Safeguarding Brands From Scams

by Frederick Felman, Jun 10, 2010, 4:30 PM

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2009 will be remembered as the year that delivered an onslaught of challenges to CMOs. Financial uncertainty and changes in consumer buying habits combined with reduced marketing budgets led to demands for greater accountability and efficiency for every marketing dollar. These trends are driving an important new responsibility for CMOs in 2010: safeguarding their brands from online scams.

Marketers know that cyberspace has made the traditional sales and marketing funnel obsolete: today what matters is who¹s winning the online battle for mindshare and brand loyalty. Researching purchases online is performed by 67% of consumers who use the Internet to gather product information, compare prices and learn what other consumers think. And it¹s no secret that online scam artists recognize consumer desires for good deals in a down market as well as the power of brands to drive business.

Brand scammers are knowledgeable marketers using best practices in interactive marketing. Using the same tools as a legitimate brand marketer -- search engine optimization (SEO), paid search advertising, social media, affiliate marketing, and well-recognized brands -- savvy scammers siphon the online traffic meant for your brands to their own Web sites.

Instead of finding your branded Web site, unsuspecting consumers find suspicious sites with deals that are, literally, too good to be true. Scammers operate easy-to-navigate e-commerce sites with high-quality graphics, online help, secure shopping carts, product reviews and community features as well as unbelievably low prices. But, instead of a great deal, your customers get counterfeit products, pirated goods, a nasty computer virus -- or all of the above.

During the holiday period in 2009, we investigated the prevalence of this practice. We examined 20 of the top 1,000 product-related searches, focusing on paid search ads and analyzing 583 unique Web sites to which the ads pointed.

We found that nearly 17% of the paid search ads for popular consumer products -- including designer handbags and shoes, music, movies, and hi-tech gadgets -- led to sites likely offering counterfeit or pirated goods. This number was even higher for certain categories, such as designer handbags, where an eye-opening 32% of the ads led to sites appearing to sell fakes.

Our findings underscore how counterfeiters and pirates have mastered the art of using paid search ads to target online shoppers seeking popular brands. And, by bidding on the same branded keywords as a legitimate brand, counterfeiters and pirates drive up costs, too.

Paid search advertising is not the only tool in the scammers' repertory. They are also accomplished at "black-hat" SEO techniques to capture search traffic. In March 2009, scammers targeted the popular March Madness basketball tournaments, using techniques like keyword stuffing to push pages laden with computer viruses and other "malware" to the top of search engine results pages. These techniques have also been used with high-profile software and gadget launches.

No brand -- no industry, no region, no market -- is immune. From the adult site operators who use family brands to attract unsuspecting users... to the luxury brand counterfeiters who hijack traffic and revenue to sites promoting fake goods... to the unscrupulous hoteliers diverting travelers to competitive properties, the problem is pervasive.

How pervasive? According to one source, $13 billion is spent on search marketing, while HitWise found that 14% of branded searches go to a site other than that of the brand. Do the math and see that up to $1.8 billion of industry search budget is being diverted. Factor in lost sales, increased support and service costs and negative effects on lifetime value of a customer and these numbers become even more sobering.

We're all feeling the heat from the boardroom to demonstrably boost marketing ROI and improve sales and revenue. Can we afford to have our online marketing investments diverted to sites that use our brands but don't deliver business to us? Smart CMOs are saying "no" and leading their colleagues across organizational boundaries to develop strategies that safeguard their brands, their customers and their bottom lines.

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