The genuine threat of online brand impersonation is that it can damage a company’s customer relationships and tarnish its reputation in the market. Studies show that when a customer becomes the target of a spoofed website, email campaign, or other form of brand impersonation attack, they are more likely to blame the brand than the fraudster for the attack.

It’s easy to get lost in abstraction. Terms like “brand integrity” and “tarnished reputation” don’t convey the on-the-ground impact felt by customer service, IT, or management. In this three-part blog series, we’ll explore the long-term consequences of brand impersonation attacks, including effects on the customer experience and hiring process. 

First, we will begin with damage related to the company’s finances.

How Online Brand Impersonation Damages the Company Financially

Online brand impersonation can impact a company’s financial health in three key ways: direct revenue, company valuation, and market share. These three outcomes are linked and dependent upon each other. Once a damaged brand identity influences one area, the others will feel it. 

Direct Revenue

One of the most common strategies in brand impersonation attacks is to create a fake website (spoof) and deceive visitors into believing it to be the authentic website for the brand. From there, fraudsters can use online sales on the fake website to steal financial information or the funds themselves. This exchange diverts sales from the legitimate website to the fraudster and reduces revenue.

In response, companies are either incentivized or obligated to attempt to counteract their losses or security vulnerabilities: 

• • They may need to cover the money taken from the account and see an increase in cybersecurity insurance fees. 

• • They may incur monitoring expenses or legal fees to remove spoofs from the web. 

• • They may need to invest in a PR and marketing campaign to repair a damaged reputation. 

• • They may be required to staff a more significant customer service team to address complaints.

Though the final outcome is not always the same, a dynamic of reduced revenue, higher costs, and lower profitability is consistent.

Company Valuation

A company’s valuation is an important metric for its health and a practical measurement used to acquire capital and determine taxes. Repeated online brand impersonation attacks can damage the overall valuation of the company, leading to greater challenges in other areas.

As already stated, a direct impact on the company’s revenue will reduce valuation, but there are additional factors as well. Many brand valuation models, such as those used by Brand Finance, adjust their ratings based on customer trust and loyalty. As the relationship between the brand and its customers erodes, that change will be reflected in the company’s valuation.

Finally, brand impersonation attacks dilute the brand. With more people using the company’s imagery, logo, and assets, creating, building, and maintaining a tight brand identity becomes more difficult. Over time, this will degrade the brand’s and company’s overall valuation.

Market Share

Customers are more likely to blame the brand than the fraudster, which increases the likelihood that they will shift their loyalty to a competitor. According to PWC, 87% of customers will choose another company if they do not trust that the brand will safeguard their data. This “blame” leads to customer churn for you and gains for your competitors.

Further, the same PWC survey found that 88% of consumers say their willingness to share personal data is determined by how much they trust a company. That is a grim finding to contend with. It means that the companies with the greatest brand integrity, strongest reputation, and best relationship with their customers will be the most vulnerable to an online brand impersonation attack.

Each attack disillusions another customer and prompts them to explore your competitors.

WHAT YOU SHOULD DO NEXT

Online brand impersonation undermines the precise elements that help a company flourish. Whether it’s your reputation, employee experience, or business resiliency, online brand impersonation poses a real and present threat.

Learn more about its impact in our white paper, The Damaging Effects of Online Impersonation on Your Brand’s Integrity.