In an advertising world where the biggest players are trying to get even bigger, how can the relatively small Havas Group survive and compete?
Industry behemoths Omnicom and Publicis pursued a $35 billion merger to gain even more heft, before calling off the deal three months ago due to a variety of setbacks. Now, there is speculation over the fate of another major player, Interpublic, after activist investor Elliott Management took a stake in the company.
Does Havas, the world’s sixth-largest ad holding company by revenue, feel some pressure to explore consolidation opportunities? The company says it doesn’t see its size as a disadvantage. “As long as we’re a leader in technology, which we’re doing in many ways, scale becomes almost irrelevant,” said Andrew Benett, global CEO of Havas Worldwide.
Madison Avenue long believed that Havas would eventually be acquired or paired up with another holding company, especially given that corporate raider Vincent Bollore holds the largest ownership stake in the company. Mr. Bollore’s son, Yannick Bollore, now sits at the helm of Havas.
Scale can offer companies advantages such as better prices for media, but despite the noise, Havas executives said they don’t see a need to be big. They say the company’s size has made it easier to simplify its operating structure and operate in a more nimble way.
“Big is great, big is beautiful, but agile and speed is better today,” said Dominique Delport, global managing director for the company’s media buying operations, Havas Media Group.
Key to Havas’ growth strategy is its integration of its creative and media-buying operations, a move that Havas believes gives it a leg up on rivals. Bringing the two disciplines closer together is meant to give Havas more efficiency and to appeal to marketers that have long complained that creative and media executives need to work more closely together. Ad holding companies years ago pulled apart creative and media duties and formed standalone units, a separation that marketers have said causes tension between the two.
“Our clients don’t de-couple creative and media when they’re thinking about driving their business so we’re trying not to as well,” Mr. Benett said.
Havas says that as data begins to play a bigger role in marketing, having creative and media disciplines working together will appeal to clients. Media-buying firms already use data to target ads more effectively; the company believes data can also help the creative side of the business develop personalized ads. Havas plans to launch a global data offering in the fourth quarter that combines the analysis used by Havas for media planning with capabilities from the creative side to help create data-driven ads.
Havas posted 1% organic revenue growth last year, with total revenue coming in at 1.77 billion euros. For the first quarter, organic revenue improved 3% and new business wins rose 66% from a year earlier to 669 million euros.
The company says its integrated approach has brought in new business. Recent notable wins for Havas include PayPal and TD Ameritrade earlier this year and Liberty Mutual late last year. Still, the shop has lost some business including some ad assignments for one of its biggest clients, Reckitt Benckiser.
“We are in a tough business. We are in an industry where to start up a media agency or a creative agency, you need a couple guys and a laptop. You don’t need much more,” Mr. Benett said. “Clients rightly so are looking for the best ideas and whether that idea comes from a small start-up in Silicon Valley or in Dumbo or in India or from a big agency or a small agency, they need to grow their business…. We need to bring them value every single day.”