Gideon Spanier
Mar 10, 2022

Yannick Bollore on Havas’ ‘momentum’, M&A and staff escaping from Ukraine

Havas CEO talks to Campaign at Vivendi's annual results when agency arm reported 10% revenue growth.

Yannick Bollore on Havas’ ‘momentum’, M&A and staff escaping from Ukraine

Havas owner Vivendi has revealed that between 30% and 40% of its 870-strong Ukrainian workforce have managed to escape the country since the “nightmare” of the Russian invasion two weeks ago.

Yannick Bollore, chairman of Vivendi and chief executive officer of Havas, said the French media giant had been sending additional money and other resources such as satellite phones to Ukraine to support its employees at Havas and sister company Gameloft, whose offices in Kharkov have been bombed.

He also revealed that Havas had been in talks to invest in a Russian agency—a long-time affiliate agency partner for Havas clients—just before the war began but he cancelled those plans this week because “there is no way we can do an investment in Russia right now”. Vivendi does not have operations or staff in Russia.

Bollore was speaking to Campaign at Vivendi’s annual financial results, which showed Havas’ revenues grew 10.4% to €2.24 billion (US$2.47 billion) in 2021—a turnaround after a 9.9% decline in 2020 during the worst of the coronavirus slump.

Profits before exceptional items (Ebita) almost doubled to €239 million—higher than 2019 levels.

Havas described 2021 as a “record” year in terms of client wins, including Asda for creative, Unilever for media in Western Europe and Pfizer and Sanofi for Havas Health & You.

In his interview, Bollore dismissed suggestions that Havas, the smallest of the big six agency groups, might invest in large-scale M&A, noting the group grew faster than French counterpart Publicis despite its rival making larger acquisitions.

How was 2021 for Havas?

"2021 looked quite different from what we expected at the end of 2020 when we did the budgeting exercise and we were still dealing with Covid-19. We expected to get back to 2019 results more in 2022.

"We’ve seen the situation improve month after month and I am proud that at the end of 2021 not only have we reached our 2019 results in terms of revenue but in terms of Ebita [profit] we are even higher than 2019, which is fantastic as we have [achieved it] one year in advance of our plans."

How have your three divisions—creative, media, healthcare—performed? For example, healthcare clients are now almost 30% of global revenue. 

"We have basically one third each [in revenue terms]. Health had a very strong performance in 2020 despite the pandemic because the pharmaceutical sector was at the forefront of what needed to be done, which was quite helpful because media and creative were hurt pretty badly, especially media.

"In 2021, the three divisions have been over-performing—they are three engines. Health continued its great progression. Creative has been doing quite well—high, single-digit growth. And media has recovered a lot. The three divisions are in line—we have the same performance. "

You had some significant media wins such as Unilever and the Iberia part of IAG in 2021. Has there been a significant change in your media business?

"We have completely reshuffled our media business three or four years ago with a new leadership, including Peter Mears globally and Paddy Affleck in the UK. The team reshuffled the product deeply.

"We have invested a lot—we haven’t done big acquisitions in media. We have really invested in our product, trying to achieve two points of differentiation. First, how do we use data—the way we analyse data to drive media. Second, driving the meaningful media experience—what we call MX—because not all media channels are the same in terms of meaningfulness and creating a more meaningful experience will drive more business [for clients].

"It is working well and has been super-convincing for new clients. But I am always more proud when we retain our clients than when we win new clients because retaining clients, they know who we are, they know how we operate, so it is great when they stay with us."

In a message to staff, you and Arnaud de Puyfontaine, the chief executive of Vivendi, talk about supporting staff in Ukraine given the “desperately tragic” situation. What are you doing?

"I was concerned with Covid but I am horrified by what’s happening in Ukraine. We have 250 people in Havas and 620 people in Gameloft, which is located in Kharkov—their buildings were bombed last week and they are not able to go back to work.

"Honestly, it’s a nightmare for the [Vivendi] group—because it’s very hard to help them in a proper way. Because the group is doing fine [at a business level], we are able to give financial support—not only continuing to pay salaries but also to give additional financial support to our people.

"We are also giving some logistics support because at some point they couldn’t even use their telephones so we have sent some satellite phones to make sure they can contact the teams and their family.

"For the past 10 days, between 30% and 40% of our teams have escaped the country to neighbouring countries—they have been welcomed by other teammates at Vivendi, Havas and Gameloft.

"Honestly, it’s a nightmare because we’re not prepared to deal with this kind of thing. But we are really doing our best and the situation is evolving day by day."

What about the situation in Russia? We have seen WPP shut down operations in Russia. 

"Vivendi and Gameloft don’t have any operations in Russia. The only operation that Havas has is an affiliation—we operate through a local partner, the ADV Group, that serves our global clients. It is not the same situation as WPP, which had a fully-owned operation.

"We had been working with our Russian partner to make an investment in Russia in the past month [before the war] but I had a meeting with them yesterday morning and told them we are putting a stop to this investment project. There is no way we can do an investment in Russia right now.

"It was a hard decision to make but it’s important that all of our support today is for Ukrainian teammates and I don’t want to commit to anything in Russia. You can make an argument for making an investment in Russia because the rouble is down a lot and valuations are down. I am responsible for making the best business decisions for the group but I don’t want to take advantage of the situation today. "

Does your relationship with your affiliate continue?

'The affiliate is Russian—it’s a Russian operation with Russian people and they continue to operate. Most of the clients are local. They are not my clients. Some of the international clients are continuing—I know some pharma companies are continuing. But it’s not my decision, it’s between clients and the local partner."

Are you giving a financial outlook for 2022? 

'We haven’t given any financial guidance. What I said to the team at the start of the year was that the momentum for the group was very good but we had three threats coming in 2022. First, inflation—it’s always easier to increase salary and compensation than to increase our fees for our clients. Second, how the logistics and shipping issues will affect some of our clients and will change some of their communications. And the third threat was the geo-political risk with Russia and China.

"Now some very bad things have happened in Russia. I have [been looking at] some different scenarios [about what can happen next]: I have a scenario where things will last for a period of time in Ukraine but we are reviewing scenarios where the conflict could become something much bigger and that will have a much bigger impact on the global economy and for Vivendi and Havas.

"If things remain the same [and the conflict does not spread further], it won’t change the positive momentum we are experiencing globally—and I don’t like to say something like that during the middle of a crisis because it’s very hard.

"I want to be prudent and I don’t like to commit to any guidance today because you don’t know what can happen. Three weeks ago, we would have had a completely different conversation." 

What were you predicting before the Ukraine war began?

"Before the war, the momentum was very positive because we won a lot of new business last year and our leaders are very committed—we have had the same executive committee since the beginning of the pandemic—and we have great talent attraction capabilities because people enjoy working at Havas."

Do you worry there is a risk of a recession in 2022?

"Not if things remain equal [and the conflict does not escalate further]. And especially not in our industry—because Covid-19 has demonstrated that there is a very important need for brands to communicate. I don’t believe brands will stop communicating."

Havas and some other agency groups were struggling to grow before the pandemic but now, Ukraine aside, things have going better for the sector. What has been happening? Have you been able to simplify and digitise and modernise more quickly? 

"It’s a conjunction of things. Covid-19 has accelerated the transformation of the sector and Covid has also proven to companies and brands that communication works. The brands that have maintained their communications budget have out-performed their peers.

"Leaving aside the impact of the disease [on health and well being], it has been a good thing because it has accelerated the transformation that needed to be done.

"We have adapted our cost structure and found productivity for our clients, we have worked more efficiently, we have organised the group into three divisions— health, creative, media—it is much simpler.

"We have launched Havas CX and Havas Market and we're developing a new practice around consultancy with a strong agency in the UK, Gate One."

There are 36,000 people in Vivendi and 20,000 in Havas. Now you have sold down your stake in Universal Music Group, Havas is a more significant part of Vivendi in terms of the revenue and its people. What next for Havas in the Vivendi family? You could do big M&A in the agency sector and stop being number six and start being number two or number one... 

"Yes, but why? Everything starts with a ‘Why?’. When you look at the organic growth of Havas and the progression of the profitability when you compare with 2019, it is exactly in line with our [bigger] peers.

"In the case of our French colleagues from Publicis, they are doing exactly the same growth—even slightly lower at 10% [versus 10.4% at Havas]. They have done bigger acquisitions and are more exposed to the US, so they should be growing faster.

"So I am not sure we are under-scale. If we were bigger, we wouldn’t grow faster because the bigger groups are not growing any faster than Havas. And, honestly, it’s been the same case for the last eight years—sometimes we are doing better, sometimes we are doing slightly lower.

"I am not sure that adding any scale will help the business. Maybe I will feel better to say I am number one instead of number six—by the way, I don’t wake up in the morning and think I am number six. I don’t really care about being number six. I think we have perfect scale.

"When I position myself from a Vivendi point of view, I think we can have a better use of our money in developing some other businesses—for instance, we have invested in the book publishing business [by buying Editis and are acquiring Hachette]. We believed in book publishing, we were under-scale.

"With the TV business with Studio Canal and Canal+, we still have some room to grow because we have grown subscribers from eight million to 24 million in five years and our competitors Netflix and Disney+ have between 150 million and 200 million subscribers.

"Just to come back on advertising, I am not sure it would change the quality of the teams and service to the clients, if we were to acquire one of our peers. From a client perspective—I am trying to be client-centric—I am not sure it would change."

So if Vivendi is investing more in other parts of the business,  what makes you excited about Havas for the future?

"What excites me at Havas is our ability to influence the world with our communications assets and our advice to clients. I was very proud when we started our Meaningful Brands Survey and when we explained to clients that if they were perceived as meaningful they would over-perform their clients [in terms of stock market performance].

"We have given lots of advice to clients to become more meaningful from a diversity and inclusion standpoint, from a climate change standpoint, generally from a CSR point view.

"I feel we are contributing to making the world a better place."

Campaign UK

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