Yannick Bolloré on leading Havas until 2035, break-up ‘rationale’ and staff pay

Yannick Bolloré has insisted Havas can thrive as a standalone group on the stock market if plans proceed to spin it off from French parent company Vivendi – and a future sale or merger with another agency group is not the “rationale” for the break-up.

Bolloré, the chairman and chief executive of Havas since 2013, rejected the suggestion that Vivendi’s acquisition of Havas in 2017 had been a strategic mistake and maintained the only reason for the corporate break-up now is the “conglomerate discount”  that has weighed on Vivendi’s valuation.

Speaking at Vivendi’s annual results, he told Campaign that he has “committed to remain running Havas at least until 2035”, when the agency group marks its 200th anniversary. That is an unusually long time horizon that would need shareholder approval but Bolloré Groupe, the family investment firm, wields significant power with 30% of the voting rights.

Havas was one of the top global agency performers in terms of organic revenue growth, with a 4.4% increase in 2023, but its profit margin of 11.5% (up from 11% a year earlier) was among the lowest.

Bolloré cited two potential factors affecting profitability: Havas’ relatively low geographical exposure to the United States, where margin tends to be highest, and staff pay. “Maybe we are paying our people too well, which is not a bad thing,” he said, although he conceded he did not have “evidence” to prove the case.

The Vivendi annual report showed its salary bill was €2.32bn (£2bn) for 39,200 staff, including around 23,000 at Havas. On that basis, average pay was likely to be in the region of €59,000 or about £50,000 a year.

Bolloré earned €3.1m as chairman and CEO of Havas, plus €400,000 as chair of the supervisory board of Vivendi.

Brian Wieser, an analyst and founder of Madison & Wall, said Havas’ margin was probably affected by the fact it is “small in the US where they would arguably get a bigger margin” and “they operate a legacy creative network” that will “still have infrastructure costs that are high”.

During the wide-ranging interview, Bolloré also discussed how Havas had been the “most acquisitive” agency group, buying into ten agencies, including Uncommon Creative Studio, in 2023. Campaign has reported Havas could pay up to £112m for the London-based agency if the founders hit all of their targets over six years. “I hope they will make it,” Bolloré said.

Here is a transcript of the interview:

Campaign: Let's start with 2023 and you had quite good organic growth. How would you describe 2023 overall?

First, I'm very pleased with the results because, as I told you at the Q3 results, I was not expecting such a great organic growth [rate] at the start of the year because of macro-economic uncertainties and geo-political instabilities. We had a very positive organic growth of 4.4%.

Second, when I compare us with our peers, I’m even more satisfied because we are almost the best in the industry – just after Publicis and better than Omnicom and much better than IPG or WPP, and not mentioning Dentsu, which decreased.

What can you tell us about the creative, media and health divisions and can you give us a growth figure for each of them?

The three business units grew at the same level – more or less. Media had a very strong year with great wins such as Shell. I’m very happy with health results – they secured all of the historical clients [that went up for pitch] and they won the consolidation pitch for Johnson & Johnson. And on the creative side, 2023 got off to a very good start with Danone. We also produced a film with Havas New York for the Super Bowl [this year] with Jeremy Renner. We don't disclose client satisfaction [scores], but it's great. People engagement is very good as well. So it's been a fantastic year and we enter 2024 with serenity.

What is your forecast for 2024?

It's hard to say. I'm always very pessimistic when it comes to a forecast. And we still have the same uncertainty – both in terms of macro-economics and geo-politics. But I hope that 2024 will look like 2023 – maybe not as strong but I would say with the same kind of [positive growth] trend.

The year is off to a good start. We already made an important acquisition in the UK with a B2B PR agency called Ledger Bennett. We have some other acquisitions in the pipe and we have a strong new-business pipeline.

We were all together with the top management in Miami at the end of January to discuss the strategy for the next three to four years and the level of talent at the senior leadership position that Havas has has never been so strong. I feel confident. We have a very good team.

On your revenue growth, you are near the top of the table versus peers, but not on profit margin. So explain to us why your margin is lower. You may have improved it but it's still low and this is very important when you're planning for Havas to be a standalone business.

We improved our margin in 2023 compared to the previous year and we have a plan to continue to improve this margin.

There are two reasons why our margin may be lower than our peers. First, maybe we are less exposed to the US – it's only 38% of our revenue – and the US is the market with the highest margin. Second, maybe we are paying our people too well, which is not a bad thing.

Do you have evidence that you're paying them higher than rivals?

No, I don’t have any kind of evidence.

Can you give us an update on the plan for Vivendi to separate the businesses and the important unit for readers of Campaign is Havas? Where are we on the timetable?

We announced in December last year that we were studying the feasibility of splitting the company into four entities. For context, it was in order to reduce the very significant [share price] discount of [being a] conglomerate that Vivendi has been suffering from. This plan has been very well received by investors because the stock price went up 15% since the announcement.

And we announced that if we were to implement that plan, the window in terms of timing would take between 12 to 18 months. So if it happens, it will take place between December 2024 and June 2025.

We are still working on the feasibility. It raises lots of complex questions, as you can imagine, with impact and consequences on HR, tax, financing and legal, so we are still addressing all of those points.

The intention is that Havas would become a quoted company again in its own right on the stock market. So was it a mistake in 2017 for Bolloré Groupe to sell Havas to Vivendi? Because it seems strange to reverse the logic of the deal you did in 2017 – unless it’s just because of the conglomerate discount?

It's only because of the conglomerate discount [that we are now considering spinning off Havas]. For Vivendi, acquiring Havas has been a great opportunity. Havas is very resilient in terms of cashflow. It has developed synergies with other businesses such as Canal+ and even Universal Music. So I think it’s been a good acquisition for Vivendi.

The problem that Vivendi is facing today is clearly the conglomerate discount. We believe that shareholders today – and more today than six or seven years ago – want to have pure players [focused on one business], more than conglomerates.

If you look at the discount of conglomerates, it’s not just at Vivendi. Lots of different groups are contemplating splitting their company. So I think it's more a market trend than any other thing.

Even if it's still a [feasability] study at this point, I still believe it's a project that would make sense for investors, stakeholders, employees and all of our entities. It will give them new opportunities to invest. And I believe that Havas will continue to grow and to appreciate [in value] in the years to come.

And you will stay running Havas?

I have committed to remain running Havas at least until 2035, which will mark the 200th anniversary of the group.

Havas is the number six agency holding company and maybe even number seven behind Accenture Song because everyone is smaller than Accenture. When Havas became part of Vivendi, suddenly you became part of a much larger business. Even now Vivendi has a €10bn valuation [after selling a majority stake in Universal Music Group] but Havas is going to become quite a small business when it is spun off. So does this split plan also allow the possibility that you could merge Havas with another agency group?

No. This is not the plan. I've heard some people saying: "Will you sell Havas?" If we wanted to sell Havas, it would be easier to sell Havas while it is not listed than when it would be listed. So there is no rationale behind this idea [that Havas should merge with another holding company].

I still believe that Havas can do very well on its own and the results of 2022 and 2023 have proved my point. Even if Havas is not the biggest player in the industry, I believe it is one of the strongest, if not the strongest. So I believe that investors that want to have growth and to invest in a company with a bright future should really consider Havas.

You've made 10 acquisitions in 2023 and you say you've been the most acquisitive, although probably the total outlay has not been that large in terms of the amount of money you spent [compared with Omnicom buying Flywheel or Dentsu acquiring Tag]. These are all bolt-ons for Havas, they’re not transformative acquisitions. So why buy lots of little businesses?

It’s true that they are bolt-on acquisitions. Some of them are more sizeable than others and what we want is companies that will integrate into Havas and complement Havas, whether it is from an expertise point of view or geographical standpoint. It is transforming Havas – maybe not in terms of scale but in terms of access to talent and expertise.

Do you worry about artificial intelligence? There is some commentary that agencies, like a lot of businesses, are going to struggle because some of their services can be created using AI.

I am very positive and bullish on AI. I think it's going to be a great help for agencies. I believe, of course, that agencies not using AI will be replaced by agencies using AI because it's completely changing the productivity, the efficiencies, the effectiveness [of the work]. I don't see a real threat in terms of losing business because some of our clients would integrate their advertising or communication capabilities [in-house as a result of AI].

I still believe that we are delivering a service of professionals working together that is unique and will be very hard to replicate inside a client or a different kind of organisation. Because it's a combination of strategy and creativity – a mix of left and right brain – and I still believe that agencies are the best places to use AI for the best interest of their clients.

The best analogy that I have found is, like the invention of the camera at the beginning of the 20th century. It hasn't killed all the painters, it has only killed the average painters. Where you are right is I would say for an average agency, not producing great work, it's going to be hard because you can really internalise this kind of work [as a client by using AI in-house].

With the best agencies in the world, the most strategic, the most creative, with the best media planners, it would be very hard to use software to replace your agency – I don't believe it works in real life.

What’s the status of the B Corp membership of Havas agencies? I believe four Havas agencies have B Corp membership. B Lab said in January that it was conducting an investigation after receiving a number of complaints [after Havas won Shell].

I don't have any updates. I know they are investigating and we are fully cooperating, of course.

Has it made you think differently about how you will handle these types of clients in controversial sectors? You talked before about the importance of clients being on a transition.

I still think the same. I believe Havas’ mission is to make a meaningful difference to brands, businesses and people. Before working with Shell or this type of client, we had a discussion with our executive committee team and we all agreed that it was best, in order to make a really meaningful difference, to work with any type of clients – as long as they're engaging in a meaningful transition journey. And I still believe the most effective change comes from within.

You have the Havas Village model with different agency disciplines under one roof. How much are clients asking for more integration? We hear mixed views with some clients saying they need it all joined up rather than having different agencies for creative, health and so on.

Clearly the trend for the past ten years has been for more consolidation [of agency services]. There are so many specialisms now – not just media and creative like 20 years ago. You have social, mobile, search, PR, you have everything. You have clients operating in multiple countries and multiple brands. So we see more and more consolidation pitches and it’s very important to thrive in this industry to be part of a global network and to be able to offer an integrated approach to clients.

You said right at the start of this interview about how you're pleased that you're ahead of most of your peers on organic growth, just behind Publicis. Why is agency performance diverging? Why are some groups doing well and some falling behind?

It’s a good question because I think it's one the first years in the past decade, at least, maybe more, that we see so much discrepancy between the different growth [rates] of the groups. Before it was more like one or two percentage points of difference. Now we can see ten points of difference between Publicis or Havas and Dentsu. And more than four points between Havas and IPG and three points between Havas and WPP.

I don’t know the reason exactly and we need to see if 2024 will be the same. I believe Havas is offering a very strong model to its clients and very good service and the teams are great. And maybe it's making a difference. Maybe also, the fact that Havas has been putting technology, data and AI at the core of everything we do is making our expertise more modern, more agile, more efficient and more effective.

For sure, I would say when you look at the results of the groups, the two best-performing groups are the most integrated. We were the first to integrate, so we were years in advance, thanks to the "Together" strategy. We are "One Havas" and Publicis has moved to the "Power of One" strategy five or six years ago and they are well advanced and we need to give credit [to them].