• by Karlene Lukovitz  @KLmarketdaily, March 9, 2009

Brand abuse or "brandjacking" increased significantly last year--and scammers continued to become more sophisticated, according to the 2008 Brandjacking Index study from MarkMonitor, a provider of enterprise brand protection solutions.

Brandjackers keep realizing revenue from ongoing scams--80% of abuse sites identified in last year's study are still active--even as they expand their bag of tricks.

Across the 30 leading global brands tracked, "cybersquatting"--the abuse of trademarks within the domain-name system--continues to be most prevalent, and grew 18% in 2008. The number of such abuses increased during each quarter last year, reaching an average high of nearly 450,000 in the fourth quarter. Most generic dictionary words and terms have been registered as domains, and using brand names in domains helps brandjackers drive traffic through search engines.

The pattern of significant, consistent quarter-over-quarter growth in cybersquatting during both 2007 and 2008 points to growing success at using search engine optimization techniques to divert traffic to illegitimate or unauthorized sites, points out MarkMonitor CMO Frederick Feldman.

Combining types of abuse

Brandjackers are also engaged in blended abuse, or combining cybersquatting with other brandjacking techniques. For instance, scammers set up bogus "badbrandname.com" sites and divert traffic to "adult/offensive" content and e-commerce promotions.

Next to cybersquatting, the most common abuse techniques involve false association, or using the brand name in page content in a misleading manner. These abuses grew 20% last year, averaging over 86,000 in the fourth quarter. Pay-per-click abuses ranked third--averaging 33,614 in Q4--and grew 24% year-over-year.

E-commerce abuse showed the largest growth last year: up 46%, with instances averaging 24,589 in the fourth quarter. Offensive content abuse is still relatively small as a category (1,656 instances in Q4), but grew 21% year-over-year.

Phishing attacks also jumped, with 444 organizations being phished for the first time during 2008.

The financial crisis and increasingly sophisticated methods/ technology drove big increases in phishing against payment services brands (up 122%) and financial services brands (up 51%) during the second half. However, because phishers "follow the money," phish attacks against retail/service brands dropped 83% last year, and attacks against auction brands dropped 67% during the second half.

The data show that social networks, Twitter, gaming and "virtual world" sites are becoming increasingly popular targets for abusers.

Nearly 70% of all brand-abuse sites were hosted in the U.S., followed by Germany (9%) and the United Kingdom (4%).

Biggest target: media brands

Looking at specific market categories, media brands were the biggest target, with a Q4 high of nearly 44,000 abuse instances and an 11% increase for the year. Automotive brands were second, with a high of nearly 29,000 instances and an increase of 21% for the year. Consumer electronics peaked at over 15,000 instances (up 2% for the year), and high-tech at about 12,500 (up 21% for the year). Apparel and food/beverage each had highs of over 9,000 instances, and saw 28% and 17% increases for the year, respectively.

Financial brands averaged nearly 11,500 instances in Q4--but, despite the increased phishing attacks in this sector, saw overall brandjacking instances decline 6% for the year. The only other market showing a decline for the year (down 9%) was CPGs, which peaked at about 3,500 instances.

While MarkMonitor doesn't provide estimates of monetary losses resulting from online brand abuse, brand reputation and customer relationship damages alone are obviously massive--not to mention losses incurred through diverted revenue and sales commissions paid by companies to the very abusers who are ripping them off, points out Feldman.

According to a Gartner study, an estimated 3.6 million U.S. consumers lost approximately $3.2 billion to phishing scams alone in the 12 months ending August 2007.

Companies having the greatest success at fighting brand abuse are those that are making this a priority "at the highest levels of management," according to MarkMonitor President/CEO Irfan Salim.

To produce the brandjacking study, MarkMonitor uses proprietary algorithms to search approximately 134 million public records on a daily basis for brand abuse in domain data as well as U.S. and international Patent and Trademark Office data. The phishing data analyzed is based on feeds from leading international Internet service providers, email providers and other partners. The 30 brands tracked are from Interbrand's Best Global Brands study.