The case against holograms: how a once-lofty security technology has fallen

The early effort to use holograms as a brand protection tool began in the 1980s with Johnny Walker Scotch whisky and the blockbuster drug Zantac. Within a few years, holograms would start to play an increasingly important role, not only as a distinguishing feature on a package but also for branding purposes. And with that development came the idea that holograms can help to identify genuine products from the increasingly brazen attacks by counterfeiters. The logic was simple — consumers will be reassured when seeing a hologram, which would either be missing or of poor discernible quality on fake replicas.

That argument no longer holds. The increasing trend among brand owners, and even some governments, is to walk away from holograms as a security product. The largest state in India, Uttar Pradesh, dropped holograms from their liquor excise stamps, a move that is now being considered by other Indian states as well. Similarly, several large pharmaceutical and CPG companies have either dropped holograms from their packages or are currently preparing to migrate to other competing solutions.

Here, I take up the question of what happened to this once fabled technology. At one level, the answer is simple — holograms themselves became highly susceptible to ­­­counterfeiting and therefore trust in their effectiveness rapidly declined. There are, however, other causes that are more nuanced and relate to brand marketing, consumer behavior, and technology trends.

This article will outline five key reasons that have led to the downfall of holograms and which do not bode well for the future application of this technology as a product security solution.

1) The ease of duplication

The rapid pace of technology development has transformed holographic production from what was once the province of sophisticated manufacturing into a commonplace and almost routine industry. That is not to say that the making of holograms is straightforward by any means, only that the cost and craft behind the art is now unexceptional. While there remain several large and distinguished suppliers, a veritable cottage industry has also arisen as a result, particularly in China and India, which caters to the now widespread global supply of low-cost holographic seals and foils.

The emergence of a large and eager supplier base has transformed holograms from a niche to a commodity product and created the conditions for widespread copying of genuine security holograms. Any original hologram can now be easily and well replicated at high volumes. As a result, many brand owners who have spent substantially to create packages with an embedded security hologram have seen their efforts and investments squandered once a counterfeit variant appears in the marketplace.

There is now widespread belief among brand owners and security specialists that holograms no longer offer the protective benefits that were once hailed to be so supreme.

2) The cost of education

Although fake holograms are generally of uneven quality compared to the original, it is also true that they are usually sufficient to fool an ordinary consumer who is unable to notice the difference. To make proper use of the hologram investment, the brand owner must therefore devote significant marketing effort and cost to educate the consumer base. While there are some notable examples of this effort through online education, it is also unquestionably true that most product managers are loathe to publicly expose their counterfeiting problem and take the even greater step of alerting consumers on how to differentiate their own products from counterfeits.

The cost of education, therefore, does not only relate to the monetary aspect of the marketing investment but also the cost associated with dilution of their brand equity from such public exposure.

3) The problem of psychology

Consider the following conundrum. A banknote is bustling with security features and yet consumers generally pay little or no attention to them. In fact, the collection of passive security features — watermark, optically variable ink, hologram, etc. — are largely a wasted effort in terms of consumer engagement for the purpose of identifying counterfeits. The reason according to neuroscientists is simple — human attention is fleeting and we simple couldn't be bothered to take time out to scrutinize something even as important as the banknotes in our wallet.

This significant obstacle represents the greatest challenge that brand owners must face when considering the use of holograms and other passive technologies. To properly verify a product, the human consumer must actively interrogate the package, which most are simply unwilling to do. And even if that behavioral act can be instilled, it is immensely complicated by the two forgoing issues described above — counterfeit holograms can be very similar to genuine ones and there is a marketing lethargy to educate people to distinguish between them.

It is a staple of behavioral science that conscious engagement with a product serves as the single most effective means to direct the attentional spotlight, an act that is simply not inspired by a passive hologram.

4) The changing times

A hologram is a passive entity that requires mere visual inspection and a qualitative decision on authenticity. This is fundamentally not an authentication process but rather a best guess that the product is original. Furthermore, passive technologies do not permit any type of consumer engagement, something that is of increasing importance to demanding marketing heads who require value additions to their investment.

Brand owners are therefore turning to technologies that provide an actual binary result — yes or no in terms of authenticity — and turning away from the qualitative offerings in the passive category. This trend started with mass serialization where a unique number is inserted into a QR code and placed on a package, and which can in turn be verified by a Smartphone app. However, these older solutions are now surpassed by the current generation of technologies, such as fingerprinting, which offer far greater benefits over all its antecedents.

Holograms are static, non-interactive products that have limited utility in a 21st century digital world where brand owners covet the value-added benefits that come from engagement.

5) An invitation to counterfeit

Holograms are among the most ineffective security solutions currently available, and in fact they may even serve as an invitation to counterfeit because of an interesting dilemma. To make matters worse, holograms are not immune to this problem even if layered with another technology such as a serialized QR codes or NFC chips.

Whereas consumer apathy makes it difficult to direct the attention needed to carefully scrutinize a hologram, a false sense of security paradoxically emerges due to the branding familiarity we associate upon seeing them. The mere presence of a hologram can produce false reassurance as a result. And given the general inability of consumers to properly identify an original hologram, counterfeiters can take advantage of that weakness in conjunction with an established brand association to successfully perpetuate their products in the marketplace.

Simply stated, it is better not to place a hologram, or any other layered technology in conjunction with a hologram, on a package at all so as to remove the problems of false association and false reassurance.

It is undoubtedly true that holograms still maintain a robust presence on many products, and this will likely continue for some time due to the branding caché that has been established. It is also true that the passive nature of holograms combined with the ease of duplication have substantially reduced their effectiveness as a brand protection solution. Holograms now represent a low hanging fruit to criminal enterprises that can easily target such embedded products to create that perfect simulation of a genuine brand.

The clear and compelling security deficits of holograms and other passive technologies has led to the development of an entirely new set of offerings that are characterized almost uniformly by their robust ability to withstand duplication. The recent advent of third-generation (3G) solutions has ushered in a new era in the fight against counterfeit products. A 3G solution is one that can neither be successfully copied nor emulated. A few technologies can already lay claim to these strict requirements.

Holograms served their purpose at one time as a security tool, but no longer. They can however be very beautiful and offer the kind of visual appeal to a package that creates undeniable marketing sparkle. Any effort to extend their use beyond that into the product security realm would represent willful misuse, given what we now know about the futility of holograms, and therefore be an arguable abdication of corporate responsibility toward consumer safety.

Avi Chaudhuri is Chief Scientist at Systech.