Luxury brand

For Omega and Swatch, the rewards of co-branding could be astronomical

For Omega and Swatch, the rewards of co-branding could be astronomical
Source: Swatch

Many moons ago I worked for one of the top Swiss watch companies in Geneva. It was a lovely gig: the hotel, the air, the people and the watches. The beauty of the whole thing. One of the very senior guys there took a shine to me and a few days into the engagement asked, with a gesture, to see my watch. “What,” I remember him saying, “does the young professor wear on his wrist?”

I can’t actually remember what watch the young professor was wearing back then. But it sure as shit wasn’t the kind you wanted to put on display anywhere near Switzerland. “Très bien,” said my Swiss friend as I raised my sleeve. But he said it in a way that suggested it wasn’t very “bien” at all. He pronounced the two words in the manner of a doctor telling his patient that he had lost a leg. And that the other would surely need to go in the morning.

I spent the rest of the week with my sleeve stretched desperately down over my offensive time piece. And on the Friday, when my work was over, I wound down with a French friend at the airport and described the whole, horrible incident. He worked for a champagne house and found the whole story incredibly enjoyable. He spent the next hour continually asking to see my watch and I spent it telling him to go fuck himself.

But eventually I begged him for advice. Work had gone well that week and I would be invited back. The room would be populated again with rich, Swiss executives who worked in watches and jewellery. Many would be sporting time pieces costing well into six figures. There was no way I could operate at that level, I told my French friend, but I needed a watch that would avoid any further humiliation. What should I do?

His plane was about to depart. And as he packed up his bag and checked his tickets, he looked at me with a flicker of sympathy. Gesturing to my wrist, he finished the last of his champagne and said: “Speedmaster. C’est ton seul espoir,” my only hope. As he headed to the gate he shouted “très bien!” over his shoulder and was gone.

The synergy of co-branding ensures that the subsequent product gets a lot of editorial coverage and double the target market to aim at.

And that’s how I bought my first proper watch. That weekend I went to Mayfair and spent almost two thousand quid on a stainless steel, black-faced Omega Speedmaster. If you’re not familiar with fine watches then that last sentence might shock you.

Two thousand pounds!

Well, I have to tell you that this is a tiny price to pay for a fine watch. I’ve spent a lot more money since on far more exotic fare, and I’m still stood at the wet end of the executive pissing contest that occasionally breaks out when people talk watches. And when they do, the Speedmaster is worth every penny. Because despite its relatively accessible price point, no-one will ever say a bad word about it.

Omega Speedmaster’s enduring appeal

I’ve worked with senior people from Rolex, Hublot, Zenith and Audemars Piguet. I’ve got idiot friends who collect frighteningly expensive watches. All of them exhibit the same affectionate, respectful look when they see a Speedmaster. It’s a fine watch despite its humble price. Hell, it might even be superior to other fancier watches because it’s so classic and so affordable and so without equivalent.

The reasons for this classic status are complex and locked into events that happened 50 years ago, midway between the Earth and the Moon. When Apollo 13 caught fire in 1970, its three astronauts found themselves floating in space with less instrumentation than you used this morning to make your toast. With no digital equipment, the crew turned to their NASA-issued Omega Speedmasters to measure the required units of time that would bring the spacecraft back into Earth orbit and safety.

It’s a single, perfect moment of precision. As such, it’s possibly also the greatest ever brand story. And, as time passes, and more and more marketing effluent is dumped onto unsuspecting target customers through the ungainly business of ‘storytelling’, the genuine nature of Speedmaster’s heritage becomes ever more affecting. And I mean genuine.

There was no carefully constructed deal signed with a global talent agency. NASA purchased the Speedmasters, at retail price, for all its Apollo astronauts. This was not a ‘brand strategy play’ between a movie star and a coffee brand either. NASA chose the Speedmaster because it performed best in the weightless conditions of space. And this was much bigger than a few neo-fraudulent influencers flouncing about on Instagram or a tennis player looking for a fast buck. The Speedmasters sat on the wrists of some of the bravest, smartest men who ever lived on a quest to reach the Moon.

Source: Shutterstock

And they did not just wear their watches in a ceremonial fashion either. The Speedmaster played a central role in the business of space exploration. One of the men on the quest – Jack Swigert – really did use his Speedmaster to time the engine burn that brought Apollo 13 back unharmed, after an unplanned slingshot around the dark side of the moon, and back safely to Earth.

“The first watch worn on the moon,” it says on the back of my Speedmaster, and all the others. It’s the reason no-one gives you any shit when you wear one to a meeting in Geneva. Why my French friend told me to buy one. There might be better watches. Fancier watches. Rarer watches. But none of them have NASA, Apollo, JFK doing the hard things, Swigert, Tom Hanks and the dark side of the motherfucking moon among their brand assets.

A curious collaboration

All of which make the events of the last few days extremely difficult to assess. On Saturday, if you happened to be at Westfield London, or the Arndale Centre in Manchester, or near any of Swatch’s global retailers, you would have known about it. In fact, anywhere on the planet where they sold Swatch on Saturday was surrounded by people unable to get anywhere near the Swatch boutique, because there were already hundreds of people crammed inside.

For the most part the stores sold out and shut their doors within 30 minutes of opening. Thousands thronged the pavements outside in a forlorn attempt to get their hands on the latest Swatch release and left home empty handed.

That new release was the Moonswatch Collection, eleven different watches named after the various planetary bodies and produced in a unique co-branded arrangement between Omega and Swatch. Each watch carries both the Omega and Swatch logos and, while each is unmistakably based on the Speedmaster, there are significant differences too.

The automatic movement that powers the Speedmaster has been replaced with a battery-powered quartz engine. Instead of the traditional stainless steel, each Moonswatch is made from a compound that consists of ceramic and a bio-derived plastic. Rather than a traditional metal or leather strap, each Moonswatch comes with a flight-style Velcro strap. And then there is the price. While the Omega Speedmaster will set you back £3,000 and up, the Moonswatches all retailed for £207.

Despite these differences, the similarity between the two watch types is also striking. And, if Omega’s CEO Raynald Aeschlimann is to be believed, entirely deliberate. “It was very time-consuming, since we wanted to create a Swatch with Speedmaster DNA,” he told Wired magazine last week. “Therefore, we did spend a lot of time and energy on the designs, and we wanted to ensure that the watches functioned well, with fully operating subdials, and all possible Speedmaster details.”

But is this a good branding move? Well, you can make arguments for and against the Moonswatch. The obvious criticism for the project is that it could easily undermine the Omega Speedmaster for a very long time. On Saturday, no matter how quickly Swatch closed its boutiques, it almost certainly sold more Moonswatches in one morning than Omega will sell Speedmasters all year. That’s a scary statistic given just how similar the two watches look up close, never mind from the discrete distance behind a long sleeve shirt.

Not only is the Moonswatch less than a tenth of the price, you could also make a strong argument that it might be the superior watch on many levels. Its high-tech, lightweight and environmentally sound bio-ceramic case makes it far more innovative than the Speedmaster. The watch band is also much closer to the actual straps warn by the original astronauts. And anyone that has owned an expensive automatic watch will confirm that accuracy is rarely a strong point, especially compared to the silent efficiency of quartz.

Finally, the Moonswatch range’s planetary inspiration and exciting colours make it the more authentic and exciting option too. Who here could resist a watch called Mission to Uranus? Not I.

Scarcity might be the reason that most of the Moonswatches are now on sale on Ebay for 10 times the price they were purchased for on Saturday. But perhaps the premium is also being driven by an efficient market recognising the true value of a ridiculously under-priced product.

Benefits of co-branding

But we should remember that the Moonswatch is a co-branded offer. Co-branding is a wonderful tactical adventure in which two brands, drawn from different categories, work together on a product that carries both their names. That synergy ensures that the subsequent product gets a lot of editorial coverage and double the target market to aim at.

Research also suggests that some of your partner’s positive brand image can rub off on you too. And with different companies who have very different core competencies, there is the chance to learn from another non-competitor company and develop a truly hybrid offer. Best of all, co-branded products usually carry a significant premium over the prices either brand would offer if it went solo.

Apple working with Hermes on a special edition of its Watch is a classic example of two brands benefiting from the ‘science of alliance’.

Source: Apple

Apple burnishes its neo-luxury status while Hermes enjoys an injection of modern, 21st Century tech. Each of the two super-private companies also gets to see how the other irons its undies behind closed doors. And they can charge approximately double the price versus the regular Apple Watch, while selling bucket loads of them.

But, aside from the two logos on the dial, the Swatch/Omega Moonswatch breaks most of the other traditional conventions of co-branding. For starters, Swatch and Omega did not originate in different categories – they both make watches. They would be competitors were it not for the fact that they are part of the same company: the Swatch Group. And there is the thorny issue of the lack of price premium to confuse things further. What’s more, there are no signals that the Moonswatch will be a limited edition either. The company may have sold out but there is every sign that more are being made.

Will that move ensure that Swatch enjoys a huge hit at £200 while destroying Omega’s offer at £3,000 forever?

I am minded of something Les Binet and Sarah Carter once wrote in their wonderful book How Not to Plan. The two experienced advertisers noted that despite all the criticisms of “bad advertising”, neither had ever observed a single incidence of an ad being so bad it was bad for business. Not one.

And as I grow older and less academic in my orientation, I find the same truth plays out across much of the branding space too. For all our pronouncements of mistaken strategies and flawed execution, very few brands are ever damaged by their innovations. In truth, I think most brand managers are far too conservative in their approach to the brands that they manage. They are usually too busy consulting their team or the market to notice the giant opportunity passing them by in silence on the starboard side of the organisation.

That was very much the sentiment of Omega’s CEO, Monsieur Aeschlimann, when he was challenged about the risk of Moonswatch undermining his precious Speedmaster sub-brand.

“I’m aware there will be critics,” Aeschlimann said. “But there is a vast space between a genuine Speedmaster Moonwatch and this Swatch. There is really no crossover in any true sense, apart from the look. Yes, there is a model in black and perhaps it could pass as the real thing in certain light, but it is in bio-ceramic, which makes it unique, different. It’s important to keep it in perspective. It’s a fun project and adds some light to an industry that can take itself too seriously.”

Omega’s opportunity

I suspect Aeschlimann is correct. Aside from the several million euros of revenue generated over the weekend, consider the other benefits bestowed by the new model. Swatch has just generated enormous salience, traffic, editorial and a welcome boost of premiumness thanks to its proximity to Omega. Swatch makes incredibly good-value, long-lasting, fun watches and not enough people know that. A few more people out on the street or reading the paper or this article are now aware of it.

Meanwhile, Omega has successfully reminded everyone about the Speedmaster and its link to the stars and those amazing events of many years ago. Too many black-and-white photos of dead astronauts and ancient spaceships can make your brand incredibly dusty. The coverage this weekend was in colour and of the moment.

If you are an economist you are now going to draw a chart showing the likely cannibalisation of Speedmasters at £3,000 by Moonswatches at £200. But that would just prove how little you actually know about brands or consumers. There is a segment of the watch market that seek the authentic, ultimate, best. If that means a Swatch for now, so be it. But those that can afford the real Speedmaster will surely consider that watch over its bargain Swatch alternative.

The big challenge for Omega is not consumers trading down from a Speedmaster to a cheap Moonswatch, it is the ignorance and ambivalence towards a Speedmaster of those looking for a luxury watch. Keeping it alive, exciting and in the cultural consciousness is an important objective. Seeing the masses lined up to fail to buy a cheap replica of a Speedmaster cannot be a negative brand experience.

If you were one of the 20-somethings who lined up on Saturday, you probably learned about the Speedmaster for the first time. In a decade or two, those memories will still be there, along with a bigger income and motivation to own the original of the copy you failed to buy on a half-forgotten Saturday all those years ago.

For old buffers like me, the unexpected reminder of the glory of Speedmaster has been a welcome one. I looked at the Swatch collection with a big grin, and then cracked open my watch draw and slipped on my old Speedmaster for the first time in years. Scratchy and dull, but great nonetheless, it remains a wonderful thing. A reminder not only of the Apollo missions but my own missions to Switzerland and Paris and beyond. The first watch worn on the moon.