How Brands Are Vulnerable on the Internet
Brand loyalty is the Holy Grail of marketing. It creates a world of consumer allegiance that encourages repeat buying of favorite products and services, and it casts loyalists as willing brand evangelists who proudly don logos and spread passionate word of mouth to all within earshot. Luxury brands in particular are precious entities that are estimated to have billions of dollars in value, thanks in part to brand loyal customers. Millward Brown, for example, has valued the Louis Vuitton brand at $22.6 billion. But what happens when a brand, regardless of stature, is breached or abused?
With the power of social media/Web 2.0, companies are exposed to a multitude of online threats that have the potential to impact corporate reputation. These threats could include broken links that lead to lost revenue; porn sites that use misspelled keywords to pull customers away from a legitimate site; and the rise of Blogstorms that are often the tipping point to a damaged reputation. In fact, it is estimated that 4 percent of all brand mentions online are associated with traffic diversion or misrepresentation schemes; and an estimated 7 percent of the world’s GDP is related to the sale of counterfeit goods—a high proportion of which is sold through online auctions.
Whether intentionally malicious or innocuous in nature, any exposure to an online threat can impact corporate reputation and ultimately affect revenue, profitability and brand loyalty. It’s no surprise then that even Gartner has identified reputation as one of the biggest threat to enterprises in 2008. The bottom line is that retailers and brand owners need to make it a priority to protect themselves from the online threats that quickly erode precious brand equity and corporate reputations. That means taking the time to understand which threats could impact their business (and there are more than one might realize), making it a priority to continuously monitor for potential breaches, analyzing and measuring the magnitude of each threat, and taking the appropriate actions to mitigate them.
Kevin Joy is vice president of BrandProtect.
Tags: brand loyalty, brand reputation, brandprotect, Electronic Retailer, kevin joy, louis vuitton, millward brown, online marketing
August 13th, 2008 at 5:17 am
Kevin:
Terrific introduction to the issue. It seems like a good many in the industry are looking for ways to sell products through social networking and the like (say a more offensive posture) versus defending their brand equity and staving off erosion due to some of the underhanded marketplace tactics you outline. How do you see balancing the need for transparency when managing your brand equity, particularly in light of the cynical view the younger generation maintains towards advertising/marketing, with the fact that anyone else in the ether (competitor, counterfeiter, gadfly on a mission) has the potential to torpedo you and your brand?