Close-Up: Newsmaker - Havas Media sets sights on AIS global potential

campaignlive.co.uk, Friday, 16 May 2008 12:00AM

Havas plans to increase its stake to a majority share and take the digital and DM specialist worldwide. Kunal Dutta reports.

We're not on a buying spree," a spokeswoman for Havas Media insists. However, after recent acquisition activity, it's hard not to equate the French holding company with a sleeping giant that has woken up just in time for the January sales.

It started the year completing a £20 million acquisition of BLM Media, which became part of its second-string Arena network. Then, last month, it bought Cake, the brand entertainment specialist, for £12 million.

Barely had the ink dried on the contract before its sights were set on Archibald Ingall Stretton. Last week, Havas announced plans to increase its 40 per cent stake in the digital and DM company into a majority share, unroll it globally as an international network and, through its links with the Havas-owned Media Contacts, add a media capability.

Many of these recent purchases have caught observers by surprise, particularly for a holding company that traditionally prides itself on entrepreneurialism and organic growth rather than the alluring flash of a chequebook.

However, activity in the first quarter of 2008 points to two clear objectives. First, the need for Havas properly to have a UK presence. Second, to identify gaps in its global offering, and fill them with companies that offer the suitable blend of skills, similar culture and international growth ambitions.

AIS, which is ten years old this year, has had Havas backing right from the start. But why is it the chosen agency to represent Havas' digital ambitions globally, especially when Latitude, iglue and Mobext already sit in its locker?

Alfonso Rodes Vila, the chief executive of MPG, says its direct marketing expertise and the minority stake it owned in AIS was key in the decision. By aligning the company closely alongside Media Contacts, Havas Digital's interactive media network, it believes an international offering of media with creative thinking across direct and digital is a compelling global proposition to sit alongside MPG.

He also believes that this will set up Havas for the future. "Whatever happens with the state of the global economy, clients are increasingly likely to demand campaigns where effectiveness and return on investment can be clearly measured," he says. "At the same time, direct and digital are converging. We have digital expertise, but need to develop our skills in direct marketing to truly be part of that change."

Havas has identified the US, Mexico, Spain and Portugal as the markets where this demand is greatest, and plans to open offices in these countries under the AIS name by the end of the year. Offices across North America, Latin America, Australia and Asia will follow later.

Stuart Archibald, the managing partner of AIS, will drive international expansion while holding down his duties running the O2 account. Hiring is already underway, and the setting-up of new offices will be overseen by the Havas companies Media Contacts and MPG.

Rodes is determined that these are built from the ground up wherever possible, rather than direct takeovers. "The right culture comes from having the right balance between overall network and local market involvement," he says.

Unlike Cake and the BLM acquisitions, Rodes insists there wasn't a "Eureka" moment when the idea came to fruition. Serious talks were ongoing for the past two years, but it's hard to think that Havas would not have taken a 40 per cent stake in AIS in 1998 if it had not seen growth potential even back then.

"Direct and digital marketing are fusing closer together. My feeling is that everything, including direct marketing and offline media, is going to become digital in a few years," Rodes says.

So why launch the network now? "We saw Media Contacts was growing globally, but needed direct marketing expertise, which we have in our group. At the same time, there was a feeling that we should restructure our efforts in the UK."

Archibald also points to the mutual benefits. "Havas recognised an increasing need to align creative with their media offering," he says. "They get to bring their media expertise to our table, while we get to fulfil our global expansion aspirations."

AIS is one of the few truly integrated agencies that has not been quickly typecast as either a direct or digital specialist. Instead the 140-strong agency, which last year declared an income of £9.2 million, has been credited for its creative solutions that run across both.

"All our work yin-and-yangs between direct and digital," Archibald says. "I couldn't tell you anymore where one stops and the other starts."

Under Steve Stretton, its creative director, the agency has been able to dip in and out of both disciplines, creating a number of memorable campaigns last year, including the "stare out" viral campaign for O2 ahead of the Rugby World Cup, and Skoda's launch of the Fabia, which comprised online ads, a microsite and a direct marketing campaign, which won a Campaign Direct Award.

Some thought picking up the O2 business in 2005 was a lucky scoop, but the agency has been quick to respond to this criticism, winning the £16 million Abbey credit card business in 2006, and, more recently, the direct and digital account for EDF energy.

It has made no secret of its global expansion plans, and, as it nears its tenth birthday, the founders are still very much on board. Also, the fun and inviting culture that AIS has fostered is well known - so much so that the invite for their last Christmas party featured the mothers of the three founders.

But this is exactly why such an accelerated global growth raises serious issues, not least how you can maintain this intimate culture while starting out simultaneously in so many regions.

"Even if there is a demand for cross-media thinking, aligning Media Contacts and AIS closer together around the world is going to provide no end of teething problems. This needs to be properly piloted in the UK first before rolling out globally," the president of one agency says.

The nature of the relationship between Media Contacts and AIS is still fuzzy. While leadership of the new offices is likely to include a mix of Havas, Media Contacts and AIS management, thought will need to be given to how this works in each one. Rodes says decisions will be taken "market-by-market". In some regions, both will work out of the same office. Others may have mixed teams in different locations.

It is this that Wayne Arnold, the chief executive of Profero, warns that AIS will need to be mindful of: "For media and creative to truly work together, it needs to be in your DNA from the start. Despite the parent company, Media Contacts and AIS are two different cultures, and the real challenge will be to get them working cohesively so that work is developed together."

All of this raises a wider question: is this just a prelude to a full-scale international merger between Media Contacts and AIS? "Not for the time being. At the moment, everything sits under the umbrella of Havas Digital," Rodes says.

So, within months AIS will be answerable to a parent company as it looks to widen the scope of its offering and set up all over the world. It's a tall order, which especially risks AIS spreading itself too thinly, across too many fronts.

Archibald isn't deterred by the challenge, though. "This has got to remain a family company that intermingles together and retains its staff," he says. "My vision is to have a network that can plan in Sydney, develop creative in Mexico and share ideas across Europe."

This article was first published on campaignlive.co.uk

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