approach to online brand protection strategies, from a strategy based on traditional defensive domain registrations, to one that monitors this larger internet namespace for brand abuse. Ideally this should involve brand protection, legal and risk management personnel. This collaboration will assist the organisation in developing policies to detect, police and mitigate domains that infringe on company trademarks and steal their website traffic.
Multichannel, multiple opportunities
In today’s multichannel world, consumers demand a seamless and authentic brand experience across every channel. Brandjackers are aware of this and seek to take advantage by impersonating brands with lookalike sites and apps, to lure traffic. Counterfeiters operate over a wide array of online channels, from online marketplaces to e-commerce sites and all of these should be monitored and analysed. Fortunately, around ten online marketplaces account for 80 percent of all marketplace traffic, so by monitoring those key marketplaces will gain visibility to a significant share of the traffic.
While online retailers are expanding their markets through the use of these digital channels, brandjackers, counterfeiters are also taking advantage of them by impersonating brands in social media and mobile. The reach, transparency and viral nature of social media make it ideal for scammers who want to exploit a brand, which is why monitoring these channels should form a key part of any brand protection strategy. A brand should be registered on leading social media websites, and the channels should be monitored for impersonation and fraud to ensure fans and followers can engage with the brand safely. Savvy companies can continue to build consumer trust in the digital world with a comprehensive brand protection strategy that safeguards their customers from malicious brand impersonators.
Communicate and collaborate
A successful online brand protection strategy acknowledges the benefits of working with other organisations to stop brandjackers, counterfeiters and scammers. Pirate sites rely on ad revenues brought to them by unwitting advertisers to fund their unauthorised endeavours. By working with the likes of advertising networks and exchanges, as well as payment providers, businesses can assist in automatically identifying and removing ads hosted on pirate sites. This will disrupt their ability to profit, and ultimately remove the threat to the brand.
Online counterfeiting is a major issue and, as all of the evidence suggests, the opportunities for unauthorised activity are growing alongside the number of internet shoppers. Creating a strategy to combat this is the only solution to protect a brand, and this strategy needs to be continually reviewed, to reflect the rate of change in the internet space and stay one step ahead of the counterfeiters.
Simon Whitehouse is senior director, EMEA Sales, MarkMonitor