Counterfeiters have found fertile ground online, taking advantage of the global reach and efficiencies of the Internet to find new customers while exploiting the Internet's anonymity to hide their tracks. Well-known brands are ripe targets for these scammers who compete with legitimate search marketers for traffic, clicks, and conversions.
We recently analyzed five major sports brands, including U.S. leagues and international competitions, to see who was using these brands in online trading and promotion of sports apparel with questionable provenance. Our study focused on shirts and jerseys and excluded a panoply of other goods such as caps, tickets, DVDs, or live game video streams that are often counterfeited or pirated online.
The data that we examined included the traffic generated by the suspicious sites and the methods used to ensnare consumers on a variety of online channels including B2B sellers of bulk goods and B2C e-commerce sites, along with more than 300 branded keyword combinations that triggered paid search ads across major search engines.
Our conclusion? Online counterfeiters see a tremendous opportunity in the passion and loyalty of millions of sports fans located all over the world.
Best Practices Accelerate Growth for Counterfeiters
These questionable sports apparel sellers are adept at using best practices in online marketing techniques to take advantage of the dedicated fan and the naïve consumer:
During our study, we examined almost 480,000 paid search ads, triggered by more than 280 keyword combinations. We found more than 25 percent of these ads - more than 130,000 ads - promoted suspicious goods. The impressions generated by these ads drove an estimated 11 million annual visits.
These suspected counterfeiters are competing with legitimate advertisers for advertising inventory, driving up prices and even outbidding authentic advertisers for premium placement for ads containing trademarked terms, which are especially effective in driving traffic. According to a recent comScore and Yahoo Search Marketing (Overture) study, 20 percent of all searches are for trademarked terms.
The bottom line? Legitimate advertisers pay more for their search keywords and compete with counterfeiters for traffic seeking their own brands.
Another traffic generation technique used by these fraudsters is to promote their sites in organic search results, using inbound links from questionable sites like splogs to further exploit search engine results. These splogs copy legitimate content from elsewhere on the Web and contain a high number of links to exploit search algorithms. One of the results that we found in the study has nearly 4,000 inbound links from other sites, some of which are cybersquatted splogs.
Questionable Affiliate Marketing Practices
Another technique that can confuse those seeking sports-branded apparel is in the realm of affiliate marketing. For example, an affiliate marketer registers a cybersquatted domain involving a major sports league brand and then links to popular retail and auction sites, redirecting traffic to unauthorized channels. In return, the affiliate marketer is compensated for all traffic that converts to a sale on these unauthorized B2C sites and the consumer potentially (and unknowingly) ends up buying non-authentic merchandise.
Reaping Rewards in E-Commerce
For the five brands in the study, we identified more than 1,300 e-commerce websites selling questionable sports apparel. Those e-commerce sites alone attracted more than 56 million annual visits. Using industry metrics for order conversion, we estimate that these sites are selling 800,000 units of suspicious sports apparel annually.
We discovered 12 B2B exchange sites with more than 4,000 individual, unauthorized suppliers that appear to be offering phony merchandise. This supply chain consists of suppliers who are based predominantly in Asia and are estimated to sell 300,000 shirts or jerseys annually.
In total, we found more than 6,000 suspects selling more than 1.2 million shirts or jerseys annually over the Internet, generating nearly $25 million in revenue.
Importance of Crafting Enforcement Strategies
Thousands of sellers earn millions of dollars in annual sales of apparel that isn't licensed by the sports brands. Sadly, because of the sheer number of questionable sites and the sophisticated effort put into promoting them, sports and other brands must compete with counterfeiters for sales of their own brands. It's essential that brands craft enforcement strategies that attack not only the online distribution of their goods, but also their online promotion in order to address this multi-million dollar problem and to help their loyal fans display their team spirit with authentic goods.
This column was originally published in SES Magazine, March 2011.
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Frederick Felman is CMO at MarkMonitor, a global leader in enterprise brand protection, offering comprehensive solutions and services that safeguard brands, reputation, and revenue from online risks.