WorldWatchReport 2012 - SIHH Haute Horlogerie Preview

The Leading Market Research in the Luxury Watch Industry. Since 2004

The Leading Market Research in the Luxury Watch Industry!
Since 2004!
!

2012!

HAUTE
HORLOGERIE
PREVIEW


A MARKET STUDY LIKE NO OTHER .
Since 2004, the World Watch Report has
provided the luxury watch industry with an
exclusive analysis of the leading brands, models
and client preferences. The World Watch Report
is based on more than 1 billion unaided client
intentions entered into search engines.

This search data is collected using Digital Luxury
Group’s proprietary technology, and is translated
into client intentions related to brands, models,
distribution, replicas, price, accessories etc.*

*A detailed explanation of the methodology is available at the end of the document

© Digital Luxury Group, DLG SA, 2012
2


TRACKING 40 OF THE MOST RENOWNED LUXURY WATCH BRANDS .

3


IN THE TOP 20 MARKETS ACROSS THE GLOBE .

Germany

United Kingdom

Russia
United States France
Japan
Qatar
Spain

Switzerland China
Mexico
Taiwan
Italy
Hong Kong
India
Brazil
Saudi Arabia
Thailand Singapore

United Arab Emirates

4


RESEARCH SCOPE OF HAUTE HORLOGERIE MEDIA KIT .
•  15 Haute Horlogerie brands covered
(out of the total 40 brands available in the full report)

•  Only key highlights and partial metrics provided
•  Full report on 40 brands to be released in March at Baselworld

Free document made for the solely purpose of the 2012 Edition of the Salon
International de la Haute Horlogerie

5


THE HAUTE HORLOGERIE CATEGORY IN 2011 | KEY HIGHLIGHTS .
China surpassed the USA as the leading market ~ for the See report on

first time since the study launched in 2004, China recorded the P.9

highest demand for high-end watch brands with 25% market share

IWC, Patek Philippe, Zenith are the category leaders ~
The top 3 worldwide Haute Horlogerie brands remain unchanged See report on
P.15

from the 2010 market figures gathering more than 50% of the
worldwide market share

Jaeger-LeCoultre’s Tourbillon ~ The Le Sentier-based brand
is currently the most in demand for highly technical keywords See report on
P.19

related to the search of “tourbillon” timepieces

6


THE HAUTE HORLOGERIE CATEGORY IN 2011 | KEY HIGHLIGHTS .
Royal Oak vs. Reverso ~ Audemars Piguet’s Royal Oak See report on
P.20

overtook Jaeger-LeCoultre’s signature Reverso after 3 consecutive
years in the first position

Singapore’s Collectors Hub ~ Singapore showed evidence of a See report on

very strong watch connoisseur market with 17.5% of demand P.23

directly associated to specific models

Impressive growth in mobile internet ~ The global market
experienced a shift in media consumption with 17% of Haute See report on
P.29

Horlogerie searches performed through a web-enabled mobile
device

Social media booming ~ IWC and Jaeger-LeCoultre proved to See report on
be the trend setters in both Western and Chinese social media P.31

7


GEOGRAPHIC SEARCH ORIGIN . Searches by Market
The Relative Number of Haute Horlogerie

Germany 7.38%

United Kingdom 8.16%

Russia 5.35%
United States 21.23% France 6.84%
Japan 6.14%
Qatar 0.08%
Spain 2.37%
China 24.89%
Switzerland 2.74%
Mexico 0.65%
Taiwan 1.15%
Italy 6.11%
India 1.13% Hong Kong 1.19%

Brazil 1.04% Saudi Arabia
Thailand 1.51% Singapore 1.56%
0.12%

United Arab Emirates 0.35%

January to November 2011

8


GEOGRAPHIC SEARCH ORIGIN .
•  China surpassed USA as the leading market ~ for the
first time since the study launched in 2004, China overtook the
USA as the country exhibiting the highest demand for high-end
watches, with a 25% market share

•  Strong foothold in the West ~ Demand from Europe and
USA remained strong, gathering 55% of the total searches. Of
note were early signs of decline from France and the US,
experiencing drops of 1.4 and 5 percentage points respectively
(at a constant perimeter)

•  South-East Asia leads midsize markets ~ Singapore and
Thailand (3%) are positioned as strategic second-tier growth
drivers, ahead of Hong Kong and Taiwan (2.3%), Brazil and
Mexico (1.7%) and the Middle East (0.5%)

9


DEMAND FOR HAUTE HORLOGERIE IN CHINA | REGIONAL SEARCHES
Share of Searches by Administrative Division
.
Share of
Rank Administrative Division
searches
1 Beijing
6.7%
2 Shanghai
6.2%
3 Zhejiang
5.9%
4 Guangdong
5.5%
5 Jiangsu Province
5.2%
6 Liaoning Province 宁
4.7%
7 Shandong
4.5%
8 Henan
3.8%
9 Hebei
3.7%
10 Tianjin
3.7%
11 Fujian Province
3.6%
12 Sichuan Province
3.6%
13 Heilongjiang
3.5%
14 Hubei
3.5%
15 Anhui
3.2%
16 Shaanxi
3.0%
17 Shanxi
3.0%
18 Jilin
3.0%
19 Hunan
2.9%
20 Chongqing
2.6%
21 Guangxi
2.5%
22 Jiangxi Province
2.3%
23 Inner Mongolia
2.2%
24 Yunnan
2.2%
25 Guizhou
1.7%
26 Xinjiang
1.6%
27 Hong Kong
1.6%
28 Hainan
1.6%
29 Gansu Province
1.3%
30 Ningxia 宁
0.8%
31 Qinghai
0.4%
32 Tibet
0.2%

Baidu Data Only January to November 2011

10


DEMAND FOR HAUTE HORLOGERIE IN CHINA | REGIONAL SEARCHES .
•  A multi-faceted market ~ Composed of three major regions
and 56 ethnics groups, China’s diversity requires an in-depth
understanding of local culture and clientele preferences

•  Dominance from 1st and 2nd tier coastal cities ~ At the
heart of most high-end shopping streets, coastal cities such as
Beijing, Shanghai, Hangzhou and Dalian, gathered 56.1% of the
nation’s demand for high-end timepieces, highlighting the
concentration of consumers in these areas
•  Brand preferences vary across regions ~ Deeply rooted
heritage brands such as Patek Philippe and Vacheron
Constantin resonate favorably with traditional clients from the
Beijing region, while IWC attract a relatively younger, urban
and trendy audience from Shanghai, Anhui and even Hainan

11


HAUTE HORLOGERIE AFFINITY INDEX . Internet users
Number of Haute Horlogerie searches per 1,000


12


HAUTE HORLOGERIE AFFINITY INDEX .
•  Swiss Watch Interest ~ The home of Haute Horlogerie
is also the country with the highest density of Haute
Horlogerie searches

•  …Followed by Singapore, the Asian Switzerland ~
also recording above average results making it the Haute
Horlogerie hub for watch enthusiasts

13


MARKET SHARES OF BRAND SEARCHES | WORLDWIDE
Haute Horlogerie Brands
.


14


MARKET SHARES OF BRAND SEARCHES | WORLDWIDE .
•  IWC, Patek Philippe, Zenith category leaders ~
The top 3 worldwide Haute Horlogerie brands remain
unchanged, gathering 50% of worldwide market share
•  Laggards' difficulties to follow the path ~ smaller
brands such as Breguet, Franck Muller and Blancpain are
losing share of the global demand while the leading
brands such as Jaeger-LeCoultre, Vacheron Constantin
and Audemars Piguet are gaining market share
•  Richemont leads the Haute Horlogerie market ~ 3
out of the 5 most searched Haute Horlogerie brands
belong to the Richemont Group while the Swatch Group’s
high-end brand Breguet, appears only in the 7th position

15


MARKET EXPOSURE BY BRAND
Weight of Regions in Haute Horlogerie
.Brands Searches

Data for Middle East region was hidden in the graph due to its low visibility within the overall figure January to November 2011

16


MARKET EXPOSURE BY BRAND .
•  Strong Dependency in Asia ~ Patek Philippe (46%)
and especially Richemont brands: Vacheron Constantin
(64%), Jaeger-LeCoultre (44%) and IWC (38%) exhibit a
strong recognition across Asia
•  The old continent still plays a key role ~ A. Lange &
Söhne, Richard Mille, Zenith, Ulysse Nardin and Jaquet
Droz remain heavily focused in Europe
•  Middle East at its digital infancy ~ Qatar, Saudi
Arabia and UAE represent no more than 1% of the total
Haute Horlogerie related searches. While their two
favorite brands are similar to the global average, they
show more interest for Audemars Piguet, the third most
demanded brand in the region.

17


SEARCHING FOR TOURBILLON MOVEMENTS | US FOCUS
Brand Market Share of Tourbillon Movement Related Searches
.


18


SEARCHING FOR TOURBILLON MOVEMENTS | US FOCUS .
•  Jaeger-LeCoultre’s Tourbillon ~ The Le Sentier-based
brand recorded the highest number of technical searches
related to “tourbillon” timepieces thanks to its world-famous
gyrotourbillon
•  Category leader IWC not as popular ~ Despite its
leading market share in the US Haute Horlogerie market at
20%, the brand only gathered 5% of the highly targeted
searches related to technical movement demand
•  Breguet rises in the technical search ~ Although
relatively low in the Haute Horlogerie ranking (5%), client
interest for Breguet movements underlines its highly
technical perception among American clientele ranking 4th
in the Tourbillon related searches

19


TOP 10 MOST SEARCHED MODELS | WORLDWIDE
Haute Horlogerie Brands
.
2012 2011  Brand Models Total

1 2 æ Audemars Piguet Royal Oak 7.36%
2 3 æ IWC Portuguese 6.66%
3 1 è Jaeger -LeCoultre Reverso 5.68%
4 10 æ IWC Portofino 4.71%
5 9 æ IWC Pilot 4.44%
1. Royal Oak
6 5 è IWC Mark 3.55% Audemars Piguet

7 13 æ Audemars Piguet Royal Oak Offshore 3.32%
8 7 è Zenith El Primero 3.29%
9 4 è IWC Aquatimer 2.97%
10 11 æ Patek Philippe Nautilus 2.54%
SUB-TOTAL 44.53%
OTHERS 55.47%
TOTAL 100.00% 2. Portuguese
IWC
3. Reverso
Jaeger-LeCoultre

20


TOP 10 MOST SEARCHED MODELS | WORLDWIDE .
•  Strong market share for the leaders ~ Among the
500+ Haute Horlogerie models tracked by the World
Watch Report, the top 10 models account for 44.5% of the
worldwide demand
•  Royal Oak vs. Reverso ~ After 3 consecutive years in
the first position, Jaeger-LeCoultre’s Reverso has been
replaced by Audemars Piguet’s Royal Oak due to the
Royal Oak’s strong demand evolution in Western
markets- specifically the US, UK and Italy
•  Strong Models Awareness for IWC ~ Schaffhausen’s
brand accounted for half of the top 10 most searched
Haute Horlogerie models worldwide

21


TOP 10 HAUTE HORLOGERIE "CONNOISSEUR’ MARKETS
Weight of Models-Specific Searches by Country
.


22


TOP 10 HAUTE HORLOGERIE "CONNOISSEUR’ MARKETS .
•  Singapore’s Collectors Hub ~ Singapore shows
evidence of being a connoisseur market with 17.5% of
demand directly related to the search for specific models
•  Thailand Emerging ~ The Thai market can be
considered as the up and coming Haute Horlogerie
specialists; showing the most client interest for the 10th
ranked model, the Patek Philippe Nautilus

•  The demand for models in the Western world ~ In
absolute values, US, UK and Germany account for 55% of
the total number of searches for models

23


TOP 10 HAUTE HORLOGERIE AMBASSADORS | WORLDWIDE
Relative Share of Searches for Haute Horlogerie Ambassadors
.
2012 2011 Brand Ambassadors Activity Total

1 1 = Audemars Piguet Sachin Tendulkar Cricket 26.60%

2 2 = Audemars Piguet Lionel Messi Soccer 13.40%

3 - NEW Roger Dubuis Gerard Butler Cinema/TV 12.20%
1. Sachin Tendulkar
Audemars Piguet
4 - NEW Richard Mille Rafael Nadal Tennis 11.10%

5 4 è Jaeger LeCoultre Diane Kruger Cinema/TV 8.20%

6 - NEW Audemars Piguet Novak Djokovic Tennis 5.60%

7 - NEW Audemars Piguet Emmanuelle Chriqui Cinema/TV 4.40%

8 3 è Audemars Piguet Michael Schumacher Motor Sports 3.70% 2. Lionel Messi
Audemars Piguet
9 6 è Audemars Piguet Quincy Jones Music 2.10%

10 5 NEW IWC Zinedine Zidane Soccer 1.70%

SUB-TOTAL 89.10%

OTHERS 10.90%
3. Gerard Butler
TOTAL 100.00% Roger Dubuis


24


TOP 10 HAUTE HORLOGERIE AMBASSADORS | WORLDWIDE .
•  The Little Master rules ~ Indian cricket legend Sachin
Tendulkar remains the most searched Haute Horlogerie
ambassador for the third consecutive year, as a result of the
huge Indian fan base accounting for 90% of the search
volume
•  Gerard Butler newcomer in the ranking ~ Following
his passion for the brand, the Scottish actor boosted demand
for the Geneva-based modern Haute Horlogerie
manufacture Roger Dubuis, claiming the third position in
the ranking
•  Audemars Piguet ambassadors network ~ Overall the
celebrity endorsement strategy was largely dominated by
Audemars Piguet – featuring 6 out of the 10 the most
searched ambassadors

25


UNDERSTANDING CULTURAL-SPECIFIC BEHAVIOR
Share of Specific Search Intentions by Country
.


Replica: All brand related searches that contains keywords associated to counterfeit intention. I.E. “Rolex Replica Watch”
Price: All brand related searches that contains keywords associated to price. I.E. “Rolex Price List”
Distribution: All brand related searches that contains keywords associated to the finding of a point of sales . I.E. “Rolex shop”
Product Range: All brand related searches that contains keywords associated to the product itself, its movement, its color, its material, or its style. I.E. “Rolex gold”
26


UNDERSTANDING CULTURAL-SPECIFIC BEHAVIOR .
•  Haute Horlogerie client interests differ ~ Client
behavior for Haute Horlogerie brands varies widely
across the markets and regions of the world
•  Price sensitivity of the Chinese~ Search patterns in
China tend to be strongly related to price inquiries about
high-end timepieces; it is actually the second most
common search, right after brand related searches and
just before Models & Collections
•  Counterfeit searches still an issue in the US~
American clients tend to search proportionally more for
counterfeit versions of Haute Horlogerie, accounting
2.5% of their overall search patterns

27


MOBILE USAGE OF THE HAUTE HORLOGERIE CLIENTELE
Share of Mobile Searches Per Country
.


28


MOBILE USAGE OF THE HAUTE HORLOGERIE CLIENTELE .
•  Impressive growth in mobile Internet ~ While it is
expected that mobile internet users will overpass desktop users
only in 2014, the market is already witnessing this shift in
media consumption: 17% of global Haute Horlogerie searches
were performed through web-enabled mobile devices
•  Strong variations across markets ~ Nearly half of the
searches conducted for Haute Horlogerie brands are through
mobile devices in Japan, while European markets show less
mobile use between 12-15% (the exception being the U.K. with
20% of mobile searches )
•  “On the go” client concerns ~ Points-of-sale related
searches are performed twice as much from a mobile device
than a desktop, which underlines the importance for brands to
adapt digital strategies for their brick-and-mortar business

29


SOCIAL MEDIA FOCUS | BRAND ENGAGEMENT ON FACEBOOK
Mapping Haute Horlogerie Brand Performance on Facebook
.

30


SOCIAL MEDIA FOCUS | BRAND ENGAGEMENT ON FACEBOOK .
•  Exclusive time on Facebook ~ To date, half a million
watch aficionados are connected to Haute Horlogerie brands
on Facebook, the largest social network with 800 million
active users worldwide
•  IWC leads the path ~ Consistently with its leading market
position, IWC dominates the Facebook landscape for the
second consecutive year on quantitative criteria (over
220,000 fans) whilst maintaining a favorable level of
community engagement (0.41% average)
•  Jaeger-LeCoultre as the challenger ~ A strong and
engaging editorial and multimedia strategy on Facebook led
Jaeger-LeCoultre into the top with over 84,000 fans and
0.54% engagement rate
•  Patek Philippe stayed away from the social arena ~
The Swiss watch manufacturer remained the only Haute
Horlogerie brand not to be officially present on social media

31


SOCIAL MEDIA FOCUS | BRAND ENGAGEMENT ON TWITTER
Mapping Haute Horlogerie Brand Performance on Twitter
.

32


SOCIAL MEDIA FOCUS | BRAND ENGAGEMENT ON TWITTER .
•  Haute Horlogerie Tweets ~ Information sharing with clients
and influencers on the micro blogging platform is part of
today’s communication reality: more than 60,000 mentions of
Haute Horlogerie brands were observed (excluding replica &
discount related tweets)
•  Audemars Piguet’s leading position on Twitter ~ Among
the 12 Haute Horlogerie brands active on Twitter, Audemars
Piguet sets the trend while capturing over 35% of the total
amount of Haute Horlogerie followers – with more than 5,000
followers and a 0.55% discussion rate
•  Engaging Jaeger-LeCoultre ~With a strong number of
followers (over 3,000), Jaeger-LeCoultre maintains above-the-
average discussion rate of 0.95%, translating the brand’s ability
to adapt both content strategy and community management to
the different social media platforms

33


SOCIAL MEDIA FOCUS | BRAND ENGAGEMENT ON SINA WEIBO
Mapping Haute Horlogerie Brand Performance on Sina Weibo
.
1st Dec 2011 – 1st Jan 2012

34


BRAND ENGAGEMENT ON SINA WEIBO .
•  High-end luxury watch brands reluctant to join the
Chinese social media wave ~ to date, one third of the Haute
Horlogerie brands are managing an official presence on Sina
Weibo, the largest micro blogging platform in China. The 250
million users of the social platform account for half of the
number of Chinese Internet users

•  IWC as a first mover ~ IWC’s brand positioning and local
community management particularly reflects the brand’s ability
to rapidly grasp China’s potential amongst a younger audience
of watch lovers: registering the largest number of followers
(+5,000) while reaching above-the-average engagement
(+0.82% VS 0.56% average)

35


METHODOLOGY .
Search Queries
Extracted from search engines, the search queries collected in the World Watch Report encompass a large semantic field
of 17k+ keywords related to the brands including synonyms, plurals and misspellings.
Languages
Search queries are tracked in all major languages according to each key market: Portuguese, Russian, simplified and
traditional Chinese, Taiwanese, Japanese, French, Italian, Spanish, German, Thai and Arabic.
Search Engines
Based on Google, Bing, Yandex in Russia and Baidu in China, the World Watch Report covers an average of 85% of search
market share globally.
Data Collection and Analysis
Public and professional tools are used to automate search volume collection, thanks to Digital Luxury Group’s strong
partnerships with search engines. Once collected, this data is filtered, analyzed and translated into 14 intentions (brands,
models, replicas, etc.) using exclusive Digital Luxury Group technology.
Harmonization
As multi-products brands, such as Cartier, Chopard or Bulgari, may generate significantly more search volumes than
watch-only brands, data is harmonized to identify watch-only demand and exclude demand for other products (for ex.
“Cartier jewelry”, “Tag Heuer mobile phone”, etc.). Similar corrections have been made for brands whose names have
different associations such as Montblanc, Omega or Zenith.
Social Media engagement rate
The engagement rate is a qualitative indicator measuring the level of interactivity between a brand and its community on
each Social Media platform. Its calculation is based on the average number of feedback (“Likes” and “Comments”) per
individual post published by the brand (“Status Updates”), divided by the number of Fans on date of publication.
Deciphering Search Intentions: A methodological approach
More than tracking single brand names, the World Watch Report monitors a range of watch related searches. Using in-
house developed DemandTracker© technology, the World Watch Report actually tracks 17,229 keywords associated to
luxury watch brands, currently managing 14 different intentions in order to better understand the real needs of the online
luxury watch clientele.

36


IN THE PRESS .

37


WHO ARE WE ?
About Digital Luxury Group
Digital Luxury Group, DLG SA, is the first international company dedicated exclusively
to the design and implementation of digital communication strategies for luxury
brands. Since 2004, DLG has been publishing the World Watch Report a baseline
market study for the watchmaking industry in partnership with Europa Star and with
the precious support of the Fondation de la Haute Horlogerie.

Contact:
Nicolas HANSSENS
Research Manager
Strategy & Intelligence Business Unit
nhanssens@digital.luxury.com

Florent BONDOUX
Business Unit Manager
Strategy & Intelligence Business Unit
fbondoux@digital.luxury.com

Digital Luxury Group, DLG SA
7 Avenue Krieg
Visit our website to get detailed information: CH-1208 Geneva
www.worldwatchreport.com or www.digital-luxury.com Switzerland

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