In an ever changing corporate environment there has never been more opportunities for those organizations who embrace the online environment. Tomorrow’s business disruptors are glimmers in the eyes of today’s Da Vincis and Galileos. However, for every opportunity there is a risk. Intellectual property is at the core of an organization’s digital asset strategy and the growing risk of infringement has led business leaders to look at different ways to combat these risks. NetNames Director of Commercial Operations, Stuart Fuller, looks at five different approaches over the course of the next few weeks based on the concepts of military strategist Robert Greene, and how they can be utilised in the fight against IP abuse.
The Internet is possibly the greatest invention of all time. Some may argue that title should belong to the wheel, penicillin or the combustion engine but try telling that to the billions of people who use it every day to run their lives, or the millions of companies that compete for business on a global scale, even if they are a one-man band operating from a studio apartment in the most remote area. Huge investments in mobile technology and infrastructure is today delivering the World Wide Web to thousands of new users, of all ages, races and religions. The Internet doesn’t discriminate – it is available to anyone with the means to connect to it.
Never has the barrier to entry for firms, big or small, been so low, and it continues to get lower as technology gets better and cheaper. The opportunities that the Internet offers are clear to see in every walk of life. Today, we can communicate with family on the other side of the world in real time and at virtually zero cost. We can watch our favourite TV shows, movies or live sporting events from the palm of our hands. We can order our weekly shopping at 3am in the morning for delivery before breakfast. We can find the answer to virtually any question by asking groups of strangers. We can find love, laughter, long-lost friends and lawnmower spare parts at the click of a button.
Today’s successful organizations are those who have understood and seized the opportunity that the Internet offers.
Traditional offline global brands such as David Jones, Next and Ikeas have manage to adapt, creating a strong online presence with a wider product range. Australia’s e-commerce sector, for example, has been a real success story over recent years, now worth more than $A10 billion. “Despite a recent pick-up in the traditional bricks and mortar retail sector, it was still outpaced by the improvement in online retail growth over the past quarter,” said Alan Oster, the NAB’s Group Chief Economist in June 2014. Last year, e-commerce sales rose by 17.3%, according to eMarketer, with a forecast for growth of 14% in 2015.
Whilst the Internet has delivered huge potential and opportunities, it has also produced huge threats and risks for us all. Counterfeiting is the cornerstone of the risks that face organizations when they become successful and move into the world of e-commerce. According to the brand infringement website Havocscope, the value of losses relating to counterfeit goods worldwide is estimated at over $650 billion, or 7% of the world’s annual trade. Counterfeiting impacts every industry sector in every country around the world.
The cost of counterfeit goods cannot only be measured in the opportunity cost of not buying genuine products, there are also physical dangers to consumers. Counterfeit drugs are still the most common black market product sold around the world, accounting for over $200 billion of lost revenue annually, and putting the health and welfare of hundreds of thousands of people across the globe at risk.
The management of an organization’s digital assets is now as important as trademarks, patents and copyright. Intellectual property has moved on from the slow-moving days of the last century. Today, a domain name that can cost as little as a dollar and be registered within seconds can be the key to a billion dollar business. As an example, Amazon.com was registered back in November 1994 for a matter of a few dollars. Today, the website is the seventh most trafficked in the world and generates revenues of approximately $2,000 per second. Many organizations have become global brands because of the power of their digital assets. It is vital that they have a clear marketing strategy to take advantage of the huge opportunity the Internet presents, but also a brand protection strategy to ensure that they mitigate the risks that an online environment brings.
The International Chamber of Commerce estimates that one in six products sold online is counterfeit, whilst every week 40,000 websites are compromised by cyber criminals, according to the Boston Consulting Group. In a survey carried out by NetNames in May 2014, 96% of companies surveyed admitted that guarding their online assets is now as essential to the success of their brand as the traditional marketing mix, yet only 40% have a strategy to protect them. For the 60% that currently do not have a strategy, the costs of doing nothing can be catastrophic. Failure to act on intellectual property infringements can irreparably damage revenues, reputation and, ultimately, the business itself.
Ten years ago, author Robert Greene published the International Bestseller 33 Strategies of War, in which he outlined a number of different approaches to overcoming patterns of failure in business. His strategies were taken straight from the play books of such illustrious characters as Hannibal, Ulysses S. Grant, Margaret Thatcher, Napoleon Bonaparte, the legendary Sun Tzu and the despised Erwin Rommel. Whilst many people may consider some of his views as Machiavellian and excessive, he delivers some sound strategic advice that can be applied to the creation of an intellectual property strategy.
STRATEGY ONE - THE MORALE STRATEGY
A brand without advocates is like Christmas without presents. The Internet reaches every corner of the globe, meaning that the job of monitoring intellectual property infringements grows every day. Many brand holders don’t have a strategy simply because they don’t know where to start. Should they concentrate on marketplaces to detect counterfeit items? Social media to monitor reputation? Websites claiming fake affiliation? Mobile App monitoring? The easy bit of dealing with IP infringements is the enforcement, the hard part is the detection.
A number of global brands have taken the Morale Strategy, transforming the war against intellectual property infringement into a crusade for all that it right and just. By engaging with their advocates, (their most loyal customers) to help find and report IP infringements, they build bonds of trust. Customers feel more valued because they see the benefits they are delivering back to the brand. The key to making this work is to make it easy for the customer to report the infringements.
The first step in setting up the Morale Strategy is education. What are the dangers of buying and using a counterfeit product? How do you distinguish between real and fake? Customers need to understand the distinctions 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 people 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 their advocates.
In a group where people have truly bonded, moods and emotions are so contagious that it becomes easy to infect your troops with enthusiasm, according to Greene. Translating this into intellectual property terms is the key to the Morale Strategy. This approach has been used successfully by a number of global organizations. Canon has a whole section on its website outlining the reasons why consumers should avoid buying counterfeit products as well as useful guides as to how to spot a fake, how to report a counterfeit and, finally, a section on the success the brand has had in eliminating counterfeits.
Possibly the most respected and successful brands of this century is Apple. The California-based technology company has revolutionized the way we engage with each other and the connected world as a whole, whilst the brand itself has become synonymous with the term ‘cool’. However, it fights a constant war against counterfeit items, predominantly in the low-cost accessory space, such as charging leads and adaptors. Whilst the company dedicates a section of its website to identifying counterfeit items, it doesn’t give the consumer any channel to report potential infringements or websites that appear to be selling fake items.
One of the most counterfeited brands today is the Australian boot manufacturer Ugg. The trademark boots have been a global success, which makes the company a huge target for counterfeiters. In the three-year period from 2011 to 2014, over a million counterfeit Ugg products were seized globally, whilst the brand took action against 60,000 websites selling counterfeit products. Interestingly, the brand has received over 80,000 emails from customers regarding counterfeit items – a truly staggering number that demonstrates the Morale Strategy in full force.
A motivated army can work wonders, making up for any lack of material resources. In this case, that lack of resources may be a budget, people who are skilled enough to carry out the work, or even the time to understand what the critical issues are. However, it is the most cost-effective initial strategy that an organization can implement and one that could have the added benefit of creating additional affinity with loyal customers, who feel that they are playing a part in building the brand. Start with the end in mind. What do you know about IP infringement at the moment? What form does it take? How do you spot problems? The more information you can supply to your advocates, the higher the likelihood that you will get ethical buy-in from your customers. If you can build in the “what’s in it for you?” element, to underline the importance of the role the consumer plays, then you can build that bridge between them being a simple consumer of your brand to being a true promoter of it.