In an interview with Les Echos, Havas CEO Yannick Bolloré describes the challenges facing his group. He explains why he has no fear of self-cannibalization in the media buying arena and lays out the synergies with Vivendi, whose Supervisory Board he chairs.
Source: Les Echos
“The advertising world is under challenge, and we need to find the right stories to reach out and touch people.”
You were appointed as CEO of Havas in 2013: what would you say you have learned?
To set the context at that time, three weeks after I took over as CEO of Havas, plans were announced for a merger between Publicis and Omnicom. Size seemed to be the absolute priority; you had to be the biggest communications group possible. Havas weighed in at a mere €1.5 billion and we were being pushed towards selling. That was not what I had in mind. I decided instead that we should integrate our brands and businesses, something no one was doing back then, and put digital at the very heart of our strategy while others were isolating it in a separate division. The results have been most satisfactory: we now have 20,000 people on our strength compared to 15,000 back then. The other major step over the period was joining Vivendi in 2017. With fresh competition emerging on two fronts, from the tech giants and from the major consulting groups, we concluded that we had two issues to contend with. The first of these was size, not in terms of advertising itself but relative to US platforms like Google and Facebook, and to their Chinese counterparts such as Tencent, Alibaba or Baidu. The second issue was content, which is now key to any communications strategy.
What do you gain from having the support of Vivendi?
Becoming part of this major group has given us greater influence and negotiating power with the platforms, for one thing. Having Universal Music behind you puts you in a much stronger position when you are talking to YouTube. Or Gameloft, when talking video games with Apple, for example. And in a saturated media landscape, having access to the Vivendi ecosystem content enables us to craft standout messages for our clients. The advertising world is under challenge, and we need to find the right stories to reach out and touch people.
What concrete synergies exist between Vivendi and Havas?
The benefits flow both ways. Havas brings to Vivendi its knowledge of consumers and its expertise in data analysis. Working with the other Vivendi entities, we design original communications strategies. For the city of Dubai, for example, we developed an approach using the city as the backdrop for the video clip of ‘Thunder’, a track by Universal Music band Imagine Dragons. For Carrefour, we staged a music festival in Spain. We worked with Gameloft from the early design stages of the Asphalt game on placing messages from a mobile operator. And this is just the beginning.
Is the low point of 2017 now behind you?
2017 was a turning point for Havas. Advertisers cut back their communications spending. Leading groups began in-housing their communications, and the big consultancies emerged as competitors. We had to drop our prices, boost our productivity and speed up the pace of digitalization. Results improved with every quarter, culminating in reported organic growth of 4.8% in the final quarter. The hardest part is now behind us. We have weathered the storm and can advance with confidence into 2019. Our strategy is founded on four competitive advantages: the Havas Village model, still unrivalled, that brings all our teams together under a single roof and makes us more agile and better equipped to serve our clients; our talent recruitment and retention programs; the support we have enjoyed from Vivendi over the past eighteen months and, lastly, our expertise in “meaningfulness”, the ability to give meaning to the brands we work with, helping them to offer consumers something more than just a product.
Are you feeling the pressure of competition from consultancies like Accenture, which are increasingly moving into Havas territory?
They are only marginal at present, very rarely making the shortlist of successful bidders. That could change if they were to start buying up specialist operators in the field. It would make financial sense, as these communications groups are trading at lower valuation multiples than the big consultancies. The problem is the cultural barrier that exists: their talents and ours have very different profiles. If I were a consultancy, I wouldn’t be looking to acquire an agency and vice versa. Anyway, clients know exactly why they call Havas and not McKinsey or the opposite.
“Our aim is to evolve away from strict media buying towards an advisory role.”
Club Med, a client of Havas Media, has just brought its programmatic media buying back in-house, renting tools from Google. So you have effectively handed over some of your margin to them…
Our aim is to evolve away from strict media buying towards an advisory role. We are actually assisting Club Med with this approach, in particular by sending some of our experts over to provide training in programmatic buying. This new triangular configuration (Google/Club Med/Havas Media, Ed.) certainly means less revenue for us in the short term, but I believe this is the soundest and most sustainable solution.
How would you define this new model?
Once again, we have opted to support our clients, even at the expense of a certain amount of self-cannibalization.
We gave much thought to the example of Kodak, which failed to successfully navigate the transition to digital photography, despite having invented it. As we see it, media buying, although still an enormously significant business worth around €7 billion in 2018, is inevitably destined to evolve towards consulting, where the margins are higher. We are developing our business model towards more value and less volume in buying, which should enable us to move towards an operating margin of 15%. We also offer evaluation services that measure the audience actually reached by online campaigns. This is especially important given that digital advertising fraud has become the second biggest source of income for organized crime.
“We are developing our business model towards more value and less volume in buying.”
Competition from pure players in various communications sectors is also intensifying…
Havas was ahead of the game. Six years ago, we created a pure player in social media: Socialyse. As far back as 2005, we launched Affiperf, our programmatic pure player. Only Havas and WPP were so swift to react. And our AMO network, specializing in influence and financial PR, was named world number one by deal count in 2018.
How are you currently dealing with the rising tide of allegations of sexual harassment in a number of major groups?
It’s quite simple: zero tolerance. We had a case of harassment in the US last year, and we immediately parted company with the manager concerned.