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PULPOU BLOG
Piracy on Social Media: Your Brand's Credibility at Stake
The supply of counterfeit products has increased exponentially in recent years, and social media reflects this phenomenon. Beyond the economic costs, specialists explain how this scourge can damage your brand's reputation.
Product piracy on social media is a hot topic among the world's leading companies. It's not just about protecting the value of brands on major e-commerce platforms, providing an excellent customer experience, and ensuring quality throughout the purchasing process. Companies also need to protect their reputation on social media. Failing to do so can result in enormous hidden costs, experts warn.
Concern is growing among large companies, as the number of accounts selling counterfeit products has been increasing since 2016. A report by the analytics firm Ghost Data reveals that from 2016 to April 2019, the number of counterfeit accounts increased by 160%. Facebook, Instagram, and Twitter are the most commonly used platforms, but WhatsApp and WeChat also appear, where brand fraud is more difficult to trace.
The study "Instagram and Counterfeiting in 2019: New Features, Old Problems" shows that there are about 95 million fake accounts posing as real ones. Additionally, 65 million accounts contain content related to brand and product counterfeiting. Among the most counterfeited brands in recent years are Louis Vuitton (21%), Chanel (19%), Gucci (14%), Nike (5%), Fendi (5%), and Balenciaga (5%).
How Piracy Can Damage Your Brand's Image?
Martín Blanco, director and founder of Moebius Marketing, a social media consulting firm, explains to Pulpou that historically, pirates have chosen prestigious and reputable brands to 'clone' products and sell them. In this sense, he explains, these are brands that have managed to build 'brand equity' over time. These counterfeit accounts act as magnets to attract consumers, regardless of whether a counterfeit product is eventually sold.
Blanco argues that counterfeit markets allow people without the means to access a certain brand target that would otherwise be unattainable. This can cause severe damage to the brand's reputation, he adds. Brands pursue counterfeiters because they take away market share, but not only that; also because "if people who are not my primary target use my product, it ends up affecting the purchasing decision of the customer who buys the original product," emphasizes the specialist.
Therefore, the spread of fake accounts on social media undermines the brand's 'brand equity' in addition to market loss. "Fundamentally, the biggest damage you do to the brand is the fact that someone who is not part of the company's target audience can access the product," concludes the director. The reason is simple: people buy luxury products to forge a personal image; that image is destroyed if others with whom they have no affinity use the product.
Deregulation Increases Risk on Social Media
Damian Sztarkman, a consultant in Digital Transformation and Director of the Master's in Digital Business at the University of San Andrés in Argentina, highlights that the rise of social media accelerated the incorporation of major brands into the e-commerce market. “Even luxury brands, which were reluctant to enter this medium, or cosmetic brands, whose products are applied to the skin, have launched their own e-commerce stores,” Sztarkman points out in an interview with Pulpou.
“This allows them to have an official and direct channel of connection with their customers, ensuring the quality of the products they offer. In some cases, they also joined third-party marketplaces that meet certain criteria related to quality and customer care,” the specialist adds. Leading brands meticulously monitor product listings to actively report piracy.
On the other hand, there are marketplaces like Amazon, eBay, AliExpress, and Mercadolibre, among others, that provide platforms to connect end customers with suppliers and offer tools to facilitate transactions. “They provide—depending on their functionalities—various services: purchase protection guarantees (they do not release the money to the seller until the buyer certifies the receipt and quality of the product), reputation systems for both customers and sellers, among other functionalities,” the consultant elaborates.
Sztarkman emphasizes that social media, unlike a marketplace, lacks platforms that ensure an environment with payment guarantees, customer/supplier reputation systems, and reward and punishment systems. “A significant part of the dynamic is left to the relationship established between the parties. This makes it much easier to create companies (or supposed companies) that visually appear professional and serious but offer fake products,” he concludes.
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