Brand Protection in the Age of TikTok With Megan Harmon

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Speaker B: You're listening to the Digital Deep Dive, where we tackle the newest trends, strategies and pain points shaping growth across the digital landscape from Amazon and D2C to international expansion. Join our host and E commerce leaders across multiple industries for in depth discussions on how to maximize your brands in the digital arena. Now, here's your host, Aaron Conant. Well, hello everybody and welcome back to the Digital Deep Dive podcast. I'm your host, Aaron Conant. And today, um, I've got a, uh, discussion around brand protection. I think that might lead into some map policies as a whole. It's this conversation that's been around for a long time now. Haven't covered it in depth in a little bit. Uh, and then I was following up with a longtime friend, uh, Zach Garth over at Sigil, and he said, you have to meet Megan Harmon, um, over at Thorn Crest. And I said, okay, connect me. And then we got to chatting and it was a very interesting conversation. I thought, hey, why don't we just hit record on this and uh, find time to do a podcast. And so here we are. So things we want to tackle out of the gate, but it'll probably evolve as a while is like current state of brand protection, current state of map policies, any new things that are popping up, what do people need to be concerned about as this space continually evolves? But Megan, if you to do like brief intro on yourself, um, Thor and Crest, that'd be awesome and then we'll kind of jump into the conversation. Sound good?

Speaker C: Yeah, absolutely. Thank you so much, Aaron. I'm, um, super excited to be here and to talk with you about this. And like you said, it's, it's been a long going conversation, but I think it's evolved a lot over the last, you know, five to ten years, um, that we've been doing it and Thorn Crest, so we've been around for 13 years. I, um, am one of the founders of Thorne Crest. Uh, we, it's my other two partners, we actually met in a brand. Um, this is back in M, when Mophie was sort of booming, scaling very large in the Consumer electronics space. Um, and me and my two partners were in it, in the thick of it, running. Um, on the sales side. One of my partners was also general counsel. It was an incredibly exciting time. Um, and we ran into brand protection issues. This was over 13 years ago. So kind of think back, this was like Amazon was just breaking into tech and consumer electro. I mean, they were books back then, right? Which feels like decades ago for us all now, right, Just because of how quickly it's all evolved. Um, but ran into brand protection issues. We had this hodgepodge of services, software and monitoring and everything that we were trying to manage. We were getting major counterfeit problems. Um, we were having products come. 20% of our returns were counterfeit products. It was a massive issue. Um, and we didn't realize it until we just kind of kept peeling back the layers and peeling back the layers. Um, the biggest problem we had was there was no one truth to manage the system inside the organization. It lived with sales, it lived with ops as well. But demand planning, you're ordering too much. It lived with legal. Well, you're supposed to be tracking down all of this and managing it while they're also doing, you know, hundreds of contracts. Um, because we're scaling, you know, triple digits over and over for this, right? Like that's and that and that. And that was exciting. But that's how Thorncrust was born. I mean, we, we all sat in a room and went, this is a problem. There is no one team to manage it. And so that's what we did. We founded Thorncrust. We have experience on the consumer, on consumer sales side, deep experience. We know the fragility and the nuances of retail relationships. Um, we know margin models and profitability. I mean, we're very, we're very in tune with existing and have our finger on the pulse of what's going on in existing marketplaces. And so that's what Thorne Crest does. We work with the best software companies in this space. You talked about Sigil, we've worked with BrightWeb, we work with. I could rattle them off and name drop. Um, but we work with quite a few. But what we do is we implement those strategies. So rather than giving you tons of data that as a salesperson you receive and you go, oh, crud, this is a lot of information right now. What do I do? I mean, you have to be the one unpacking those layers. What is distribution doing? Do you have an EDI feed open? If you do, how do you pull that back? How do you renegotiate those named accounts with your distribution partner. How do you get into the retail account? How do you manage their map? Do you, do you have map? Is it just a stated map or do you have a policy? Has anyone ever signed it, agreed to it, been informed of it like it is? It's something that, um, you know, we're finding more often now. Like you said, this is not new, this is old. Brand protection is, is just incredibly prevalent because of how much social selling has grown and E commerce. Right. So most of these brands have software in place or they've had it and maybe it hasn't served them, but it's probably because they didn't have a team executing against it.

Speaker B: And that's where you would come in as the team.

Speaker C: And that's what we do. And that's, that's what Foreign Crest does. So we. But, uh, rather than just executing, we do more strategy. So we sit with the brain and we go, this is what needs to happen. How do we do it? Right, Let us help you. Let's help you and support you in doing it. Because us just being a consultant is not helpful. You have tons of consultants. We all do. It's. It's the execution, it's the support that you need to, to manage it.

Speaker B: So where do you see brands missing it today? Because you're. I mean, I've been doing, you know, dinners or webinars or just chatting with people on brand protection. I mean, this will be BWG Connect. That networking group would be around for nine years and I bet you for eight and a half we've been tackling this. Um, and agree there's different, I don't know, there's different ways that brands approach it. Right. A lot of times they just want. Well, they might have hired a brand protection person, but they don't really know how to use them. And I've seen a lot of those, you know, being, you know, during these rifts been, you know, reduction in forces. They. They kind of like move that person aside, like find a different role. They're out.

Speaker A: Um.

Speaker B: Um.

Speaker C: Right.

Speaker B: And it's, you know, maybe they do have a tech. Maybe something is out there. Maybe it is a sigil or whatever. You know, there's a ton out there and they got it, it's flagging it. But where do you step in with a brand? Which my guess is a lot of them have, like, where are brands missing it right now? But I mean, you have a business model because you're fulfilling a need. Like, what is that? Where do people miss like what, they step in their toe?

Speaker C: Yeah, I mean, and that's a good question because frankly, I don't think that they really know it until you start having this conversation with them. Most, um, of them have so software. Right. Or they've heard of it or they're, they've got two or three. Frankly, we have some brands on the, that are at large enterprise that have three different software platforms that they use. To me, that's an operational nightmare. If I was on the sales side, like having to log into multiple platforms. Um, what they're missing is the fundamentals. I mean what the tools that you put in place when you were 5 million, even 10 million. They're not the same tools that you need at 250 or 350 or 750. But oftentimes those tools like. Well, we have that. Well, when's the last time you updated your authorized reseller agreement? When is the last time you updated your warranty policy so that it actually protects you against E commerce violations and repackaged goods? Well, I don't. Right. So when's the last time you have updated your map policy? Well, we have one. Has, have you sent it, When's the last time you sent it to somebody? Like does it have violations? Does it have compliance guardrails? Because probably not oftentimes it's like don't violate map. Right. But lengthier and a one page. But, but really are you tracking it? Because a map policy without you tracking it, it's like, wait, I have to track it? How? What do you mean trap? So I have to monitor the sellers and then what do I do when they violate. Then you send them a notice. Okay, what about notice to? Well, you have to track notice to. Uh, what do you. I can't track notice to. And that's where we see kind of the train fall off the tracks. Right. Is, is, it's. These policies have not evolved and if they have, they're not being tracked for compliance. And that's, that's the fundamentals. That is that a lot of brands don't realize.

Speaker B: I mean they want this simple fix. And I don't, I don't begrudge them that. Uh, because everything has gotten so crazy in E Commerce. The legal team, they want this to be resolved, but they don't, they don't have the expertise to handle first sale doctrine, Lanham act with all this. They just have it in the E Commerce area in every place it may be coming from. So they take a very, very, um, conservative view.

Speaker C: Right.

Speaker B: It's just catching up with a brand. We're talking about the space and they don't, they don't want to engage in any kind of legal fight whatsoever with unauthorized resellers. In the conversation back and forth was, well, why not? It's like rallies. We just don't have the time for it or the expertise and we don't get it wound up in it. And so it's just interesting as we're playing out this conversation that, uh, that's what I see a lot of times is like brands say, yes, I have it in place, but it's not really working. And it is this executional side, right? You can get all the software and it can give you all the data, but if you're not, if you're not acting on it, maybe it's a compliance piece, right? They don't know how to accurately. Like you're saying follow up. Are you monitoring this? And then are you following up and are giving you notice and second notice, at what point in time do you actually take them to a lawsuit and,

Speaker C: or find them, right. Or adjust their pricing or. I mean we, we've never, and we don't ever intend to take a brand with us to court. I mean there's, we are not about litigation. We actually avoid it at all costs, most of it. And our success rate with brands is 98% across the board. So it's very high. Most of this is channel control. It really is, it comes down to have you locked down distribution, what does retail look like, etc. And a lot of that is, uh, is fundamentals that frankly they take time and most brands that are scaling don't have time. Time, right. They're running as fast as they can with uh, 900 hats trying to just keep up with everything that's going on. So when you're like, hey, let's unpack it, they're like, um, no, just solve it. Just take the, you know, take the seller offline and you're like, okay, they're just going to pop back up again. And then in six months you're going to wonder why these guys keep popping back up. Well, we've not found the source and, and that's where I think the problem ends up with. It's, they want the quick fix, but the reality is there is no quick fix. Like get, start peeling back the layers and then you're set up for the long term. Then you become less reactive and more proactive in your approach. Right? Making sure you have the right sellers on board and et cetera. Et cetera. And, and it becomes almost an ethos or a culture of onboarding at that point. Um, and it protects the brand for the long term. But it is, I mean, the pain is there and the pain is very real. Right. I mean, we've had, we had a brand call us a couple of weeks ago, and it's evol evolved. We talked about that, Aaron. Like this. We're not just counterfeits anymore. Now we have trade dress problems all over TikTok in the hundreds, in the thousands by brand, because consumers are just buying what looks like the same lipstick that their girlfriend told us, or the same perfume or the same shoes, but it isn't. And then they're getting it and they're upset because it doesn't work the same way. So now we have trade dress issues that are in the masses and we have, I mean, literally stolen shipments. Right. We've, we've worked with the police in the last three months more than we have in the last 10 years because of how many stolen shipments are just starting to pop up. Um, and filing it and then the stolen shipments, we've got to now contact every retailer, tell them a shipment's been stolen. If you have a marketplace platform, we need to vet that marketplace seller before they onboard. Because this could be a stolen good. They could be a part of an ongoing case. Right. It just sort of like continues to ongo, you know, it kind of go downhill. And you're like, this is, it's becoming more, um, convoluted and complex than just a seller that bought it.

Speaker B: Well, I mean, I think that's where most people are looking at it. Maybe that's the rabbit hole we go down a little bit here is I think most people right now are looking at Amazon and, you know, a Walmart. Um, I don't know how many people follow ebay. I know some people do, but I mean, that seems to be America's garage sale anyway, so they're a little bit more okay with it. That's another. Yeah, but anyway, the TikTok piece, so you're, you're getting into social commerce as well and where people are selling. Because

Speaker C: I think that's the miss here. They're connected. They're not, they're not disconnect. They're all connected. Yeah, you've got Amazon's connected to Walmart, connected to Tick Tock, connected to some of, uh, the fishing sites like Aliexpress and Alibaba and some of these others that are actually where, you know, manufacturers that are trying to sell in Bulk for like type product. I mean all of these are connected because when one thing happens, let's say tick tock, right, it's, it's very hot. Um, and it's a, it's a, can be a big problem. And they're putting protocols in place far faster than they were before. So you know, we're, we're happy that they're addressing this internally. TikTok is specifically, um, but I mean we had a beauty brand that had a lipstick and their packaging, basically it was, the gradient color was slightly different color on TikTok than it was their own. And the brand, rather than having an M dash or a dash, they just dropped the dash. Well, that actually was not a violation technically of the product. The brand didn't have the right trade dress and IP in place. We helped them put that in place. But the, the reality is they were selling thousands, then they were getting reviews on TikTok. Then people were going to Amazon and leaving reviews saying, I've purchased this multiple times and it's not the same. Like this is like false advertising, it doesn't do, or, or it isn't as valuable or the same color it's supposed to be. The brand was like, this is, this isn't accurate. But the problem is it exists now. And if you've got a consumer who, like my father, who is an advanced, you know, a tech consumer, but he's a little, you know, he's on the older side but he, you know, is, is heavily involved in this business and he's like, well, I just look at the most recent reviews. Well, shoot. Because, because that's not necessarily as relevant as the, the bulk of the reviews. Because what if they just got a bad batch that came through and we're getting reviews. But it isn't just Amazon, it's. Every one of these pieces is linked and it, it's really a brand health and a channel control problem. So when they just tackle Amazon, it's like addressing the tip of the iceberg, right? Amazon's only problem because everything else is broken underneath.

Speaker B: No, it's just interesting. You, you then come in essentially as a brand protection advisor, because this person rarely exists out at the scale that what you're doing. This makes sense, right? Like why this bot is why this is growing so much. And this topic is coming up more and more, which it did kind of, it went kind of nascent for a few years. But what you're talking about with TikTok, um, I mean in all the social platforms that everybody did used to just Follow Amazon. And now we're seeing this huge influence and that at the end of the day is brand. What are you talking about? Trade dress like trademark infringement. Right. Like that is brand protection at its core. And there is a massive impact and they will um, they will totally use the platforms until somebody steps in and says stop.

Speaker C: Yep. And it's happening in the, the thousands. I mean we took down for a brand, we took down 400 in 30 days like it was. If this isn't just minor, it's happening in a, uh, very large scale. Now think about it, agentic commerce, right. That's coming. Well, if someone's typing in X, Y and Z brand and you're getting five different locations that you can purchase it and their variety of pricing and they all look kind of the same, but maybe the images is a little bit skewed here or there. You've got the same problem. We've just, I mean e commerce has opened up for consumers and unless it is totally locked down and underneath the surface is cleaned up, you're going to continue having things pop up. Ebay is a problem, you know, America's garage sale. But before it wasn't tracked, now it is. And we are seeing major issues with ebay sellers. They're becoming a little bit more savvy than they were five years ago.

Speaker B: Yeah, there's uh, an underlying feeling. I still find this from a lot of brands and I think it's mainly because they don't necessarily want to deal with it and they want to have a reason to not deal with it is they bring up the first sale doctrine and the fact that once it's gone out, it can be resold anywhere for any reason. And that is, that's technically true if all the check marks are made, which includes it's the exact same product. Right. It is all attribute, all attributes are exactly the same. That includes reps, warranties that you can actually put a plan in place. Right. And uh, this is where, you know,

Speaker C: under the surface the first sale doctrine is not relevant if the warranty is void. Have you updated your warranty? What does the product need to do for you as the brand to ensure quality of the product?

Speaker B: And it's setting that foundation in place, which sometimes is mapped, sometimes is not map. Right. It's setting that foundation in place such that then you do have the legal right to go do something about it. But to your point, yo, they're just inundated with so much brands as a whole. They don't have time, they don't. It's super important. The bigger you get, you know, whether it's a six figure problem to begin with and then it's a seven figure and then it's an eight figure problem for brands. The bigger you get, you have to be able to be addressing it on a routine basis. It's the how, that's right.

Speaker C: And we had a, we had a brand who lost um, their prime day placement. It cost him $150,000 within a three day period because a retailer posted a product at, at a lower MSRP five days ahead of day. Amazon came back, 1P brand, vendor central came back, said we want price, you know, meet this price. This is now the new market price Brand said I can't at the prime day cost. There's just no way I can support that MSRP at uh, this discounted rate. They lost it had tens of thousands of units, had to be basically rerouted back from Amazon's warehouse at the brand's cost, lost that sale. I mean so it is, it's a hundred thousand dollar problem like you said, or bigger, the bigger the brand, the bigger the problem gets. Um, but it is complicated because it isn't, it's not one piece. And the more you talk with brands about it, the more they're like well no, we're not tracking compliance. We'll, you know, do you expect if you're not slapping someone's hand, right, the mice are going to play while the cat's way. So if we're not tracking them, then why are they paying attention to it? And if you're not doing it across the board, then it doesn't make any sense. And we work globally. So map, like you said, it isn't relevant in Europe or in Canada, but you do have authorized reseller control that you can put in place because it is your brand and the quality of the product that you're trying to put out to the consumer, that's the guarantee, is the brand, is the quality of the product. Can you guarantee that to the consumer? With all of these other sellers selling, can you guarantee their warehousing compliance? Can you guarantee everything else? If not then there are controls that you can put in place to prevent it from happening.

Speaker B: So for people listening like you engage with a brand like uh, but what are the few things that they need to take away? You step away, you listen like these are the few things that they need to go do like right now. What, yeah, is there, there's got to be like the first ones when you engage the brand.

Speaker C: This is what we're check Your warranty policy. Update your warranty policy. What needs to happen if, how, I mean, basically, is it, is it climate controlled? It tampered packaging? Is it only, um, sold from authorized resellers with a authorized reseller like listing or whatever that is? Like, let's check your warranty policy. Put controls into your warranty policy to

Speaker B: make sure that warranty only counts if it's sold. Under certain conditions. Yes.

Speaker C: Yeah.

Speaker B: Under the certain conditions, the warranty goes away, therefore the product is different. Yeah. Okay, awesome, right?

Speaker C: You immediately have grounds to remove a seller that is selling a different product. Right. Okay, so that's not across every con, not across every consumer group. Some of that isn't super relevant to some brands and to some categories. But warranty policy would be a good one to check the next one. Do you have a MAP or UPP policy for your existing retailers and your partners? Have you put that in place? And if so, does it have criteria? Do you have a 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, whatever strikes and then what happens if they violate map five times, what happens? Do they lose exclusivity on a certain line? Do they not have the ability to pick up the new line? What is the repercussion? You don't have to terminate. Some of these retailers are big. You don't want to terminate them. And that's the scary part. On the sales side, you don't have to terminate. But a, uh, repercussion, a slap on the wrist, something so that they know they can't keep doing this. Step two, step three would be your authorized reseller agreements and that that counts both in the US and internationally. Selective distribution contracts. Selective authorized reseller agreements. Do you know where your product is going and to whom it's going? And is there criteria for what this retailer or reseller has to be doing to support your brand and to benefit your brand? It should be a mutually beneficial relationship. You should be getting something from your partner and they should be getting something from you. If they're just taking and not giving back, that's not mutually beneficial. So what does that criteria look like? So that if the reseller is not abiding by it, you have grounds to terminate that contract if you need to or have a bigger conversation, which is really normally where this happens. It's, there's very few terminations that we actually work with brands on. It's mostly conversations that end up writing themselves. The sales guy gets on the line and is like, hey, we need to talk through this. Legal's on me. This has happened a couple times. How do we fix it? Right, so now the sales guy's not the bad cop and the good cop, they're just the good cop. They're just trying to write it. Um, those are the three mains. So if you can get those in line, track them, um, monitor them, make sure that they're operating properly, you at least have foundation in order to implement. Now, IP is a big one. If you don't have ip, all of that doesn't mean much of anything. You could have all the contracts in place, but if you don't have trademarks and trade dress or patents or whatever, not much of that matters. Um, you know, you can have contracts, but you're not protecting your brand name online, in which case you'll be copied left and right. And you know, I don't know what you're protecting. There's not, there's not much to protect. So, so step one is ip. Um, but those things are really the core. And then from there your, your software, platforms, all that's excellent. But it shouldn't be rampant with problems because you should have the channel control piece that governance should be in place. So this should be, uh, the software over here should be doing minimal work. And the whack a mole should be very minimal. It shouldn't be littered with 50 sellers or a hundred sellers or 500 TikTok takedowns. Right? This should be minimal because this is working. Right?

Speaker B: Which is, it's always funny, the conversations I have where they are doing the whack a mole non stop and they're like, we've been doing this for three years and have you done anything, the foundational side, to address it? Oh, it's too much time, it's too much effort, too many attorney fees. Like, no, our legal team can't do it or whatever. It's like, oh, well, you're gonna keep

Speaker C: playing whack a mole for the next three years. You know, we, I had a conversation with the brand earlier this week and they said the same thing. They're like, we just want the software. I was like, but you're not gonna, we're not gonna change any of the policies. No, no, no. We just want to do the takedowns. Well, we're gonna, so we'll take down, we'll take down for years. We could continue taking down. We'll will work with the greatest software company in the world. But you're not going to be happy with the results because we are, we're not fixing the foundation underneath. Right? Supply chain has to change. You've got to fix it.

Speaker B: Yeah. The, the underlying fear there is they don't want to touch that piece because they don't want to impact, have a potential negative impact on sales and then, you know, bring on the wrath of the sales and marketing teams. Right. That somehow it stopped. Not necessarily looking at the long term benefit, that yes, some things off here and there, but a lot of sales, you know, guys out there, especially mid market and smaller, they're actually liquidating product to hit numbers at the end of quarters. They don't want those loops closed.

Speaker C: They. No, no, I mean, you're absolutely right. But is it, I mean, what are they doing on the front end of that? Right. Um, are they ordering 5,000 units? Well, all right. Is that a big deal? Small deal? How big are you? Right. $5,000. 5,000 units. It kind of depends on where you're at in your sc, but yeah, are they worth it if they're liquidating or can you just have a com. I mean a lot of these guys are like, lock it down please, because I can't sell anything in store. I'm losing traffic, it's not converting. Right. We actually see sales climb when governance is put into place. I mean we've got, we had a big brand that does dealer channel in the, in the apparel space to 25% up within 90 days. He's like, across dealers, across Amazon. I'm, I, I've cut off some dealers and I'm selling 25% more at a higher profit. Like I might, you know, uh, their profitability is climbing because they're working with the right partners. Sometimes it's quality over quantity. Right. That, yeah, uh, some of these guys are just not, not worth that.

Speaker B: I mean, you get back, that gets down to one of the biggest topics I have is profitability at the end of the day, when you can clean this up because everybody knows the price matching that goes on across all the platforms now, the degradation across the board of the profits and the profit margin. This is a way to address that. Because at the end of the day, Amazon would rather make more money on every unit it sells. Walmart would rather make more money on every unit itself.

Speaker C: Every retailer would.

Speaker B: Yeah, but they're not going to give up the volume or low price point or the customer if it's, if it's slower.

Speaker C: I know you said profitability and I didn't mean to cut you off, Aaron, but we do a lot of, um, merger and acquisition work. So it's interesting because basically we do a lot of work for brands ahead of valuation because they're trying to increase their profitability because they see that there's leaks and they're like, we've got to do this now or our valuation is going to be lower than it would be if we increased our profitability by 10 or 15%. It makes massive difference on their sale price. So, you know, it's, it's, ah, yeah, very interesting. So I appreciate the, uh, the conversation, the back and forth on it.

Speaker B: Yeah, this has been so much fun. Um, how do people reach you? Megan?

Speaker C: Um, email. Megancrest. Spelled the easy way. M E G A N at Thorncrest or LinkedIn. Megan. Uh, K Harmon. And we're, we're here to help and here to chat or to brainstorm ideas.

Speaker B: Yeah. Well, I so glad that Zach introduced us. Um, I'm sure we have a ton of mutual friends across the network as a whole. Uh, everybody, I'd encourage you to follow up with Megan and the team over at Thorncraft. They're great friends here and they're doing some great things for some great brands. But, um, with that, we're going to wrap up this episode of the Digital Deep Dive. Thanks, everybody, for listening. Thanks, Megan.

Speaker C: Thank you so much, Aaron. Take care.

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