The selling of sports-related merchandise has arguably never been greater than it is at this moment in time with the Olympics winding down and the beginning of the football season drawing near.
The rights holders that have licensed companies to sell merchandise around such sporting events and their participants are poised to reap a windfall.
Unfortunately, so too are a host of companies that produce and sell unauthorized goods to consumers, according to research from MarkMonitor, the leader in tracking and devising strategies that combat the production and sale of counterfeit merchandise.
MarkMonitor regularly produces the Brandjacking Index, an independent report that tracks the 30 leading brands as identified by Interbrand.
MarkMonitor’s most recent Index, released last year, focused on online sports apparel. It analyzed trends and statistics about brand abuse online as well as anecdotal information about the business and technical methods used by brandjackers.
Brandjacking, as defined by MarkMonitor, means to hijack a brand to deceive or divert attention. Brandjacking is often used in abusive or fraudulent activities devised for gain at the expense of the goodwill, brand equity and customer trust of actual brand owners.
As part of its Sports Apparel Online Report, MarkMonitor analyzed five major sports brands, including US leagues and international competitions, to see who was using these brands in online trading and promotion of sports apparel with questionable provenance. Because its objective was to measure a very specific market segment and determine what kind of abuse exists for these leading brands, it did not look at individual team brands or other sports-related offerings.
As a result of its analysis, MarkMonitor found more than 6,000 unauthorized retailers selling more than 1.2 million shirts or jerseys annually over the Internet, generating nearly $25 million in revenue. These so-called “fraudsters” also invested heavily in paid search advertising, occupying almost 28 percent of all ads triggered by branded keywords and funneling an estimated 11 million annual visits to their sites from this marketing method alone.
In addition, MarkMonitor found almost 500 cybersquatted sites using other monetization techniques, including pay-per-click ads and questionable affiliate marketing practices, to capitalize on major sports brands for their own financial gain. Unfortunately, this makes it harder for fans to find the real apparel sold by legitimate vendors that are authorized by the sports brands when shopping online.
Counterfeiters Employed Three Methods to Siphon Business Away from Legitimate Rights Holders
These questionable sports apparel sellers use savvy online marketing techniques aimed at taking advantage of the dedicated fan and naïve consumer. These questionable merchants use the three basic methods that any customer can use to locate an online merchant, including direct navigation, organic search, and paid search advertising.
Direct navigation occurs when a customer types in the domain name in their browser. By purchasing cybersquatted domains that are nearly the same as the established brand and to which they have no rights, the fraudsters can masquerade as the actual sports brand.
Organic search results are the listings that appear on search engine results pages because they are relevant to the search terms, as opposed to being paid advertisements. Through the use of ‘black hat’ or other questionable means, these fraudsters are able to promote their sites. These deceitful sites can even rise to the top of the search results pages and gather clicks and traffic.
The fraudsters also use paid search advertising by buying branded keywords to trigger paid search ads, just like the actual sports brands do. During the investigation, they examined almost 480,000 paid search ads, triggered by more than 280 keyword combinations. They found that almost 28 percent of these ads, or more than 130,000 ads, promoted suspicious goods.
This means that suspected counterfeiters are competing with legitimate advertisers for advertising inventory, driving prices up and even outbidding legitimate advertisers for premium placement. As a result, the legitimate advertisers have to pay more for their search keywords and compete with counterfeiters for traffic seeking their brands.
In addition to these fraudulent websites, there are also cases of mixing both fraudulent and legitimate sellers in a complex web. For example, a cybersquatted site redirects a visitor to an authorized dealer’s site. The authorized dealers, then, are leveraging the traffic of the cybersquatted domain to drive their own revenue. The amount of traffic that can be generated off the back of a cybersquatted domain can be significant, sometimes reaching up to several million annual visits.
Another source of confusion for consumers seeking sports-branded apparel occurs in the realm of affiliate marketing. This occurs when 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 business-to-consumer sites and the consumer potentially ends up buying non-authentic merchandise.
Brand abuse often leads to various negative consequences and can result in revenue loss, increased customer service costs and exposure to legal liability. In order to protect themselves from these negative effects, rights holders should create enforcement strategies that better protect their brand and attack the distribution of such counterfeit products.
This is where MarkMonitor, an international company that provides services aimed at preventing this growing problem, has built a strong reputation by helping countless rights holders with sophisticated solutions involving online brand protection and domain management services.
