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In the realm of brand protection, a crucial inquiry is measuring the value or Return on Investment (ROI) of programs dedicated to monitoring and enforcement. This measurement is essential for two reasons: firstly, to justify the initial expenditure on the brand protection endeavor, and secondly, to assess its value after a certain period of implementation. Consequently, some have argued in favor of certain methodologies for calculating the ROI of brand protection initiatives. These typically include evaluating the cost associated with each active infringement and estimating the percentage of lost revenue potentially recoverable after an infringement is addressed.

However, these approaches and methodologies, are difficult to put into practice. Indeed, ROI methodologies seem to be more appropriate when it comes to counterfeiting rather than brand protection itself.

Therefore, Compliance, which focuses on what would be lost instead of what could be gained may be a more effective solution to evaluate risks and gains regarding brand protection.

1. Calculation of the ROI

 

Understanding ROI in Brand Protection

Return on investment calculations, in theory, would allow the brand owner to have an overview of costs, expenses and losses pertaining to the protection of his trademark.

Also, when it comes to e-commerce marketplaces, ROI can feasibly be calculated a posteriori, ie. post-enforcement.

Data-Driven Approaches for ROI Calculation:

This calculation is based on the total numbers and value of items removed via enforcement actions as well as data caps (ex : if a market place offers millions of a same infringing item, it probably suggests that they will manufacture them on demand, not that millions of items are sitting in a warehouse). This data can be scraped by most brand protection service providers.

Similar ideas can be used to carry out ROI calculations in other contexts where the data is available. Indeed, in case of takedowns regarding social medias, mobile apps or piracy, data such as the number of followers or likes, the number of downloads or of individual sharing a copyrighted content, can be used as proxies. The standard methodologies tend to use a ROI calculation in the form of :

ROI = C x E

C is some measure of « cost », ie. the revenue difference between an infringement being active and being removed ;

E is the number of enforcements

 

Challenges in Applying ROI Methodologies

Several factors would need to be taken into account regardless, such as variable substitution rates (the measure of the proportion of customers who will buy a legitimate item if the infringing item is made unavailable via a takedown action), and the consideration on the long-term impact as well as on brand valuation (visibility, customer loyalty).

On another hand, a priori calculations, i.e before any enforcement, offer much less visibility, if none at all, considering that this calculation is be based on assumed numbers instead of exact data.

Therefore, a ROI is more likely to be calculated on anti-counterfeiting efforts (seizure of products, recovery of damages…) rather than on the defense of a brand portfolio.

2.The solution of compliance

Cyber risk is ever-present and is one of the major challenges a company may face. Domain names are often vectors for fraud, enabling employees and consumers to be misled by the imitation of the company’s name or trademarks.

While monitoring tools can help identify fraudulent domain names early on, calculating the Return on Investment (ROI) becomes tricky, especially after acquiring these domains and redirecting their traffic to the brand owner’s official website. This redirection is done in the hope of converting some of the traffic into revenue for the brand owner.However, this approach is not exactly viable since the data (webtraffic, connections…) is very hard to quantify.

 

Moreover, this vision is not sustainable as it suggests that the brand owner will keep the recovered domain name and redirect it to an active website. Both are extremely unlikely as they would negatively affect not only the Search Engine Optimization of the brand, but also the reputation of the trademark.

 

As it happens, a domain name used for fraud is rarely redirected to an official site. This would discredit the official site and create confusion between what is official and what is not – a rather bad idea when acting to neutralize fraudulent domain names.

 

Proactive Compliance Measures

 

Therefore, preventive actions that follow the logic of compliance seem more suited to avoid losing brand value and money, such as :

• Conducting brand audits among domain names to assess risks.
• Implementing monitoring systems for domain names and social media.
• Preemptive registrations of domain names in at-risk extensions.
• Taking proactive actions against potentially harmful domain names.
• Establishing procedures and a crisis management unit for rapid response to infringements.
• Developing or updating the company’s domain name policy, ensuring internal and external dissemination.

 

 

Ultimately, the decision between focusing on ROI or compliance in brand protection strategies should be guided by the specific needs and context of the brand. A balanced approach that incorporates elements of both strategies could be the most effective path. Nevertheless, while applicable to anti-counterfeiting efforts, ROI methodologies offer less quantifiable insights and can be challenging to implement accurately. Compliance, on another hand, provides a broader, more preventive framework that safeguards brand integrity.

 

For expert guidance and tailored solutions in navigating these complex brand protection strategies, consider partnering with Dreyfus Law Firm, where our dedicated team specializes in offering comprehensive legal expertise to protect and enhance your brand’s value in the digital landscape.