As e-commerce continues to grow – spurred by dramatic changes to shopping behaviors – businesses need to ensure that they can maximise the online opportunity while protecting consumers and their brands. Critical to the success of a brand protection program is the ability to measure its financial impact and getting executive buy-in.
Maximizing the opportunity offered by e-commerce is key to success. The financial impact of not fully protecting brands and consumers online – and losing out to competitors both legitimate and illegitimate – is too great.
Read expert insights from Michael Thomas, Senior Brand Protection Manager at Superdry, on how to measure the financial value of brand protection and engage stakeholders across the wider business.
Part 2: Why it is necessary to move beyond a takedown-focused reporting approach
The number of takedowns has for a long time been, and is still for some, the main metric that is used in reporting.
“Takedowns reduce the visibility and can inform strategic decisions around geographies and platform infringement but is not a ROI metric.”Michael Thomas
Takedowns and other similar metrics are an important benchmark for Brand Protection teams to understand how their service is running. But to justify investment and demonstrate value, you need to be reporting in terms that the rest of your business understands.
There’s also the issue that if you focus solely on takedowns, you can incentivise the wrong kind of behaviour. You might find your team focusing on issues where takedowns are simpler, rather than taking a strategic approach and focusing on the issues that matter to deliver lasting reductions in the threat landscape.
Superdry’s data-led approach to decision making
Superdry harnesses online intelligence for offline investigations and swift action. After tracing infringement back to offline operators, Superdry’s Brand Protection team can liaise with law enforcement to raid, seize and instigate legal action against bad actors.
“The data I receive enables me to have calls with franchisee and sourcing partners globally – data on work completed, ROI, value of Brand Protection programme.”Michael Thomas
Part 2: The different sources of value unlocked by protecting your brand online
When thinking about protecting brands, we typically associate with a strategic driver of brand value – trust, quality, and authenticity.
Superdry focuses on Consumer Trust & Revenue Protection
Consumer trust resonates with Superdry – the business wants consumers to be certain that they are purchasing genuine products. The business also recognizes the need to prevent other fraud such as phishing and misuse of potential consumers data.
By tackling these bad actors and fraudsters, Superdry removes one major source of competition, increasing visibility of its marketing efforts and growing online sales.
Maintaining control of the online space ensures a commercially positive sales and marketing team – the lost revenue through not protecting the brand online would be extremely detrimental to the business and is a massive risk.
The strategic and financial drivers vary between businesses and industries
The strategic drivers will vary. For a FMCG brand, consumer trust in their products is likely to be critical for their ongoing success, whereas for a luxury brand, preserving a reputation for quality and exclusivity may be key to supporting its price point.
These types of drivers will typically trigger investment in protecting brands and engage executive leadership. However, quantifying the benefit of protecting a brand is very difficult in these terms, making it hard to justify investment and engage cross-functionally. This often leaves brand protection teams struggling to build awareness and recognition of the importance of what they do.
It’s also noticeable that these strategic drivers are typically not expressed in terms of intellectual property. Where a legal team is responsible for Brand Protection, it must collaborate and speak the language of other functions to see maximum value.
There are three core considerations when looking to unlock value with Brand Protection.
Firstly, businesses need to look beyond takedown numbers and justify investment in commercial terms. If senior stakeholders don’t understand the value that Brand Protection adds, the function will ultimately be viewed as a cost rather than an investment, and the budget is likely to suffer.
Secondly, the strategic goals will vary by company. You need to think about what matters to your business, and also make sure you focus on what is measurable.
Finally, unless stakeholders can understand value, gaining buy-in and awareness is going to be very difficult.
Part 3: How to report success and engage executive stakeholders
Superdry case study: How Superdry reports successes and engages with executive stakeholders
The approach taken by Superdry focuses on the core quantifiable benefit from their program – recapturing revenue lost to bad actors. It is designed to be easy to explain while using assumptions built on their own data – so it is recognizable to the wider business and teams like finance.
“We are starting to get attention of senior leadership and other teams globally such as retailers. We need to use this approach to unlock internal stakeholders and relationships. Sometimes, you need to be specific with reporting with what story you are trying to tell”.Michael Thomas
Superdry starts with the volume of illegitimate listings before applying several factors to create a credible ROI figure.
With this methodology, Superdry calculates the online results to be the following:
- The total value of fake product taken down or seized: £108,984,449
- The total estimated lost sales prevented: £35,452,446
- The total estimated gross margin saved: £19,144,319
And in the offline space, Superdry calculates the total seizure value as £26,369,072 (Superdry RRP).
How Superdry calculates sales figures
Each season 65% of what Superdry put on sale in retail actually sells through. The best comparison therefore is that a counterfeiter would expect to sell-through around 65% of all Superdry product it lists.
Research varies for lost sales and substitutability to brands when consumers do not know if they are buying a genuine article or not – looking at data, we are using 50% as a substitutability figure due to our price point – it will clearly be negligible for a Rolex watch as an example as consumers will not be misled for a £10 Rolex.
There is a 54% average gross margin profit on sales for Superdry across retail and wholesale.
There are multiple approaches to measure the efficacy of Brand Protection programs that we have observed our customers successfully deploying.
The approach taken is often driven by business model. However, a common theme is the use of tests to prove credibility of models like that used by Superdry. For example, marketplace testing on a platform by platform basis to monitor sales growth before and after enforcement can provide compelling evidence. This can be done both through owned channels and by reviewing third party sales – and Corsearch’s customers have seen real results here, such as tripling sales on Amazon.
Regression analysis looks at the correlation between sales and enforcement. This is a robust approach that can assess impact at scale across more product lines – but it is more complex, and so you need to be sure your audience will understand it for it to be effective. Where our clients have used this method, they have proven significant ROI.
Integrating data with Business Intelligence (BI) tools
Increasingly, Corsearch’s customers are integrating data from Corsearch’s brand protection technology, with their business intelligence tools.
Unuathorized sellers’ sales volumes
You can also look at finding examples of unauthorized sellers and their actual sales volumes – for instance on e-commerce platforms such as Alibaba – to demonstrate revenue leakage. You may also want to consider combining quantitative data with storytelling – this can resonate particularly with executives and marketing teams.
Halting enforcement as a test
Finally – you may want to show what happens if you stop your program. One of Corsearch’s customers in the luxury watch sector, for example, found that threats resurfaced rapidly when they temporarily halted enforcement.
Part 4: How to build a business case for investment
To build a business case that your CFO will listen to, you need to show that the uplift in revenue, plus any cost efficiencies, are greater than the cost of the programme.
When thinking about revenue, you can use a similar model to that of Superdry. When thinking about costs, you should factor in the resources that are freed up to focus on other tasks. You may also consider additional benefits such as reduced customer support costs or reduced costs to remediate issues – e.g. security vulnerabilities.
Lastly – it is worth using examples to demonstrate to other functions the threats you are trying to manage and the revenues you are trying to regain.
The key to gaining buy-in is explaining the benefit in terms of the function you want to engage – so for marketing it may be about trust, brand values or marketing efficiency, for e-commerce it is likely to be focused on sales – or for security it can be helpful to focus on threats like phishing.
Corsearch can help you demonstrate the value of Brand Protection
Lack of understanding of the value of Brand Protection can lead to it being viewed as a cost-centre as opposed to a revenue generator. This only increases the risk that budget is reduced in this current business environment.
Corsearch’s Brand Protection platform allows you prioritize high-risk, visible infringements that are damaging to your bottom line. And our tailored reporting focuses on the strategic areas where you can capture true value and see ROI.
Talk to one of our experts to find out how Corsearch can help you communicate the value of Brand Protection to your executive leadership and wider business.
This blog was originally published on the Incopro website. Incopro was acquired by Corsearch in 2021, with the two organizations combining their technology and expertise to better serve the market.