Proving that protection pays – The ROI on brand protection activities.

The Internet has changed the scope of threats to brand reputation and their revenue. Online brand abuse – from fraud to counterfeiting – is more widespread, sophisticated, and lucrative than ever. Counterfeiting is currently estimated to cost the global economy $4.7 trillion annually which is a conglomerate of different countries. In today’s global marketplace, companies are in a perpetual race to protect their brands from attackers who seek to capitalize on successfully created reputations. Protecting one’s business from infringement and counterfeit can be a very tricky undertaking. Brand Protection Services allows companies to minimize revenue loss from counterfeit distribution on auction and retail websiteson various commerce exchange websites by providing valuable visibility and management control over potentially unauthorized selling activities and to detect channel infringement.

“How do we calculate return on investment (ROI) for brand-protection measures?” This depends on the brand, its products, services and geographical coverage, but it is straightforward to assess ROI calculations that can quantify the value of brand protection activities. These are often dependent on volumetric criteria, such as the value of counterfeit listings removed and the increased genuine web traffic and sales. However, let’s extend brand protection ROI beyond these immediate measurable criteria. According to an trusted Internet 2020 report, 78 per cent of consumers would shun a brand if they came across a bogus website pertaining to be that brand. Calculating the reputational damage that online infringements can inflict is therefore no easy feat. 96% of companies admit that guarding their online assets is now essential for the success of their brand, but only 40% have a strategy in place, where as one in six products sold online is identified as counterfeit . When counterfeit goods appear plentiful or genuine the revenue loss is the cause of actual loss of sales to counterfeiters and/or a fall in sales as a result of the perceived loss of value or reputation. Which eventually makes the Brands lose representation in their distribution channels when retailers see a reduction in demand or a declined pressure on legitimate brand pricing because of counterfeits. 

The ROI can also be taken as measure of recovery from past or current counterfeiting taking place online as well as in the physical world, whereas prevention activities are most often associated with the physical world. The concept of revenue recovery is based on the assumption that the sale of counterfeit products replaces legitimate sales causing brand erosion. Online recovery efforts involve, requesting to proprietors of online businesses – including business-to-business exchanges, online marketplaces such as flipkart.com and auction websites such as eBay.com – to deactivate or take down a seller’s listings offering counterfeit goods for sale. By taking down listings, the brand owner prevents that offer from being accepted. Listings on e-commerce websites can be for anything from a single good to hundreds of goods, or open ended. Quantifying the success of these efforts should be tied to the number of unique takedowns of listings, as well as the total units of goods and the market value of those goods listed. While it can said that listings on e-commerce sites do not equate to actual goods as listing taken down can be simply replaced by another for the same goods, the rationale for quantifying the listings is that you have thwarted a unique opportunity to purchase those goods. 

Another type of recovery effort in the online world involves criminal or civil actions or administrative proceedings (such as trade laws and other patent violation laws ), resulting in the takedown of domains for rogue websites, which are clusters of websites commonly owned and operating primarily from other country, selling counterfeit and pirated goods to consumers across another country. Quantifying the success rate for this effort can be tied to the number of domains seized. However, this is only one way of measuring success. While it is impossible to know the number of goods being offered or sold on any given website, you can often quantify the traffic to the websites or use readily available analytics to determine the number of visits that you deterred based on the total number of rogue websites taken down. Disabling pirate websites through litigation thus leads to good number of returns. Often, anti-counterfeit and anti-piracy laws can lead for an actions resulting in the seizure of profits received through the sale of counterfeit goods. Damages awards – such as statutory damages, actual damages or infringers’ profits, to the extent recovered by the brand owner – provide another basis on which to measure recovery. 

Recovery also occurs in the actual world in the form of customs seizures of actual goods sold at flea markets, retail stores or from factories. If your company pursues civil damages or obtains criminal restitution from counterfeiters, your monetary award can be included in the recovery bag. To make this analysis even more “touchable”, measure both the amount of counterfeit and genuine products in a certain platform at two points in time and calculate the change in the % of genuine products available. This simple exercise reminds us why we do brand protection – not just to fight illicit trade, but to be able to sell more of our products. 

Alternatively you can measure prevention from market surveys (sampling) conducted to determine the size of the problem. You can extrapolate the size of your company’s problem based on its market share. Another way to determine a baseline is to determine the scope of your problem through market surveys, both online and in the physical world. 

For example, while it is important to quantify that your company seized 50,000 units of goods with a market value of 10,00,000 and collected 6,00,000 in lost profits in a civil action, evidence showing that counterfeiters are avoiding your brand because of that action specifically ties your efforts to deterrence. Brand owners often find it can result in a qualitative success in reducing counterfeits of their brands in the market more quickly than they expected. 

Also, when just one big brand, implements a brand protection tool, it cuts into the damage that counterfeiters cause in a particular market. Realizing this brand owners would hold an advantage over their competitors by implementing brand protection, and hence increase their market share, and ROI. Do the benefits outweigh the costs? All signs point to YES as benefits do indeed outweigh the costs 99% of the time.

Not sure where to start? Don’t worry! We at TradeVigil will work closely with you as we specialize in anti-counterfeiting and brand threat intelligence services. By threat’s we mean Patent and Copyrights Infringements, Trademark & Design Rights violations, protecting Geographical Indications, and Brand Goodwill damage both in real world and on web. Shoot a mail to us for a free consultation.

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