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Why luxury goods require comprehensive brand protection

Charlie Abrahams, senior VP, MarkMonitor, warns marketers not to ignore brand protection strategies while taking advantage of online opportunities.

During any periods of economic uncertainty it is often the retail sector that is hit the hardest, particularly the high end brands, as cost-conscious consumers become more reluctant to invest in luxury items.

While genuine products at discounted prices can indeed be found on the Internet, consumers can often find themselves unknowingly caught out by counterfeit goods instead.

Act with caution

As a result, brands need to act with caution to protect consumers from being lured towards counterfeit sites and fake marketplace listings.

Compared to other global retailers, luxury brands have traditionally been far more hesitant at embracing ecommerce as part of their sales strategies. However, in today’s digitally-led world, it has never been more important for these brands to establish their presence across online and e-commerce channels. In fact, the latest McKinsey report on the fashion industry has found that e-commerce luxury fashion sales is set to increase fourfold from 2010 to 2020, which indicates that luxury brands are sitting up and paying attention to this warning.

If we take one of the biggest markets, the US, as an example — the latest research published by Walker Sands found that 27 percent of consumers purchased a luxury item on the web across 2016. That’s up 17 percentage points from 2015, and represents a 21-point gain over 2014, which provides a very strong indicator as to the concurrent growth we can expect to see across 2017. The digital marketing agency said its findings, which were based on an online survey of more than 1,400 US consumers, line up with industry predictions that digital luxury goods sales will triple to around $80 billion by 2025.

So, the outlook for luxury brands in terms of sales growth is clearly positive. However, there is a darker side to the story that comes in the form of counterfeit goods. With so much investment and activity taking place on the Internet by luxury brands, it has become easier for individuals with malicious intent to exploit the popularity and desirability of these products for their own personal gain. It is therefore imperative that businesses investing in online channels understand the importance of protecting both themselves and the hard-earned reputation of their brand.

Brand impersonation runs rampant online, and it permeates industries much broader than just fashion. From pirated music and films, to travel scams, fake pharmaceuticals, car parts, apparel and accessories, anything and everything can be exploited to the detriment of the genuine business. Brandjackers can leverage content and imagery, use URLs that appear authentic and employ other techniques that aim to siphon away traffic from its intended destination. In these ways, imposters can easily hijack a brand, and the businesses being duped are losing customers, profits and reputational value.

This issue is probably best illustrated by the number of successful legal cases that have been brought by luxury brands in recent years in a bid to tackle counterfeit activity. We have seen several high profile cases, from Belstaff’s landmark civil lawsuit that awarded $42 million in damages and resulted in almost 700 counterfeit websites being handed back to the brand, to the recent case of French fashion house Chanel who sued an unnamed individual for selling counterfeit products with the company’s trademarks online.

Protecting a luxury brand against counterfeiting online has now become a fundamental requirement, and there are key elements that need to be factored into every strategy.

Search and social media

If we think about how customers use the Internet to find a particular product, the vast majority of online sales begin with search engines. Research conducted in 2016 by Forbes Insights has found that 82% of consumers search for products online before taking the leap and making a purchase. This also ties in to the fact that most consumers will find brand websites through the use of search engines, email social media and mobile or online advertisements, as opposed to actually typing the specific URL into their browser.

As search continues to be the centrepiece of consumer activity across mobile, online and social media, it is crucial to ensure every brand protection strategy addresses the risk of lost traffic which can affect the success of a company’s digital marketing investments. In fact, with the prolific growth of the Internet, the need for the most robust and effective brand protection strategy has never been greater. A strategy is capable of protecting the negative effects which occur when someone else exploits a brand for their own gain.

Traffic diversions

Firstly, businesses need to keep brandjackers and counterfeiters from intercepting their online traffic by having pirate and fraudulent websites taken down. These can have a sizable impact on an organisation’s revenue, so taking proactive measures that will ensure potential customers are not duped into visiting a fraudulent website or buying a counterfeit product purporting to be genuine is vital.

This goes far beyond the brands themselves: it is important that every partner including affiliates, resellers, franchisees and even employees are compliant with the guidelines of the brand.

The domain game

Another element of protecting a brand online is for businesses to maximise the value of their domain portfolios. To date, the launch of the new generic top-level domains (gTLD) has seen more than 1200 new gTLDs added to the root zone. This represents an exponential increase compared to the two dozen original gTLDs, however, the expansion of the domain environment does not necessarily mean an increased domain budget.

Companies should maximise the value of their existing portfolio through portfolio rightsizing and domain utilisation. This means reviewing a portfolio at least once a year to identify registration gaps and check for out-of-policy registrations, underutilised domains and legacy domains that may be unnecessarily eating into the organisation’s budget.

As the risk of being caught out by counterfeiters continues to increase – particularly for luxury fashion brands – it is essential that brand protection strategies are not ignored when trying to take advantage of the opportunities that the online world can bring. Just like most organisations will have formulated a comprehensive sales strategy, the same must be considered for maintaining brand reputation.

MarkMonitor develops software intended to protect corporate brands from Internet counterfeiting, fraud, piracy and cybersquatting.

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