Every once in a while I’m approached by sly street “sales” teams. “Want Gucci? Want Louis Vuitton?” The answer I want to shout back is YES, OF COURSE! I want a ridiculously glutinous collection of Gucci and Louis Vuitton. I might just sell my soul for a closet full of Christian Louboutins…and nobody wants to know whose soul I would sell for a Hermes Birkin because the entire CMO Council membership is going down! But in the end, I am too loyal to the brands to fall for the fake.

Counterfeit goods, from handbags and malaria drugs to toys and airplane parts, are a growing problem. Let’s take the Beijing Olympics. Leading up to the games, over 30,000 mascot dolls had been seized, internet sites selling unofficial goods shut down, and numerous reminders were issued stating that those caught trading or buying counterfeit Olympic goods would be fined and punished.

The irony isn’t lost on me. The U.S. Commerce Department estimates piracy and counterfeiting costs between $200 billion–$250 billion a year. China, a major source of counterfeit manufacturers, costs the US an estimated $24 billion alone. Yet now, with 15% of an estimated $70 million in Olympic licensing on the line, the Chinese government is taking notice and taking charge, for now.

The need for intense brand security extends online as well. According to the Spring 2008 MarkMonitor Brandjacking Index, cybersquatting grew by 40 percent with 402,882 accounts in Q1 2008. MarkMonitor also estimates that online sales of counterfeit and grey market goods will cost businesses upward of $137 billion this year.

To look at these problems through our senior marketer’s lens, the CMO Council has launched a new Secure the Trust of Your Brand program called Protection from Brand Infection. We will quantify the impact these incidents are having on brand trust, confidence, credibility and affinity among consumers, channels and business partners. If you’d like to get involved, let me know. We are actively recruiting leadership committee members who would like to share their insights. Sponsorships are also available, if you want to take a more visible thought leadership stand. For more information on the program, visit http://www.cmocouncil.org/programs/current/protection.asp.

So I end this month’s note with a quote from one of my college professors, Joseph Brodsky. “The surest defense against Evil is extreme individualism, originality of thinking, whimsicality, even—if you will—eccentricity. That is, something that can't be feigned, faked, imitated; something even a seasoned imposter couldn't be happy with.” It is my hope that Protection from Brand Infection highlights the ways that we as marketers can build our own surest defense.

Until next month!
Liz Miller
VP, Programs & Operations
CMO Council

Online Brand Protection:
A Step-by-Step Guide to Creating a Proactive Strategy
From MarkMonitor

The Internet has made it possible for companies to quickly expand their ability to do business across many different countries, cultures, and continents, and with relative ease that even just a few years ago was unheard of. But the same technologies and techniques that make it easy for corporations to have this global reach are also available to criminals, who are getting smarter at figuring out ways to abuse brands for their own profit and do so by hiding behind the anonymity of the Internet. These abuses cover a wide range of activities, including infringing pay-per-click sites, false association, automated phishing expeditions and cybersquatted domain names. The latter continues to be the most popular exploit and because the most common dictionary words are already used for domains, domainers are increasingly turning to brand names and trademarks when they register infringing domains. In fact, according to the MarkMonitor Brandjacking Index™, cybersquatting increased by 33% last year.

In addition, cybersquatters continually take advantage of the Internet and the system to evolve their abuse tactics. For instance, domain abusers that continually reserve, test out a domain name, release it at the end of the fiveday ICANN grace period, and then re-register the domain name are called Domain Kiters. These abusers don’t have to pay for owning the domain, they can place banner ads to gather even more money and “test market” the kited domain to see what name produces the most revenue. The resulting infringing pay-per-clicks can add up to significant lost revenue for the legitimate brand owner as they’re unknowingly paying for click-thrus coming from these sites via advertising intermediaries. In addition, these sites can create real consumer frustration, ultimately resulting in a loss of trust and confidence in the brand. While ICANN is evaluating a number of solutions to this problem, some may be more effective than others in dissuading domain kiters.

These threats hurt sales, reduce overall consumer trust, and dilute the brand equity that your company has carefully built over the years, and do so in a few days or weeks with some well-timed attacks. This is why online brand protection has become so important, and why it is another current-day essential business concern. Even The Wall St. Journal has recognized this trend:

In the past, companies have tried to protect their brands through manual methods, such as the occasional search engine query or by setting up a few Google Alerts on their key brands. However, this approach doesn’t work as the Internet is constantly evolving, domain attacks happen almost continuously, and as a result, infringing sites and Whois records often change before the brand owner has a chance to take action. In addition, the dynamic nature of the Internet makes it difficult to collect and store evidentiary data for possible future action.

The ideal online brand protection program should be a coordinated, crossdepartmental and automated approach that goes beyond just the legal department and involves brand management, marketing, loss prevention, risk and supply chain management. This protection also needs to be more proactive, where you track down abusers before they become repeat offenders, and head off any potential problems with reputation, brand confusion, or diverted site traffic and its associated click stream and revenue.

Steps to Take The ideal online brand protection strategy consists of both technological and organizational programs that encompass the following four steps:

• Identify all domain names in your portfolio
• Manage your portfolio proactively
• Monitor for potential abuse
• Respond to abuse

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The Measure of a Brand: The Online Challenge
By Kevin Joy, Vice President BD-BrandProtect & Andrew Zimakas, Managing Director, Brand Finance Canada

The Internet has changed the way organizations do business today. At the same time, the proliferation of information available online can be both a blessing and a curse when it comes to protecting a corporate brand. Organizations are quickly realizing that monitoring and protecting brand and copyright usage has become exponentially harder with the rise of the Internet. Phishing, spoofing sites, phony links, misleading photos – there are literally thousands of ways a brand or copyrighted images can be misused. The rise of blogging and recent amendments to fair-use laws in the United States that allow journalistic use of copyrighted material without permission have made it even more challenging.

While the task seems overwhelming, protecting a brand online is vital in today’s competitive environment. Overlooking online brand usage can lead to loss of revenues through counterfeiting and spoofing; loss of reputation where customer trust has been compromised; and even loss of rights to the brand if a company has not demonstrated due diligence in protecting it. In addition, with blogs providing an open forum for consumer complaints and editorial challenges, it is critical to one’s reputation to have comprehensive knowledge of what is being said about a brand, by whom, and what – if any – type of response is needed.

In addition, many organizations have a regulatory obligation to address foreseeable threats to their customers, which can include online activities associated with identity theft, misleading information or even simple nuisance events.

The dollar value behind the brand
The value of a brand is far more significant than most people realize today. Beyond the obvious goodwill and recognition factor, a brand is a highly valuable corporate asset. In some cases it can be worth tens of millions to billions of dollars, and represent more than 50% of a company’s net worth. Brand Finance, a global brand valuation consultancy, reports that Nike’s brand for example represents 84% of its total enterprise assets, making it the most valuable contributor to its parent company’s value.

According to the Brand Finance 250 January 2007 report on the world’s most valuable brands:

• The total value of the 250 most valuable global brands is $2,179 trillion.
• Coca-Cola is the world’s most valuable brand with an estimated value of $43,146 million.
• Google’s brand value is the highest of the Internet brands at $24,687 million.
• On average, brand values represent 18% of the total enterprise value of the businesses represented within the BF250.
• New financial reporting standards have led to a marked increase in disclosed intangible assets, including brands, amongst listed companies.

Setting the precedent
Policing a brand is not simply a matter of addressing the obvious threats such as Internet fraud or phishing attacks however. Ignoring what seem like minor nuisances – such as widespread unauthorized use of logos – can also lead to loss of rights to the brand. When challenging a brand violation in court, enterprises must demonstrate due diligence in protecting their logos and brand. If a company has not done that, courts will typically rule that the mark is no longer meaningful and has become ubiquitous. For some that could translate into the loss of tens of millions of dollars in brand equity. This turned out to be the fate for such brands as escalator and aspirin, simply because there was not enough effort put into protecting them – and this was long before the Internet came into play.

A growing need
It has become obvious to those that are close to the task of managing their brands that brand protection is a vital component for any corporate strategy. However, industry observers report that brand protection online in fact represents a major area of weakness for many enterprises today.

Gartner’s October 2007 report, “Managing online reputation is becoming a business imperative” says that businesses need to become more proactive in managing their reputation online in the face of rising crime and reputational persistence. As the Internet evolves and the level of sophistication of online crime increases, it is becoming ever riskier to participate on the Internet.”

It also predicts that by the end of 2010, criminals will routinely use the Internet to extort funds, which will damage corporate reputations by ensuring that routine online search activities return negative or libelous results. This leads to the inevitable conclusion that there is a compelling need for organizations to “get to grips” with Internet reputation management.

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