As advertisers spend more online, brand name firms increasingly are seeing their names, customers and millions of dollars in sales hijacked by shady marketers.
Instances of deceptive marketing to build traffic for rogue sites or to sell faux-branded products rose 17% last year, according to MarkMonitor, whose software tracks digital marketing infringement.
Shady marketers are using so-called cybersquatting to do their digital stealing. They drive people to a "squatted" site via e-mails or through paid search. Once they've led someone there, they hope to steal credit card information, spur clicks on ads to skim revenue from online ad networks or sell fake products, such as pharmaceuticals or pricey handbags.
The tactics target electronics, sports apparel, luxury brands and pharmaceutical brands the most and cost marketers about $175 billion worldwide in lost revenue, says Fred Felman of MarkMonitor.
"When the economy goes south, white-collar criminals don't quit," Felman says. The company's "Brand Jacking Index" report shows that daily incidences of cybersquatting against 30 of the top global brands rose to 449,484 last year vs. 382,246 in 2007. A first-time study coming out today in conjunction with industry group Chief Marketing Officer Council addresses how marketers are coping with the surge in cybersquatting.
"We're at a point in which marketers need a wake-up call in what's happening to their brand," says Liz Miller, vice president, programs and operations for the council. "Marketing is in the dark, and cybercriminals are ramping up their game."
Incidents are up as marketers increasingly use search engine optimization to reach consumers online, where ad spending is expected to top $24 billion this year. While ad expenditures overall are expected to fall by as much as 10%, digital advertising in 2009 is expected to be up about 4.5% over 2008, according to online marketing tracker eMarketer.
As businesses fight for a share of dwindling dollars, rogue marketers are getting more aggressive. The CMO study says that marketers see their brands as more vulnerable to infringement online than in other media, with 29.5% of the 300 marketers reporting brand infringement on the Web vs. 22.6% in other media.
Despite the big cost to marketers, few of them invest in protecting their brands online. The CMO study reports 52% of respondents spend less than $100,000 on brand protection annually. Just 2.7% say they spend $5 million or more.
