Havas Group has made a slew of acquisitions in recent years across geographies. In India, the French-based conglomerate recently acquired PRPundit
The Vivendi-owned holding company was also one of the first legacy holding companies to take early steps towards integration with its Havas Village model. In an interaction with Campaign India, Christian de La Villehuchet, global chief integration officer, discusses what he looks for in an agency during M&A, the ongoing talent exodus in agencies, the recent mergers of WPP agencies, and what led to it, while explaining what his role as ‘global chief integration officer’ of the Group entails.
What brings you to India?
It's my sixth time in India since I've been working with Havas. And I have seen a lot of changes. I'd say three things brought me to India.
The first one is to celebrate success. It's important to celebrate success. In the four years since Rana Barua and his team took over the group, we have moved from 200 people and three agencies to 2000 people and 18 agencies.
The second reason for me being here is that we have bought a lot of agencies in the last year. So, I want to meet and interact with these agencies. I want to make sure that the agencies are well integrated. To do that, it's important that they feel part of Havas, they do business with us, and they do business around the globe, not only in India.
The third reason is to build the future. I have a fantastic relationship with Rana. We trust each other and we want to invent a fantastic group for tomorrow with even more referrals, but with a very collaborative and integrated model, where all of the agencies who have joined us start to generate revenue with each other. So it creates organic growth, adds value and strengthens relationships with our clients.
Can you enlighten us on what your role as chief integration officer entails?
The chief integration officer is the chief transformation officer of the group. To create the (Havas) Village and to make sure that we create value through the sum of all the parts, which I would say is superior to each of the parts. So it's piloting the implementation and culture and revenue building in each village.
Culture first, because you can only build revenue and growth if you first talk the same language, share the same vision, operate in the same way, and of course build systems that ensure this.
It’s also identifying centres of expertise that can have a reach which is far beyond their geographical scope. We have to try of course to not duplicate the same everywhere. So whenever we have something unique, we ensure that it is as rich as possible and goes beyond. And of course, it is directing all the M&A policy which will need to be rewritten/directed. We don't do M&A for growth. We do M&A to strengthen our offering, add a stronger proposition to the clients and be more attractive as an integrated group to the market.
Also, the role of the chief integration officer is to ensure that we are well-equipped and well-organised to capture integrated clients. Clients want fewer or unique partners to deal with. To do that, we need an organisation that offers exhaustive, collaborative and seamless organisational leadership processes to the client. Otherwise, they won't trust us.
Given how clients today are looking at different agencies for different pieces of work, how do you position Havas to a client?
Well, first of all, we are the only holding company that is ‘client-facing’. We are a brand ‘Havas’. The rest are holding companies, and they have a lot of brands, we have a unique brand. Havas Creative and Havas Media, but it's Havas. What we call the ‘One Havas’. And this is why we believe we can provide the most integrated solution to the client's business.
The clients' challenges are more and more complicated and you need more and more disciplines to tackle the challenges. We can articulate those disciplines under one name, one organisation, and one philosophy.
The philosophy is to make a meaningful difference to brands and people and to make brands meaningful. It's only by combining creativity, media, and innovation, that you can make brands meaningful, and we are uniquely organised to deliver that mission.
You’ve previously said what makes your network different is that 'we do not create ‘competing’ offerings but ‘complementary’- it’s more about collaboration, not rivalry'. Can you explain what you meant?
When you look at the competition, they first pile up very competitive offerings. WPP is reorganising, but they have many networks, and so does Publicis. We have one creative network and one media network. We don't want to duplicate what we already have but to complement what we have.
Why? Because our integration is organised to deliver value to the client, it's not only to deliver value to the shareholder. So when we acquire a company, it's to fill a gap that we don't have. It's not to add a layer to what exists already and probably our competitors have started to look into this as well because they are diminishing the number of agencies.
But how can you integrate when you have four creative networks, three media networks or two digital organisations? It's complicated. For us, it's very simple. So this is why I always say we don't have a ‘competitive’ offering, we have a ‘complementary’ offering.
What’s your take on the recent mergers at WPP and the simplification drive initiated at Group M? When it comes to moving agencies onto common operating systems, do you think it’s the way forward for legacy holding companies?
Havas has done it already, we are one brand, one mission, and one operating system, aimed to deliver a meaningful brand idea, and a meaningful media experience, and everyone works on a similar system. It's not the ‘Babel Tower’, where everybody discovers that they don't speak the same language.
I think what our competitors are doing is just necessary because clients want simplicity and speed. After all, the world is changing permanently, and smartly. So bringing great minds together is a good thing. Where I'm a bit sad for them is that in doing so, they kill fantastic identities, like VMLY&R or JWT.
The beauty of being smaller is we have to be smarter. So we said, let's not do what the others are doing, let's do something different. What if we were building an organisation that matches what the client needs? Clients need creativity, they need consistency, and they need control. So, you bring the solution where actually they have access to one leader who can organise and they potentially need less cost. If you use fewer people, it will cost less than if you use more people, because we are still mostly paid on a time-based model. We have tried out integration, because we have thought of the client, not just the stakeholders, or shareholders, but what is the right organisation for the client.
The Indian agency ecosystem is seeing plenty of start-ups where we're seeing CXOs at agencies stepping out to go independent. Given that an independent agency, Gut based in Argentina won the agency of the year at Cannes this year, do you think it's going to get more difficult to acquire agencies?
I don't think it's going to be more difficult and I think the recent period has proved it is not so difficult. The last thing we want is to turn entrepreneurs into what they did not want to become.
Another thing about our acquisitions is that we only buy a majority. They keep the minority, and they still behave as the entrepreneur. We try to find the best balance between being part of a family, buying into a mission, an organisation, belonging, and at the same time remaining what you are, because fundamentally, this is what we buy- we don't buy growth, we buy good competence and culture.
And I've seen so many acquisitions done the wrong way. Because you just buy the growth, eliminate the leadership, and kill the culture. Our proposition is very attractive because we say to the entrepreneur, ‘join us and you will remain an entrepreneur’. It's a company of entrepreneurs who belong to an entrepreneur. And no one else can say that, because all our competitors belong to the market, while we belong 100% to Vivendi.
Having said that, the reality is clients are consolidating into fewer companies than before. So if you're not big enough, you might disappear off the radar, which is why they find the best way of remaining where they are but at the same time being part of a bigger ecosystem where they have a chance to win the business. We have 200 clients, so they will also have access to these 200 clients.
What are three things you look for while making an acquisition? Your most recent acquisition in India was PR Pundit. What was it that attracted you to the agency?
First, the leadership and in leadership, a culture fit. Are these people going to be able to work with us, are we going to be able to work with them? Our most successful companies in Havas are the companies we've acquired, where there are still minority shareholders. The second thing is consistency of performance. We're very nervous when the performance is inconsistent. The third is a future-facing discipline, a discipline in which the clients will invest more in their need to not only communicate but to connect with their audience. So it's not just about communication. It is also about experience and entertainment, which are new ways to connect with the audience, sometimes outside of the advertising playing field.
Coming to PR Pundit, first of all, we needed to be in the discipline of PR, it's super important. Secondly, we loved the reputation, the work, and the leadership. In Archana (Jain), we have a fantastic leader with a fantastic track record. And we needed to complete our offering once again- it's a horizontal integration, not vertical integration. PR and especially, social PR in today’s world is vital. It's a competence we didn't have at scale.
You've previously stated that: ‘Attracting and retaining talent is undoubtedly the most important challenge in the communication industry right now. Our business is solely about talent’. How do you plan to overcome that challenge today when we are seeing a talent crisis of sorts with an exodus of talent everywhere?
I'm not saying it doesn't exist. First of all, I'm also the chairperson of the Association of Advertising Agencies in Europe. And it's a big topic for us. There is a paradox between what we stand for and what we can do as an industry - and I'm talking as an industry, not just Havas and the perception of the young generation. We can make the world a better place, the world is in a difficult situation. There are a lot of environmental and geopolitical insecurities. There is a lot of fear and a lot of anxiety, particularly with the young. We are the only industry that can influence the agenda of the advertisers, by helping them define the purpose, put together a set of actions around this purpose, make the world a better place, and at the same time produce work that changes the behaviours of the consumers. We are the only industry that can influence the advertisers who have a critical role to play in changing the world and influence the people who ultimately behave by action and talk.
However, the young generation doesn't believe that sometimes, they believe we are at the service of moneymakers and we are following what they asked us to do. That's not the reality of what we do. So we need to educate the young generation, to promote this idea that if they want to contribute and we know they want to contribute to changing the world, then they should join us. And also, it's an industry where it's fun, it's exciting, it's about ideas, it's about interacting with each other, it's about creating stuff. So if we educate people that they are in the right industry, and if they understand that, I think we can win this.
You have also said that 'talent accounts for 75% of your costs and is 100% of your value'. The perception here in India is that talent within agencies, and specifically at the mid to entry levels is underpaid. How can this be corrected?
By being better paid by the client. The point is, that we are selling value, not time, and we are selling solutions, not services. I think we still need to educate clients as to what the value of our industry is and how it contributes to their business. We'll be having the Effectiveness Europe Award ceremony in two weeks in Brussels. We never had in the history of the Effies so many entries win an award. It means that effectiveness has not been so high on the agenda. But the remuneration of the agency has never been so low. How is it acceptable?
We need to fight ‘how can we pay better’ by being paid better, and it should be an industry fight because we are creating value every day for the business, particularly in the changing landscape where we are creating more and more product ideas. In the digital world, service ideas. We're not just creating communication. So this is a fight honestly, as an industry leader and not just for Havas.
You've held various positions over the last 30 years within the group - which one has been the most challenging?
When I was the CEO of Havas Creative, Europe from 2010 to 2016. Why? Because between 2010 and 2016 was the worst economic period in Europe. To put it in football parlance, I had to be a defender, when I am more of a striker.
Secondly, there is a fundamental difference between being a country leader and being a regional leader. When you're a country leader, it's like you're the pilot of a plane, you know everything, you know your client, you know your staff, and you know your market. As against when you’re a regional leader with 19 markets and 49 operations, you're in the control tower, not in the cockpit or plane. So you don't have the same level of control. And when you have been a striker, that is very challenging.
Now too, of course, it is a global role but it's super exhilarating. We are in 100 countries, we have 600 companies, it's massive. It's a 2.5 billion group. But I am so convinced that what we do, what we build is the right model, that it's less challenging even if it's a much bigger responsibility because there is a wind of entrepreneurship at Havas which fascinates me every day!