CMO study: Marketers fear increase in brand infection

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In times of a slow economy, marketers see a lot of danger for brand integrity by fakes, frauds and infringements. The Chief Marketing Office (CMO) Council asked in a global audit of 306 marketers, sponsored by MarkMonitor, how marketers view threats to online and offline brand attacks. The results reveal that top marketers see online threats heating up but still struggle to understand, monitor and measure the impact of the increased sophistication of brand hijackers and product knock-offs on consumer trust and confidence. The good point is: they plan to increase spending on brand protection.

The study “Protection From Brand Infection” shows that marketers are reporting a greater number of incidents or fraud online than offline. In terms of chief vulnerability online (29.5%) has surpassed offline (22.6%) already. The brand value, trust, integrity and reputation is being eroded and damaged, reply the study respondents. The main problems companies are fighting grey market knock-offs, phishing attacks, cyber squatting, email scams, trademark abuse, copyright and patent infringements.

“Sophisticated and savvy brand extortionists and cyber scammers on the Internet are boldly preying on unsuspecting consumers with bogus brand name email/web sites, deals and inducements that entrap, extort and expose consumers to financial loss, identity theft, and viral infection,” said Donovan Neale-May, the CMO Council’s executive director. “Marketers have awakened to not just the threat to bottom line business issues posed by trademark trespassing, but also the costs of lost brand value, integrity and consumer trust.”

Liz Miller, VP of the CMO Council, referred to these changes in a phone call with me that brand corruption is not new to companies and markets but developing with the web quicker than expected.

„This is not a new phenomenon, but a new face and a new outlet of brand infectious attacks. Wherever there is a monetary gain, people find a channel for it, and the speed at which this happens exponentially increased in the modern digital age. Years ago, we were talking about credit card abuse via phone based options, then it went on to email based scams and phishing issues and now, it presents in instant mass communication – also through social media, the one to many factor needs to be obeyed with a critical and professional eye.“

Key findings of the Protection from Brand Infection study
– The top six market segments with the highest prevalence of abuse are digital media, luxury goods, software, footwear and apparel and Internet e-commerce (tied), and consumer electronics.
– 30.3% said their company has a specialized brand protection group with another 17% choosing to outsource those efforts with a third party provider or leaving it up to their industry trade organization.
– 27.4% reported they spend less than $100,000 on brand protection annually and the same number reported they have no budget allocations. Another 29.1% report they don’t know. 9.8 percent say they’re spending more than $500,000 while 2.7% say they’re spending more than $5 million.
– The value and integrity of brand assets suffered the greatest impact from counterfeit products, knock-offs or online brand hijackings, with 41.2 percent of marketers rating this highest followed by 35% blaming it for undermining revenue and margins and 26.7 percent saying the activities raised unnecessary customer concerns and anxieties.

“Brand attacks, whether through online scams, phishing or cybersquatting, impact brand integrity and reputation immediately because the malicious activities are customer-facing and affect the heart of what contributes to underlying brand value – customer perception,” said Frederick Felman, chief marketing officer of MarkMonitor. “This expanding use of the digital realm to hijack and misuse brands is unchartered territory for many marketers who have been focused on optimizing their online strategies to communicate brand value and now realize that they must also elevate their efforts to protect brand assets online.””

The leading strategy marketers have employed to combat online attacks is online monitoring and using third-party providers to root out cyber squatting and misuse of brands and trademarks. Marketers say they place an emphasis on prevention and monitoring misuse because recovery of lost value or actual damages is difficult.

Spot On!
Although there is a big threat in brand infection, only one third of marketers planning (30,3%) plan to increase spending on brand protection, while 33,3% won’t change their habits. Most marketers still do not understand and measure the size of trademark trespassing and knock-off confusion. The impact of brand hijacking on sales is significant: 39.6% say the cost is greater than 5% of sales, and 8.2% even state it exceeded 20% of sales.

Another interesting finding is that not marketing holds responsibility for brand integrity in most companies – and over a third of the marketers said they don’t know the business impact of knock-offs, gray market product or bogus brand cloning on sales.
– 42% of companies have assigned this responsibility to legal, finance or IT
– 20% reported they didn’t know the impact on brand equity or goodwill.
– 15% of marketers lead brand protection programs
– 6% of the executives surveyed have official brand protection departments

A lot of room to improve the way brand protection is handled, especially when watching the rapid development of the web and it’s selling possibilities and communication options.

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  1. FraudRating » CMO study: Marketers fear increase in brand infection am 11.05.2009 21:56 

    […] http://www.thestrategyweb.com/cmo-study-marketers-fear-increase-in-brand-infection   Posted in Apparel Brands, Brand Hijackers, CMO Council, Fraud Detection, Fraud Prevention, Online Fraud, Organizations, eCommerce, online attacks, online retail sales | Tags: Brand Hijackers, CMO Council, cyber squatting, grey market knock-offs, marketers, MarkMonitor, offline fraud, Online Fraud, phishing attacks, Protection From Brand Infection […]

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