French agency group Havas will have more flexibility in its strategy after its proposed spin-off from parent company Vivendi, CEO and Chairman Yannick Bolloré said ahead of its Capital Markets Day today, and will pursue strategic acquisitions in order to drive continued growth.
Increased M&A will form part of Havas’s ‘Converged’ strategy, in which the agency group will look to drive greater integration between different parts of the business. This will include rolling out a new agency-wide ‘operating system’, built upon its existing ‘Converged’ media tool, as well as investing €400 million over the next four years in technology, data, and generative AI.
The Converged strategy is already being implemented across the group. But Bolloré believes that spinning off Havas from Vivendi “would allow the group to more swiftly pursue innovation efforts and targeted acquisitions thanks to increased agility”. The ability to fund acquisitions partly through shares once Havas is a standalone company will also enable it to target bigger companies, he told the FT.
The group aims to generate contributions to net revenues from new acquisitions averaging between €40 million and €50 million per year over the medium term. Bolloré didn’t name any specific targets, though given Havas’s commitment to investment in tech, data, and generative AI, it’s likely these would be areas of interest.
Point of differentiation
The Converged strategy is designed to help drive long-term growth for the French group, at a time when performance has been flagging. Net revenues across the first nine months of the year were down 0.8 percent on an organic basis according to Havas’s most recent earnings (though the company attributes this primarily to the loss of a major US client).
The challenge for Havas, as for all the major agency groups, is finding a true point of differentiation. A lot of the core principles of the Converged strategy – simplifying internal structures, rolling out a cross-agency ‘operating system’, bringing more integration between media and creative, and investing in tech, data, and generative AI – are also being adopted by Havas’s major competitors.
This is where M&A can be key. The right acquisition can provide an agency group with capabilities which can’t be easily replicated by its rivals. Publicis and Omnicom, the two top performers among the major holding groups in recent quarters, have pointed to their acquisitions (such as Epsilon and CitrusAd for the former, and Flywheel for the latter) as key to their success.
Havas will hope to find its own killer acquisition to help drive an advantage in its data and/or generative AI offering – and any moves which allow it to go after a wider range of potential targets will help boost this strategy.
