MarkMonitor Reports Continuing Rise in Online Abuse of Top Drug Brands

SAN FRANCISCO--(BUSINESS WIRE)--MarkMonitor®, the global leader in enterprise brand protection, today released the Summer 2008 Brandjacking Index™, reporting that brandjackers increasingly abuse top-ranked pharmaceutical brands, endangering consumers via a supply chain compromised by the sale of questionable prescription drugs through dubious online pharmacies and exchange sites. The report also found that cybersquatting of leading brands has reached an all-time high and that phishers are targeting an increased number of diverse organizations for the first time.

“Our year-over-year trend data shows a grave situation: The number of people looking to save money by buying pharmaceuticals over the Web is growing rapidly while scammers are more aggressively exploiting loose controls over online sales of drugs,” said Irfan Salim, president and chief executive officer of MarkMonitor. “As consumers increasingly turn to the Internet to buy medications, brandholders must ensure these customers are not faced with the potentially life-threatening risk of buying fake or sub-standard medications.”

The quarterly MarkMonitor Brandjacking Index is an independent report that measures the effect of online threats to brands and investigates trends, including drilled-down analysis of how the most popular brands are abused online and the industries where abuse is causing the most damage. In addition to ongoing tracking of 30 leading brands as identified by Interbrand, the summer report includes a research focus on online abuses of pharmaceutical brands, including an investigation of suspicious online pharmacies.

The report’s drug, channel abuse and search engine advertising data for the online pharmaceutical market is based on six leading drug brands: three of the highest-ranking drug products according to the “Top 200 Brands for 2007 by U.S. Sales” study by Drugs.com, and three of the most popular drug products online. The data is compared to and analyzed against research conducted by MarkMonitor in August 2007 to provide a benchmark for trends.

Following are select findings from the MarkMonitor Summer 2008 Brandjacking Index:

Online sales of fake, expired or gray-market drugs continue to grow as traffic to questionable sites triples and marketing tactics become increasingly aggressive.

• Of the 2,986 online pharmacies studies, only two are Verified Internet Pharmacy Practice Sites (VIPPS), the industry credential that assures consumers of legitimate online pharmacy operations.
• More than one-third of the online pharmacies in the study generate enough traffic to merit an Alexa ranking. Each of these sites sees an average of 99,000 visitors daily, more than triple the daily visitors noted in 2007. Using industry statistics for traffic conversion and average order sizes, MarkMonitor estimates that this traffic converts to $12 billion in annual sales for the six drug brands studied, an increase from the 2007 estimate of $4 billion.
• Marketers for these pharmacies and sites are becoming increasingly aggressive. MarkMonitor estimates brandjackers spend $26 million annually for search advertising using only those six keywords.
• Representative sampling of pricing for one popular drug brand shows an 85% average price discount at illicit pharmacies when compared to certified pharmacies.
• 64 percent of these 2,986 pharmacies do not secure customer data, putting consumers’ identity information at risk. This number has grown compared to 50 percent last year.
• 49 percent of the 2,986 pharmacies were hosted in the U.S., followed by the U.K., which hosted 12 percent, and Germany, which hosted 9 percent.
• Exchange sites that sell pharmaceuticals in bulk quantities by the pill as well as sell active pharmaceutical ingredients (APIs) risk corrupting the overall drug supply chain. Analysis of just 40 listings on exchange and trade sites shows a $30 million wholesale market for the six brands studied.
• 60 percent of pharmacies identified in 2007 are still operating, and 59 percent of online exchange listings identified in 2007 remain active.

Brandjackers continue to focus their attention on cybersquatting to abuse leading brands as well as pharmaceutical brands.

• Cybersquatting – the registration of domain names containing a brand, slogan or trademark to which the registrant has no right – of drug brands rose 35 percent for the year and eCommerce sites for these drug brands rose by 66 percent for the year.
• Cybersquatting of mainstream brands continued its position as the brandjacker’s tool of choice with 428,617 instances during the second quarter of 2008. This growing trend in cybersquatting shows a 38-percent increase compared with the previous year.
• The media and automotive industries continue to be the most frequently targeted by brandjackers. The media industry experienced 41,797 instances of brandjacking in Q2 2008, a 17-percent increase since Q2 2007. The automotive industry experienced 27,600 instances of brandjacking in Q2 2008, a 60-percent increase since Q2 2007.
• Brandjacking of the apparel industry grew by 68 percent over the year, the greatest annual increase of any category. In parallel, the luxury industry grew at the greatest rate for the quarter at 30 percent.
• Three out of four brandjacking sites are hosted in the U.S., a 55-percent increase compared to Q1 2008. Germany continued in the No. 2 spot with 5 percent of brandjacking sites, while China moved from the seventh position to the third.

Phishers alternate their quarterly focus between auction and financial institutions; 81 percent of all phishing URLs target a small number of companies.

• 35 percent of the 485 organizations phished in Q2 2008 were phished for the first time. The total number of organizations phished this quarter increased 19.5 percent since last quarter and 20 percent since last year.
• Phishing attacks against financial sites increased by 66 percent in Q2 2008 compared to Q1 2008, while phishing attacks against auction sites decreased by 50 percent, demonstrating a cyclical change of focus by phishers.
• 35 percent of phishing sites were hosted in the U.S. in Q2 2008 compared to 67 percent in Q2 2007. The U.S. continued a significant lead among hosting countries; China followed in second place with 8 percent of phishing sites.

The cornerstone of the Brandjacking Index is the volume of public data analyzed by MarkMonitor using the company’s proprietary algorithms; no customer data or proprietary customer information is used to create the Brandjacking Index. MarkMonitor searches approximately 134 million public records daily for brand abuse in domain data as well as U.S. and international patent and trademark office data.

The phishing data MarkMonitor analyzes is based on feeds from leading international Internet service providers (ISPs), e-mail providers and other alliance partners. The company has scanned billions of Web pages since November 2004 and processes up to 16 million unique suspected phishing e-mails daily.

About MarkMonitor

MarkMonitor, the global leader in enterprise brand protection, offers comprehensive solutions and services that safeguard brands, reputation and revenue from online risks. With end-to-end solutions that address the growing threats of online fraud, brand abuse and unauthorized channels, MarkMonitor enables a secure Internet for businesses and their customers. The company’s exclusive access to data combined with its patented real-time prevention, detection and response capabilities provide wide-ranging protection to the ever-changing online risks faced by brands today. For more information, visit www.markmonitor.com.

Editor’s Note: For complete Brandjacking Index results or more information concerning methodology, contact Te Smith at 831-818-1267 / te.smith@markmonitor.com or Jonathan Jordan at 202-777-3842 / jjordan@ar-edelman.com.

© 2008 MarkMonitor Inc. All rights reserved. MarkMonitor® is a registered trademark of MarkMonitor, Inc. All other trademarks included herein are the property of their respective owners.