One in six products sold today are counterfeits. In the UK alone it is an industry worth $41bn whilst globally it accounts for $360bn in international trade. If counterfeiting were a country it would be Sweden sitting at number 33 out of 182, above Austria, Switzerland, Norway and Greece in the Gross Domestic Product league table. If counterfeiting were a company it would be BP, the fourth largest company in the world by revenue. And if counterfeiting were a person it would be the nine richest people in the world all rolled into one.
It is one of those overt yet stealth criminal industries that everyone knows exists, but no one appears concerned about. When talking about counterfeiting and the extent of the industry people shake their head, tut and smile as if this criminal industry is a cheeky schoolboy like Tom Sawyer, always up to no good but not really causing anyone any harm.
Counterfeiting is not just big business, it is big criminal business. You don't just happen upon a $360bn cottage industry. Counterfeiting is not just about intellectual property theft; it encompasses child labor, slave labor, hacking, blackmail, theft and human trafficking and is managed by organized crime syndicates and even terrorist groups.
Counterfeiting causes tremendous harm to human beings. It is estimated that one third of the anti malarial medicines used in East Asia and Africa is counterfeit, whilst in the UK 10 percent of all foodstuffs is fake. In 2008 fake baby milk caused illness to thousands of babies in China, due to the inclusion of melamine, a chemical used in the production of plastics.
'Caveat emptor' (let the buyer beware) certainly applies to consumers tempted by cheap counterfeit products but the effect of buying fake 'knock off' goods has a 'knock on' effect on the price of legitimate products. Every pound, euro or dollar spent on counterfeits is a pound, euro or dollar not spent with the brand owner, reducing the savings from economies of scale that can be passed on to the consumer. Production costs, support costs, marketing costs and legal costs are all higher, which the brand owner must pass on to the consumer - a double whammy.
The scale of the counterfeiting problem online is so large that often brand owners don't know where to start. It is very difficult to know where to focus your anti-counterfeiting efforts online when the attackers seem to be all around you. So here are a few tips to allow brand owners to stay one step ahead of the online fakers, fraudsters and counterfeiters without spending a fortune to do so.
- Take control of your domain names. Your domain names are your visibility on the Internet; they are the most important and valuable online asset that you own. If you control the names you control the part of the Internet that matters to you. Know what domain names you own, centralize the registration and management of them, ensure they never drop, and enforce rapidly and robustly against typosquatters, copycat sites and counterfeit goods.
- Make sure you have visibility of the online brand threats that pose a risk to your business and identify the areas that pose the most risk. Even if you decide not to take action against them, having visibility of the threats reduces your risk and puts you back in control.
- Be clear about the desired outcomes from your digital presence. Is it customer reach? Increased revenues? Improved brand awareness? Construct a strategy that supports these goals.
Written by Andy Churley, Marketing Director, NetNames
23 October 2012