IC-Agency explores and analyses the two faces of the Internet for the watch industry. On one side, it provides a precise evaluation of the threats and dangers presented by the Internet, notably through one of the first studies on ‘Luxury watchmaking and the Internet.’
The current 2005 study looks at five key export markets for the Swiss watch industry: the United States, the United Kingdom, Germany, Italy, and France. It also examines twelve brands - Breitling, Bulgari, Cartier, Chopard, Ebel, Girard-Perregaux, Jaeger-LeCoultre, Longines, Omega, Patek Philippe, Rolex and TAG Heuer.
The World Watch Report 2005 offers ‘strategic’ information on the actual demand for the brands in question, as well as on the demand for the primary models of each brand. It also provides a global panorama of the visibility of brands and their positioning, a detailed examination of the threats (diverting searches, cybersquatting, counterfeiting, etc.), as well as a highly developed, detailed and qualitative analysis of what is being said daily about the brands and their models in various chat rooms on the Internet.

How is the information gathered?
IC-Agency collected more than 25 million bits of data, compiled in the targeted countries, about the sites visited by Internet users. Each brand was analyzed in a thorough manner based on specific qualifications according to the ‘semantics gathered’ or, in other words, the types of searches carried out by the users using various search engines. For example, ‘cartier copy’ would clearly indicate that the user was seeking a copy; ‘cartier tank’ would suggest that that the user was interested in a specific model; ‘cartier new york’ would denote that he is looking for a retailer, and so on.
The authors of the study, who determined the type of calculations, came up with nearly 200 charts of data and crossed-checked them with data obtained from other strategic information. They estimate the margin of error to be +/- 3%.
In a general manner, the study showed that three out of four searches originated from the United States, which counts more than 200 million Internet users, followed by Italy, the United Kingdom, Germany and France. Nearly four out of five people searched using the name of the brand.

People looking for counterfeit products represented around 15% . Resellers accounted for only 1.1% of users searching the web. .

What brands and models were searched the most?
The most searches were for, of course, the King Rolex with 41.1% of the total, followed by Tag Heurer and Omega that attracted respectively 16% and 15% . Next in line were Cartier, Breitling, Patek Philippe, Longines, Bulgari, Ebel and Jaeger-LeCoultre. While 83% of all searches for Rolex concerned copies, this figure drops to 5.6% in searches for Breitling . Is this the ransom for its reputation?
Speaking of reputation, the searches for the brands’ models follow fairly closely the same curve as the search for the various brands themselves. The Daytona and the Submariner by Rolex are the winners, followed by Omega’s Seamaster. .. After these models, in decreasing order, are Rolex GMT Master, Speedmaster by Omega, Datejust, by Rolex, Roadster and Tank by Cartier, explorer by Rolex and finally Bentley by Breitling.

Counterfeiters and diverting traffic
This same study closely examines the different types of dangers present on the web. One example is ‘cybersquatting,’ which is the diversion of searches, using key words to send the search to other sites, sometimes run by unscrupulous competitors or those seeking to attract the Internet user to their own sites, whether online auction sites or those selling copies as well as authentic models.
The leading players in the counterfeiting circuit are mainly, but not only, organized crime organizations that use their sites to launder money or to finance illicit activities. IC-Agency also estimates that terrorist groups are among those selling copies in order to finance their activities. Counterfeiting can also be the work of isolated individuals, with more or less private agendas, as well as dishonest manufacturers and retailers.
With a good understanding of how the Internet is used by most people, promoters of these types of sites take advantage of loopholes in the laws to stay in business or sometimes fall through the cracks of legal enforcement. Generally, their sites have a very short life span and they move, multiply, or disappear at one address to reappear at another, profiting from the low level of computer knowledge of most Internet users.

What are the consequences of these activities for the brands?
Beyond the direct or indirect economic consequences of counterfeit sales via the Internet, the dilution of the brand’s capital is a clear danger. The Internet, as we all know, is a medium particularly well suited to engendering and propagating unfounded rumours and all kinds of beliefs that can weaken a brand and erode its capital of trust. The aura of exclusivity that surrounds the luxury brand becomes tarnished. As the negativity expands, it lowers the value of the brand. Its identification and that of its products deteriorate. The image becomes clouded.
The extent to which the Internet user is diverted to online auction sites or those selling fake watches is largely being ignored. It reaches the summit in the United States where nearly 100% of searches for Cartier are diverted to sites selling copies. In this country, the Internet user typically only reaches a brand’s official site about 10% to 15% of the time (Breitling, Bulgari, Jaeger-LeCoultre). In Germany, the brands most affected by diversions are Omega, Chopard and Bulgari. In this nation, the audience for Girard-Perregaux and Patek Philippe suffer the most diversions (more than 70%) towards online auction sites such as eBay.

The obscure role of search engines
There is another and largely unknown phenomenon that affects online searches. In a specific case study, IC-Agency expended a great effort to learn “the search engine Google makes how much money on the backs of the brands” by selling space to links that are directly attached to such and such a key word. According to their calculations, during only the month of October 2004, Google earned 110,760 Swiss francs “on the back” of Rolex, and 16,290 Swiss francs on the back of TAG Heuer, but earned only a meagre 120 francs for Bulgari. In total, these sums represent more than two million francs per year! This abusive use of key words and diversion of traffic weigh significantly on the global cost of ad campaigns, sapping not only their effectiveness but causing higher prices for key words and for better access to traffic on the Internet. By diminishing the visibility of the brands’ official sites, sometimes drastically, this traffic diversion also involves major economic losses.
This detailed study clearly shows the threats and dangers present on the Internet. While they may be largely felt, they are largely also unknown, because of the lack of specific analysis tools. These deficiencies are what the studies conducted by IC-Agency will gradually fill.

Opportunities not understood
The general lack of understanding also extends to the opportunities that the Internet can provide. It is an incomparable tool offering a detailed analysis of the actual demand. But beyond this aspect, the Internet has a lot to offer those brands wanting to exploit all its potential. As the IC-Agency says, the Internet is a ‘sixth sense online’ that can help an enterprise to better master the economic environment, better analyze and meet the demand, anticipate the trends, optimize distribution, strengthen and protect its image.

Internet watch
The Internet allows continuous access to a constantly renewable mass of useful information that must be correctly deciphered and analyzed. It is a formidable tool to gain insight into society, technology, law and competition. When well thought-out, targeted and rationalized, this tool allows us to identify and anticipate specific socio-cultural behaviour in a brand’s various strategic markets. One relatively recent example is the appearance of the ‘bling’ culture in the United States, born during the latter segments of the hip-hop and rap movements. An appropriate ‘Internet watch’ analysis of society could have anticipated the vogue for large diamond watches that are so popular today.
But this global ‘watch’ also applies to technological advances (in university searches, for example), to judicial aspects (security of the brand, management strategy of domain names, warning and reactivity in cases of abuse of the brand’s intellectual property, etc.), and to the examination of competition (growing or shrinking markets, positive and negative attributes, strong and weak points).

Better understanding of the target audience
Attentive observation to the Internet allows one to better anticipate upcoming trends and thus meet market demands.
Detailed observation of searches by Internet users, for both brands and their models, provides important information, including the most popular case shapes, materials and colours of the bracelets and dials, etc. The identification of the most ‘searched’ models is also useful in evaluating the effectiveness of a brand’s communication.
The monitoring of chat rooms initiated by collectors, the frequent searches for blogs (online personal journals) devoted to certain socio-cultural aspects (for example, the urban Japanese sub-culture), and the observation of specific sites provide tools for deciphering behaviour, attitudes and criteria that set trends. This analytical mass of data, important for new product launches, can now be translated into strategic action carried out upstream in anticipation of upcoming trends.

Optimization of the distribution
In the domain of distribution, the Internet also provides effective tools, whether in terms of anticipation, reactivity or in strengthening and improving the existing structures.
Within a specific market, an analysis of the Internet permits, for example, the identification of regions or cities where the strongest demand is seen. A brand can use this data to strengthen its presence in precise areas.
In a prosaic manner, the Internet strongly contributes to improving orders and an optimization of after-sales service. It helps energize or personalize the contact between brand and retailers.

Improvement in communication
By offering a quality tool for evaluating the effectiveness of media campaigns, the Internet permits a brand to optimize and strengthen its communication and positioning.
But the Internet is not solely a reactive medium. It also offers possibilities for the brand to directly target certain groups. With effective utilization, the Internet can be the vehicle for better and more precise results.
On the marketing level, the Internet allows selective improvement in the visibility of a brand’s flagship products, the strategic positioning in the different search engines or in the comparative price sites. Pre-campaigns, tests, influencing, and refinement of communication are some of the opportunities offered by this tool.

Protection of the image
As we have seen, the Internet allows us to measure the popularity of a given market, but it also permits the measurement of a brand’s image, reputation, and popularity among Internet users as well as in the media. By monitoring specialized chat rooms, the press, and even the investor community, the Internet offers a global coverage allowing for a better understanding of the networks of influence and prescription tools. The ‘Internet watch’ provides the opportunity to better prepare against attacks targeting the brand, the enterprise or its representatives.
All departments of the enterprise are affected by the ‘sixth sense online.’ The major challenge now is to be able to transform what is seen as a danger or threat into opportunities for development and mastery over their environment.

Europa Star Magazine April - May 2005 issue – reviewed in December 2005