Digital transformation is both a blessing and a curse for marks. The rise of social media and the rapid pace of technological innovation offer brands the opportunity to show more of themselves, but it also creates a greater chance of becoming a victim of counterfeiting. New research by MarkMonitor, conducted by the independent market research firm Vitreous World, shows that counterfeiting affects almost half (47%) of the brands. That is no longer a matter of a few cents, as many as one in three brands report a loss in turnover of more than 10 percent due to counterfeiting.
Counterfeiting and trademark infringement
Four out of ten organizations (41%) have to deal with had an increase in counterfeiting and trademark infringements. This is caused by the digital transformation: social media (61%), big data (52%), chat / messaging (52%); artificial intelligence (51%), dark web (48%) and augmented reality (47%). There is no light yet at the end of the tunnel, the digital transformation continues and that is what worries brand owners. For example, 58 percent think it will be more difficult to protect themselves against counterfeiting in the next five years.
Counterfeiting is a serious problem, with more and more counterfeit goods coming to customers. In December 2017, for example, millions of kilos of counterfeit clothing, toys and gadgets were confiscated at the British border. This kind of counterfeit goods causes a huge drop in consumer confidence and is bad for the image of a brand. While today, that good reputation is essential for the success of a brand. Whether it is a restaurant, a film or a car, the online reviews provide a ‘make it or break it’. A poor assessment due to a counterfeit product can lead to unjustified negative assessments.
Adaptation of approaches
Online brand protection is becoming increasingly important due to online developments. In fact, it has never been more important. Nevertheless, an effective approach will become increasingly complicated. The scale and complexity of the problem have increased considerably in recent years due to the international nature of business, online shopping and the growth of social media. This has given criminals extra infiltration possibilities. Nowadays brand name protection is not limited to its own brand, but it has become a social problem. Organizations must protect customers and ensure their trust and loyalty.
Successful protection of a brand requires a multidisciplinary approach from the inside. However, MarkMonitor’s research shows that only 19 percent of respondents have developed a brand protection strategy at the moment. For respondents who do not have such a plan, costs are the biggest obstacle (65%), followed by a lack of time and resources (64%).
Brands do not only suffer from counterfeit products that arise in the market. Other types of infringements that brands generally suffer from include: reduced website traffic due to hacked websites (46%); higher costs for paid search ads (49%); damage to reputation (50%) and advertising on social media of counterfeit products (45%).
Despite the fact that counterfeiting occurs more and more, brands do not commit a legal follow-up to infringement. Only slightly more than half (56%) of the brands have taken legal action, of which 23% say the action resulted in a removal of infringing content or product and a quarter (24%) said the action resulted in financial compensation.
Digitization offers brands enormous opportunities, but the same opportunities are also used by cybercriminals and fraudsters, a dilemma. The result is declining consumer confidence, loss of sales and reputational damage. At the same time, many companies are faced with the dilemma that a brand-name strategy costs too much money, while counterfeit products lose revenue. The investment in a brand name protection program is, however, considerably smaller than the damage caused by counterfeiting.
We live in a time of worldwide solidarity. Every day enthusiastic entrepreneurs start with new products. All brands, from multinationals to startups, need advanced technology to protect their revenue and reputation. But also engaging third parties for online monitoring helps. This is crucial to protect consumers against the risks of counterfeiting and to maintain their trust.