Feature

Havas - the road to recovery

After hitting rock bottom, has Havas now got the vision to compete in the communications big league? Claire Beale investigates.

As well as being a window on the corporate soul, Havas' new company brochure, People Inside, is a palmist's heaven. Key executives are each portrayed by a close-up of their hand.

It's an odd device, but let's go with it. Although no palm reader, I can conjecture several things from these photos. First, Mr Vincent Bollore, Havas' saviour, has a strong Breton hand but soft and smooth, built for business rather than apple-growing. Fernando Rodes Vila has the long slender fingers and fragile wrist of the aesthete, the thinker, the humanist. As the man at the war-front of Havas' battle back to health, it's perhaps a surprising diagnosis, but then Rodes is far from your typical holding company apparatchik.

Rodes is generally considered one of the nicest, most decent men in advertising. OK, there's not much competition for the most-likeable-holding-company-chief prize, but Rodes seems to combine a business vigour with a genuine warmth and consideration. Scion of an advertising dynasty in Spain, Rodes wears his Catalan credentials with honour. Yet he's spent the best part of the past year imbibing the brew of Havas' Suresnes headquarters where there are ambitious plans to revive the 170-year-old Havas empire. Rodes intends to make Havas "the most attractive and most interesting group in our industry".

As unquestionably, on the basis of size and breadth, the weakest of the world's biggest holding companies (behind WPP, Omnicom, Publicis Groupe, Interpublic Group), this is bold thinking. Havas turned in only 0.8 per cent actual growth last year, on revenues of EUR1,472 million. Yet 2006 saw its first rise in annual revenue since 2001 and is being seen by analysts as an early sign that Bollore's arrival and the new management line-up have shocked Havas back to life.

A quick run through of how Havas came to its knees: Once neck-and-neck with Gallic rival Publicis, a series of high-profile account losses and misguided acquisitions (particularly in the US) had seen Havas shrink to about a third of the size of its French foe. The $500 million acquisition of the Washington Redskins was typical, but a muddled bid for Grey Global was probably the nadir of the group's ill-conceived development strategy. In fact, Havas spent EUR3.7 billion on acquisitions between 1998 and 2001; you could have bought a controlling interest in Omnicom for that. And Havas' market capitalisation didn't move, before or after. By 2001, margins were a shameful 3.7 per cent.

So the bottom was rocked, until Bollore and his cavalry charged in in 2005. Bollore has a 29 per cent stake, and has brought with him not only a fearsome reputation as a business buccaneer (and potential corporate raider), but - crucially - personal pockets deeper than any of the other holding company chiefs could dream of: his fortune is estimated at £1.6 billion. Rodes is very clear on the advantage that Bollore and his money give Havas: "Our alliance makes us incredibly powerful."

And far from being a sell-up merchant, Bollore himself insists that he's in it for the long haul. He has committed himself to the business until 2022, not just for the sake of the company, he says, but for his family: "It's my heritage. For my son and daughters, it's more sexy to have media and comms in the group than only paper and oil (Bollore Group's other interests)."

Rodes picks up this theme. Havas, he says, has a long-term strategy for growth that revolves around three tenets: integration, innovation and entrepreneurship. It's integration where he believes Havas' main chance lies. The reasoning goes something like this: whereas other groups have competing agencies, Havas has a simpler structure, a single global creative network, Euro RSCG (Arnold, Havas' other significant creative brand, has 75 per cent of its business in America), a single global media network (Media Planning Group), and burgeoning though anonymous specialist networks such as B6 (entertainment) and Havas Sports.

But integration works best when groups can offer clients an array of best-in-class agencies to work coherently with. How does Havas stack up? Well, Euro may just be turning a corner. It scooped the best agency network gong for 2006 from Campaign and Advertising Age, clear evidence, Rodes says, that Euro's vital creative credentials and new-business acumen are a match for any other agency.

David Jones (stubby fingers, crisp cuffs, Euro's global chief) is also sure that Euro has all the ingredients in place. "The thing I was so excited about when I got the global CEO gig was that I didn't have to change very much. The reality of what we are is actually terrific, the problem is perception."

Of course, like all networks, Euro has spikes of creative excellence pinpricking seas of mediocrity. Paris, Germany and Milan are among the hotspots, but the network has seen off competition from the likes of Crispin Porter & Bogusky, Berlin Cameron and DDB Chicago in the last year or so, and Jaguar, Reckitt Benckiser, Sanofi, Exxon are network triumphs.

Hence the "network of the year" gongs. In fact, the accolades forced a stay of execution for the Euro name. There has been much internal debate about whether the network should get a spit and polish under a new moniker, but the marketing boost provided by the awards meant the Euro name is here to stay for some time yet.

Name change or no, Euro can no longer afford to be simply a creative agency, and - following the theme of integration to its logical conclusion - is now considering how to answer the issue of combining media and creativity once again under a single roof.

Its sister media agency is Media Planning Group - the company Rodes' father launched in Spain in the late 70s, now run by his brother, Alfonso (scarred palm, small thumb). In media muscle, MPG is an also-ran behind the giants Group M and OMG, but Rodes is confident MPG can find an edge in strategy and media thinking - evidence of that "innovation" tenet in action. "MPG is still a young agency, but it's strong, growing faster than anyone else. We have demonstrated year after year that size is not an issue. It's not about size, it's about strength; we have learned to bring about added value through intelligence."

For all the chutzpah, how Havas will bring its different disciplines together coherently is moot. Rodes says that every agency within the Havas family must have a process that facilitates integration, but going the whole full-service hog is only right for certain agencies in certain markets. In France, most of Havas' independent agencies have been grouped together and the Euro RSCG team has launched a new integrated agency Compagnie 360; in Spain Euro and MPG are together launching a new agency, Wonderland, owned 50/50, to offer integrated solutions. The most likely plan in the UK is to have a media operation within the creative agency, but powered by MPG.

Rodes is very clear, though, that by the end of this year, Havas intends to be "the most integrated group in the world". Saying is, of course, easier than doing, but it does seem that coming from behind offers some clear advantages when it comes to smashing barriers; no-one has much to lose.

One preoccupation is the prospect of integrating with Aegis. It's something Bollore has been driving; he owns an 29 per cent stake in the media and research giant but has famously tried and failed four times to win a seat on the Aegis board. "I believe Aegis and Havas are two companies which could be in a very win-win agreement to work together," Bollore says. "In Aegis, a big number of people would prefer to be with Havas because it's a smaller group. If it fiancees with Publicis or WPP, it will be swallowed up. The pressure inside Aegis and our financial stability means that one day we'll make a good marriage with Aegis."

Rodes agrees: "Aegis came to us many times because they saw the logic of an alliance. The paradox is that now we have a common shareholder we cannot agree." But Bollore is determined to keep gnawing away at this one. "I can't believe they can remain in such an archaic position for such a long time. But as it's a love affair, we don't want to be aggressive. I will keep trying until 2022 and after that maybe my successor will be tougher than I am."

Despite the flirtation with Aegis, Rodes says the focus is organic growth. The group did make a serious play for the UK independent Clemmow Hornby Inge, which finally sold a 49 per cent stake to rival WPP, but Rodes says the interest in CHI was opportunistic. "We're not looking for another acquisition; not everyone in Havas was enthusiastic about the CHI offer."

For Rodes, organic growth will rely heavily on that third tenet: entrepreneurship. "Havas should have a good balance between entrepreneurship and rigour. Rigour is easy; the difficult thing is to have a group of people who have the initiative to grow without being told when or how." To this end Havas has pursued a vigorous hiring strategy to improve management: Mark Hunter joined as the ECD in London from W&K Amsterdam; Jader Rosetto (a 34-year-old with 35 Cannes Lions under his belt) joined as the ECD of Euro RSCG Brazil; in North America, the former Coca-Cola creative chief Esther Lee joined as CEO and president of global brands.

And 20 per cent of Havas shares are now designated for the group's management, who can buy into the company under a new warranty initiative that Rodes is confident "aligns the interests of our managers with those of our shareholders". The warrants have been over-subscribed. "It proves that our people want to be part of the success of the group, connecting their heads, hearts and wallets."

The analysts are certainly buying it - so far, at least. "I sense a turnaround," Lorna Tilbian of Numis says. "I think it's the combination of Bollore's financial acumen, Fernando's prudent pragmatism and Jones' operational flair that is largely behind it."

So the Havas stage is set and there's only one script. "2007 is the take-off year," Rodes says confidently. Then with a modest sweep of his hand, he adds a characteristic footnote: "But we do have a long way to go before we achieve our ambitions."

HAVAS HISTORY

1835: Charles-Louis Havas founds France's first press agency.

1920: Havas merges with Societe Generale d'Annonces.

1968: Havas Conseil is created to house the group's advertising and media interests.

1975: Havas Conseil changes its name to Eurocom.

1992: Eurocom acquires the French advertising group RSCG, leading to the launch of the Euro RSCG Worldwide advertising network.

1994: Euro RSCG does a deal with Young & Rubicam to set up a joint venture media operation through Y&R's Mediapolis.

1996: Eurocom changes its name to Havas Advertising. Its largest division, Euro RSCG, moves its headquarters to New York.

1999: Havas is acquired by Vivendi, which rapidly divests itself of Havas Advertising.

1999: Mediapolis and Media Planning, a Spanish planning and buying agency, are merged to form Media Planning Group. Havas acquires 45 per cent of the unit, taking full control in 2001.

2000: Havas builds its DM credentials with the acquisition of Snyder Communications, bringing in Arnold Communications, Brann Worldwide and Bounty.

2004: Corporate raider Vincent Bollore begins to build his stake in Havas.

2005: Bollore wins four board seats and seizes control of the company. Chairman and chief executive Alain de Pouzilhac is deposed and Bollore becomes chairman.

2006: Fernando Rodes Vila, son of the founder of MPG, is named the chief executive of Havas.

THE MAN HEALING HAVAS
Name: Fernando Rodes Vila
Age: 46
Lives: Paris/Barcelona
Family: One wife, four children
Greatest extravagance: I like simple things
Personal mantra: No comment
Professional mantra: Teamwork brings results
Favourite ad: Air France
Greatest media innovation: Social networks
Most admired person in the industry: It's a long list
What three things do you always carry with you? My passport, a book
(always the same), my backpack
What car do you drive? Citroen

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