The global pandemic has brought about countless negative consequences, and one prolific downside is the rise in counterfeit products. While the world went online to shop, criminals got busy counterfeiting everything from alcohol and cosmetics to medical supplies and vaccines. In order to curb this trend, brands are turning to security labeling technologies to protect their products from counterfeiters. However, the technologies vary in protection performance. Let’s take a look at holograms vs. smart labels.

Holograms seem to be everywhere. They are used by sporting goods companies, high-end fashion products, and in some cases, on the items you use every day such as credit cards. Holograms are intriguing. The shifting colors and the changing images can be very eye-catching will draw the consumer’s attention. But are holograms the best for brand protection, or are they just “pretty” labels? 

If you asked 10 people what offered better brand protection, a hologram or an intelligent label, most would immediately say the hologram. But how can the same repeating image provide brand protection? 

So, what is a hologram? A hologram is a three-dimensional image formed on a film or other surface. Any image can be turned into a hologram. Some labels have a generic background image or a product or company name. For example, take a look at your Mastercard credit card, and you will see a holographic image that says “Mastercard” or of a dove or eagle with color-shifting properties.

The growth of e-commerce

The projection for global growth in e-commerce is about 12.7% through 2025. In 2022, this growth will account for an estimated $5.545 trillion.

The dark side of e-commerce growth is that counterfeiting has also grown. Recent estimates are $3 trillion in 2022, including online and in-store purchases. Online counterfeit products range from 35% for fragrances and cosmetics to 8% for handbags. 

What is brand protection?

There are many definitions of brand protection, ranging from protecting your IP to attempting to prevent counterfeiting. Simply put, brand protection saves your product and your company’s reputation. It is also about protecting a company’s profits, jobs, and money to reinvest into new projects.

But can a hologram offer effective brand protection? In a word – No. A hologram can identify a brand but cannot effectively protect a brand. However, holograms can provide overt security features to which consumers can identify a specific product or brand. Unfortunately, holograms must be combined with additional features such as micro-text, UV- sensitive, or other specialty inks. These added features require either special equipment to read the covert technology or trained staff to find it.

In either case, this detective work requires additional expenses the brand owner must pay. In some cases, the amount for the trained policing force and specialty equipment may equal or exceed the cost of the counterfeiting problem. Holograms are designed to be difficult to copy. There is no question the trained eye can tell the difference between a genuine hologram and a fake. But what about the average consumer? Some consumers see a hologram and believe the product must be real because there is a hologram on the package. Regrettably, this is not always the case. 

Additionally, brand owners implement holograms for an entire product line rather than for each individual item in the product line, which makes items impossible to track. With the increase in e-commerce, there has been an equal increase in counterfeiting. With this additional money to be made, counterfeiters have become more sophisticated, and replicating a hologram, although not simple, is not impossible.

Smart Label Technology

The best brand protection is with 100% random technology combining overt and covert security in plain sight. So, what constitutes an intelligent label? A smart label creates consumer interaction and allows instant product authentication. With an intelligent label, the consumer can scan the label using a mobile device to determine if the product is authentic. This can be done before the purchase or once the product is received via courier. A smart label also allows the brand owner to track the product within their supply/sales channels to the consumer. 

According to Oberlo, there are over 6.4 billion phone users worldwide, and over 69% of these people will purchase products via their mobile devices. These consumers can also help police counterfeiting by using intelligent label technology via an app downloaded from their smart device. Users of these devices simply scan the label using the app, and the smart label can authenticate the product via the label.

The markings on an intelligent label are 100% random. Each label is serialized and has a unique design, so there are no static images to replicate.  Even the most sophisticated counterfeiter will not attempt to create a single fake label at the item level. 

Intelligent labels also significantly reduce the cost of brand protection. That is because there is no special equipment to purchase or policing force needed to authenticate a product. Unlike a hologram, smart labels can be integrated with a track and trace system, from which the brand owner can derive even more benefits. The system allows tracking of items throughout the supply chain. The data collected from intelligent labels is accessible via the cloud and can identify customer and market trends as well as provide an early warning of counterfeited and diverted products.

In summary, a smart label provides a number of advantages over a hologram, especially the capability to place unique and distinct overt and covert marks that can be authenticated using ordinary mobile devices, which are ubiquitous worldwide. An intelligent label also lowers the cost of brand protection and engages the consumer.  

About the author: Ron Ducharme serves as vice president of business development at Covectra, a solutions provider in the track and trace space. Ron can be reached at rducharme@covectra.com.