In a world where an increasing amount of transactions take place in the digital space (online retail accounts for over 21% of all global sales as of 2022 with projections estimating continuous exponential growth), protecting your digital assets becomes a necessity. Protecting your Brand online has a direct correlation to healthy growth for a variety of reasons. These can be perceived and separated into two categories: Direct and Indirect benefits.
Direct Benefits of Brand Protection
The Direct benefits aid in the procurement of traditional metrics of success such as:
- Mitigating Negative Impact Over Revenue: Whenever a counterfeit is sold, the rightful owner loses out on the potential sale and profits.
- Justifying R&D Investment: Whenever a counterfeit product is sold, they coast off the innovation or patented design of a company which presumably invested time and resources into – the aberrant violation of Intellectual Property is proven to be quite costly for most companies.
- Lowering Potential Legal Costs: If your brand has been notified of instances of brand abuse or counterfeits, your options are to start spending company time and resources on the search of products, contacting individual vendors or marketplaces, and monitoring the deletion of said products. Alternatively, you could hire a traditional Law Firm to manage these copyright infringements, however as they don´t tend to possess automated detection mechanisms, they will take longer, and as a result, cost your company more money.
However, the silent killer of brands can be attributed to the lack of attention to Indirect benefits of protecting your company. These Indirect metrics are abstract and less intuitive for most business owners. Indirect consequences are those related to a brand's reputation – an intangible asset, which can very easily result in a tangible loss of profit. Corporate Reputation Quotients and Net Promoter scores are important to keep in mind, however they can be difficult to calculate.
Indirect Benefits of Brand protection
The Indirect Benefits can be valued as the following:
- Brand Equity Valuation:This can be done by estimating future earnings based on brand awareness, perceived quality, and loyalty. – While counterfeits can boost brand awareness, they can severely harm the perceived quality and in turn tarnish loyalty. A 2016 survey conducted by the International Trademark Association found that 54% of consumers who had purchased a counterfeit product reported that they would trust the brand less as a result. Another study conducted by the OECD in 2019 found that 65% of consumers who had purchased a counterfeit product reported that they would be less likely to purchase from the brand again in the future.
- Market Based Valuation:This can be calculated by analyzing the brands performance in the market by calculating the market share, revenue and profitability. Financial metrics can be applied in order to determine the valuation, these include: price-to-earnings ratio, market capitalization and enterprise value. However, companies may encounter a potential blindside by not considering the business insights behind their counterfeit markets; these insights can help businesses understand where their products are gaining popularity, and where to expand next.
- Consumer Based Valuation:This step considers the perceived value of the brand by customers and it's usually ascertained through market research about brand awareness, customer loyalty, and willingness to pay for the brand.Brand protection helps maintain the brand's reputation and ensures that customers receive high-quality products that are consistent with their expectations. By protecting your brand, you build customer trust and loyalty, which can ultimately increase the perceived value of your brand and therefore reflect positively in their willingness to pay.
- Cost Based Valuation: Lastly, before considering the use for a Brand Protection company, it is important to calculate the value of your brand in relation to the associated costs of building, maintaining and scaling the brand. This includes the costs of developing and marketing and subcontracting these costs from the brands estimated future earnings.
Your brand's reputation is an incredibly important asset, and it is your responsibility as a brand to ensure that it is being protected at all times. While the effects of the loss of a single sale to a counterfeit might not be alarming, the long-term lingering effects of counterfeit products might
irreparably damage your brand.
To learn more about brand protection, and what you can do to ensure that your brand is safe,
get a free consultation.
Author: Mathias Spielvogel - Smart Protection
