April marked a new milestone in the digital age when the Organisation for Economic Cooperation and Development (OECD) released a report that claims that the value of counterfeit goods sold has reached nearly half a trillion dollars. For those unfamiliar with what that would look like, here it is: $500,000,000,000.
The most worrying aspect of the report is that the results are based on the physical seizure of goods around the world from 2011 to 2013. So, essentially, we are three years behind the curve on understanding the global impact of counterfeits on the world’s economy. We’ve lived with the statistic that almost one in every six products sold in the world is likely to be counterfeit – the latest OECD analysis suggests that counterfeits now account for 2.5% of all international trade.
Part of the issue we face today is related to consumer spending habits. Our society has never been more about image and prestige than it is today, but we either can’t or won’t pay the premium for branded and luxury goods. We no longer see products as just names. We see them as lifestyle choices, and we will often get into heated debate with friends and colleagues about the merits of one brand over another. Are you an Apple fan or a Samsung? Nike or adidas? British Airways or Virgin? Higher standards of living mean consumer consumption is now not just a satisfaction of hygiene needs, as Maslow’s theory of motivation through the Hierarchy of Needs (1943) once described. Thanks to the decrease in manufacturing costs aligned with an increase in spending power, we are now brand consumers, willing to act as mobile advertising boards for their products, advocating the marketing messages we see and hear through our interaction with technology. As consumers, we all have product aspirations that unfortunately drive the demand and supply of counterfeit goods. We are all used to preceding our search queries with words such as ‘cheap’, ‘sale’, ‘bargain’ or ‘discount’. Many of the most aspirational brands do not sell their products in such a way, but that doesn’t mean someone else won’t – or at least claim they do.
It takes seconds to register a domain name, with few mechanisms in place to prevent someone infringing on a trademark or intellectual property. A swish, copycat website can be built within a couple of hours, and the all-too-pervasive social media networks take care of a zero-cost global marketing campaign. Buy a few thousand followers to create an authentic looking digital footprint, and you’re ready to start exploiting consumers. It really is that easy, unfortunately.
The OECD report focuses on the economy from three years ago in its analysis, which in digital years is almost a generation. Many brand holders, such as luxury brands like Rolex and Ray-Ban, may already be concerned with the numbers in this report – but just think what they could be in a few years’ time...
Brand holders are in a constant battle with counterfeiters, whether they realize it or not. Cyber-criminals use the same marketing tactics as the genuine brand holder; social media, paid search, online marketplaces. Their objectives are exactly the same: drive traffic, increase revenues – although the final step of ‘customer retention’ is often missing. So what exactly should brand holders be doing?
One approach taken by a growing number of global brands is to mobilize their greatest assets – their customers – as their first line of defense against the counterfeiters, essentially creating a moral crusade. By engaging with the customers to help find and report potential counterfeits, they build bonds of trust with their advocates, whilst customers feel more valued and more engaged with the brand. The key to making this work is to make it easy for the customer to report the infringements and to make them feel valued.
The good news for brand holders is that the first step doesn’t have to cost them anything. Creating a website that educates consumers easy to do, but can be incredibly effective. The key messages are simple ones: what are the dangers of buying and using a counterfeit product? How do you distinguish between real and fake? What happens if you find a retailer that appears to be selling counterfeit goods? Customers need to understand the distinction between good and evil; right and wrong. For instance, illustrating the difference between genuine and counterfeit drugs could save lives. The best way to motivate an already-engaged group is not through reason, but emotion. By defining what would and could happen if counterfeits are used, a brand holder is forming an emotional bond with its consumers.
Author Robert Greene wrote in his 2006 best seller ‘The Concise Strategies of War’ that where people have truly bonded, moods and emotions are so contagious that it becomes easy to infect others with enthusiasm. Translating this into intellectual property terms is the key to a strategy based on a moral question. This approach has already been used by a number of global organizations to great effect.
Counterfeiting is not going to disappear overnight. It will take years of constant focus, pressure and legal proceedings to even start to turn the tide, but that does not mean everyone should simply raise the white flag and admit defeat. The one thing the OECD report does underline is that counterfeiting is now at a level where it can genuinely hurt global economies, meaning the ripple effect touches us all. Brand holders should decide whether they want to be part of the problem or the solution. Creating brand protection strategies may seem like a small step in the grand scheme of things, but if everyone took that same step, the effect would significantly turn the tide against the threat of the counterfeiters.