The benefits of the Watchtower are increased production of food and iron, which also increases to a greater degree as you progress in beating Season 1 and claiming Outposts from the end of each Province.
The Watchtower also has a nice logistical benefit that Farms and Mines don’t — it continues production while being upgraded.
And because the Watchtower uses food instead of iron for upgrades, it can be a useful building to work on when you’re also completing iron-intensive upgrades if you have VIP and a second builder.
Really the only potential downside of upgrading your Watchtower is that as your production and storage increases, the potential loot available for raiding you increases too. Since some players make a point of seeking out targets with large food or iron reserves available for raiding, it can in theory make you a little more of a target.
But in practice, if you’re online reasonably often and routinely collecting resources from your Watchtower, you’ll still net a vast portion of the food and iron produced.