Counterfeiting becomes the fake news for global brands 

Chrissie Jamieson is VP Marketing at MarkMonitor UK The digital transformation that has occurred over the past decade has changed the brand landscape beyond all recognition. In fact, many of today’s biggest brands have come from a pre-digital time. Most of this digital transformation has been for the better, however it has also had the negative consequence of increasing the propensity for counterfeited goods. New research commissioned by MarkMonitor and conducted by independent market-research firm Vitreous World showed that the scourge of counterfeiting is now hitting almost half (47 percent) of brands through lost revenue. It’s not just pennies either, with one-in-three brands reporting this loss in sales to be worth more than 10 percent. Four-in-ten organisations (41%) have experienced an increase in the occurrence of counterfeiting and brand infringement. This has, more often than not, originated from a variety of components related to digital transformation on a global scale, including but not being limited to: advances in social media for six-in-ten (61%) companies; big data (52%); chat/messaging (52%); artificial intelligence (51%); the dark web (48%), and augmented reality (47%). No light at the end of the tunnel Everything from luxury watches to medicines are now counterfeited. According to the Organisation for Economic Co-operation and Development (OECD), the global trade in counterfeits continues to expand rapidly and now accounts for 2.5 percent of world trade, or £383 billion ($461 billion). In the UK alone, research by the Centre for Economic and Business Research showed that counterfeit goods cost the economy £17.3 billion ($20.8 billion) and resulted in 72,000 jobs being lost as a result. There appears to be no light at the end of the tunnel for brands. In fact, our research found that 58% of brands feel that keeping themselves safe from counterfeiting will become increasingly difficult over the next five years. Skewed reviews Counterfeiting is a serious problem. Over the past year there has been plenty of talk about the danger of fake news on consumer perceptions (not to mention election results). The same shift in consumer perceptions can also, of course, be caused by counterfeiting. There is an increasingly high number of fake goods entering the supply chain — in December 2017, for example, millions of pounds worth of fake clothes, toys and gadgets were seized by the UK Border Force — which has led to a massive reduction in consumer confidence levels. This in turn can have catastrophic consequences on a genuine brand’s bottom line. Today, reputation is everything. Whether it’s a restaurant, a movie or a car, nowadays they all live or die by the ratings they receive online. The internet has become a word of mouth referral system for a whole generation of consumers. Because of this, negativity around a brand – partially stoked by counterfeit goods skewing reviews – can spread like wild fire. Adapting approaches Online brand protection has never been more important than it is today. It will continue to grow in complexity and, as a result, it’s vital that organisations adapt their approach accordingly today to reap the rewards tomorrow. The issue of brand protection has always been a challenge for businesses. However, the scope and complexity of the problem has grown significantly over the last few years due to the global nature of business, an increased consumer appetite for shopping online and an expanding marketplace, driven by the proliferation of social media channels. This has provided additional points of infiltration for criminals and those with malicious intent. Today, brand protection is not confined to just the business. Rather, an overriding objective is for the organisation to protect its customers, safeguarding their trust and loyalty. Successful company brand protection requires a multi-disciplinary approach that starts from within. It is therefore imperative that it has buy-in from the very top of the organisation. However, our research reveals that only 19 percent of respondents currently use a unified approach when implementing and monitoring a brand protection initiative. Looking at those respondents with no plan in place, the number one barrier is cost (65%), followed by a lack of time and resources (64%). Remaining complacent As we have seen, nearly half of brands report having lost sales due to fakes flooding the market. However, much of the damage is difficult to quantify. For example, other types of infringement that brands typically suffer from include: lost traffic due to cyber-squatted sites (46%); an increased cost of paid search adverts (49%); damage to a brand’s reputation (50%), and counterfeit-sponsored adverts on social media (45%). Despite counterfeiting rising in frequency, brands are far too often remaining complacent regarding standing their ground against infringement. Only just over half (56%) of respondents have taken legal action, with 23 percent saying the action resulted in a takedown of infringing content or products, and a quarter (24%) saying it resulted in financial compensation. Catch-22 Online brand protection remains a critical feature for all businesses. As the digital channels expand with new ways to advertise and market goods and services, the threat of infringement and abuse rises too. It’s a catch-22. The online space has presented brands with tremendous opportunities, but these same opportunities are also being exploited by cybercriminals and fraudsters. The result is damaged customer trust, lost revenue and a tarnished reputation. The good news is that those brands that have had the foresight to implement online brand protection will gain valuable awareness of the landscape in which they operate, the channels that need to be monitored and the importance of such a plan. However, they will still face challenges in the monitoring and management of these programmes – challenges that need to be overcome to face future threats. These include the ability to quantify the value lost to infringements and the ability to prioritise them, a lack of knowledgeable staff and a lack of resources. Protecting revenues and reputations While it is easy to understand the temptation to solve the issue of counterfeiting internally, the difficulty of working with scant in-house resources can potentially do more harm than good, as it can quickly become a compromised programme. Working with third-party experts is often a more effective way forward. Reassuringly, the customer can remain at the heart of these programmes too. Either way, cost remains as a prohibitive factor for those brands that don’t currently have an online brand protection programme in place. But with the increase in counterfeiting and the associated loss of revenue it is a case of speculating to accumulate, and the exercise generally has swift return on investment. In the globally-connected times that we live in, all brands from world-leading multinationals to enthusiastic start-ups must embrace advanced technology to protect revenues and reputations alike. They also need to turn to trusted third-party organisations to help police their brand online. In the digital world, brands face new risks due to the web’s anonymity, the global nature of a brand’s reach and shifting consumption patterns for digital content, goods and services. Brand protection in 2018 involves a lot more than taking care of the brand itself. Critically, it’s about maintaining customer trust and protecting consumers from the dangers posed by counterfeiters and online criminals.
The good news is that those brands that have had the foresight to implement online brand protection will gain valuable awareness of the landscape in which they operate