Adland
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The creative agency Fallon McElligott was acquired shortly afterwards. And then Saatchi & Saatchi sailed onto the horizon.
The wounded giant of the eighties was striving to build a new image under its chairman Bob Seelert (a former General Mills executive) and flamboyant CEO Kevin Roberts. The agency had needed a colourful character like Roberts in order to break with the past. Roberts had discovered the power of brands while working for fashion designer Mary Quant in London in the 1960s. He’d then taken his experience to posts at Gillette, Procter & Gamble, Pepsi and Lion Nathan Breweries in New Zealand – where he was chief operating officer before accepting the invitation to run Saatchi in 1997.
With an accent that tumbles from Northern England to New York to New Zealand and back again – often in the same phrase – Roberts is one of those informal, switched on, global citizens in which the advertising industry seems to specialize. He’s good at providing inspiration and controversy in equal measure. While working for Pepsi, he machine-gunned a Coke vending machine on stage during a conference. More recently he created the concept of ‘Lovemarks’ – brands that inspire loyalty beyond reason.
Back in 2000, Roberts and Seelert found themselves running a debt-laden, discredited agency that was unlikely to grow much further without a large injection of cash. (By that stage, Saatchi & Saatchi had been de-merged from Cordiant, the holding company it had shared with Bates. Cordiant and Bates later ended up in the hands of WPP, where they were dissolved into other parts of the operation.) Saatchi enjoyed an unconsummated flirtation with the Japanese agency Dentsu and rejected a proposition from WPP, which was regarded as too controlling. The answer, then, perhaps lay with Publicis.
The dance started on another foot, when Publicis, Saatchi and Bates began discussing a merger of their media operations. Lévy was cool on that deal, but he instigated behind-the-scenes talks with Bob Seelert about the future of Saatchi & Saatchi – starting with a discreet breakfast meeting at London’s Connaught Hotel. The informal discussions about a potential fusion were continuing when Lévy was approached by Young & Rubicam, which was trying to stave off a takeover by WPP and wondered if it could throw in its lot with Publicis. But Publicis was considered an unlikely white knight for Y&R – the latter handled the Ford account, which would have clashed bumpers with key Publicis client Renault. It seems that even Lévy took his negotiations with Saatchi more seriously. ‘I knew that once news of my talks with [Y&R] became public, my conversation with Saatchi & Saatchi would turn into something more concrete – which proved to be the case.’
Lévy also won the support of Kevin Roberts, who after a crucial meeting decided that he trusted the Frenchman with the Saatchi brand and those who worked for the company. The US $1.9 billion deal was completed on 20 June 2000. Now there could be no question that the Publicis Groupe was a global player. ‘There were three excellent reasons for acquiring Saatchi,’ says Lévy. ‘It was still an excellent brand with a reputation for creativity. I had a great deal of respect for Bob Seelert and Kevin Roberts. And finally, it gave us instant global status: the name Saatchi & Saatchi is known everywhere, all over the world.’
A year and a half later, Lévy found to his surprise that he was still hungry. For months he’d been reading in the press that there were now two tiers of global communications groups – and his was in the second tier. ‘To me, the insinuation was “top class”, “second class”,’ says Lévy. ‘If we wanted to enter the top tier – to become “top class” – we needed to make another acquisition.’
Lévy had previously had some informal contact with Roger Haupt, CEO of Bcom3. As you’ll remember, Bcom3 was the awkwardly named holding company of Leo Burnett and the MacManus Group, in which Dentsu had taken a 22 per cent stake. Many at Leo Burnett felt that the name sounded temporary – as if it was a step on the way to someplace else. That place turned out to be Publicis.
Soon after 11 September 2001, Lévy resumed contact with Haupt to discuss the potential for a merger. He recalls that they met in ‘strange, unlikely places, like the Hilton at Heathrow Airport, with no lawyers or financiers present’ to draw up the deal, which was then presented to Dentsu. The Japanese agency gave its accord and the US $3 billion deal was announced in March 2002. During several meetings with staff, Lévy mustered all his charm and tact to reassure Leo Burnett employees that their new owner would not attempt to interfere with the agency’s unique heritage.
The acquisition turned Publicis into the fourth largest advertising group worldwide. At the time of writing it sits at number three, with an annual net income of US $791 million.
Havas: child of the information age
The modern history of Havas ended with a boardroom battle. Its ancient history began with a secret mission.
Charles Louis Havas was born in Rouen on 5 July 1783 into a wealthy Jewish family of Hungarian descent. His father had a number of business interests, including a small local newspaper. As described by Jacques Séguéla in his book on the history of Havas, Tous Ego (2005), Charles became in his turn a notable merchant, banker, publisher and wheeler-dealer – but he seemed to lose fortunes as quickly as he made them.
In 1861, Charles departed on a mysterious journey. Nobody knows where he went or why – there has been some speculation that it was a spying or diplomatic mission (or a mixture of both) for the king, Louis-Philippe. ‘I am going on a long and dangerous journey,’ he wrote to his sister-in-law. ‘Should I succeed, I will make everyone happy; if not, God knows what we will become.’
While the details of his voyage remain murky, the mission seems to have provided the capital for his nascent press agency. He may also have recruited several foreign correspondents along the way. On his return he began translating news items from the overseas press and gathering dispatches from the stock exchange. He forged contacts with businessmen and politicians. But Havas was more than a prototype freelance reporter. His rise coincided with the first information boom: Louis-Philippe was warily tolerant of a free press and by 1835 there were 600 newspapers and periodicals in France, all hungry for the kind of information Havas could provide. In addition, Havas’s political connections led him to become the almost exclusive diffuser of government information, creating an awkwardly cosy relationship between press and state.
In 1835 the Havas agency was installed in a three-room, 80-square-metre space at what is today 51 rue Jean-Jacques Rousseau. The agency’s news dispatches were crowned with the words VITE ET BIEN (‘Fast and good’), indicating that Havas had a flair for self-promotion. In order to deliver on his promise he made use of every available form of information technology, from carrier pigeons to the brand new electric telegraph. By 1840, the agency was publishing a range of bulletins for politicians, bankers and industrialists, as well as providing publicity services for many of the same.
Havas died on 21 May 1858, succeeded at the head of the company by his two sons. Charles Auguste Havas rapidly assumed the leadership role. Shortly after his father’s death, he bought a stake in the newspaper advertising sales house Société Générale des Annonces (SGA), which would come under the full control of the agency in 1914. The slow swing of Havas away from news and towards advertising had begun.
During the Franco-Prussian War (1870–71), however, news was still at the heart of the organization. With Paris under siege, Auguste Havas based himself in Tours in order to relay news of the capital to the rest of France, using carrier pigeons to communicate with the Paris office. In an attempt to cut off the supply, the Prussians released falcons to bring down the pigeons.
Towards the end of his reign, Auguste sold his share of the business to Emile d’Erlanger, an international financier. Other stakes were already in the hands of influential politicians, industrialists and businessmen. This contributed to the persistent impression that Havas was the intelligence service of the French industrial and political elite. Auguste died in 1889, the last Havas to head the agency. He was succeeded first by Edouard Lebey, and then by Léon Régnier.
After the Nazis marched into Paris on 14 June 1940, the offices of Havas were requisitioned by the Occupation government. Havas took on a strange new half-life. Its ownership was split three ways, with 32.4 per cent remaining with its existing owners, 47.6 per cent going to the Germans and 20 per cent to the French state. And so the news agency became a propaganda tool for the occupier and the Vichy government. After the war, Havas was nationalized, with the state taking control of the shares previously held by the Germans.
In 1947, the agency was several million francs in debt and faced increasing competition from a renascent Publicis. But at least the division between its advertising and its news arms was now clear, with the press agency operating under the new banner of Agence France Presse. Havas diversified into tourism, setting up a number of travel agencies. Advertising revenues picked up and by 1957 more than 80 per cent of its income came from advertising sales (WARC profile in association with AdBrands, October 2006). It was during this period that Havas and Publicis – ostensibly arch-rivals – are said to have entered into a tacit agreement to divide the country’s advertising spoils evenly between them in order to ward off international competition. This has never been officially acknowledged, but it seems plausible given their vast web of business and political contacts.
In 1959, Jacques Douce was named commercial publicity director, and he slowly began to shape Havas into something resembling the organization we know today. As a second string to the agency’s existing creative arm, Havas Conseil, he founded the spin-off agency Bélier, in which he took a stake. In 1972 all of Havas’s advertising-related operations were combined under the new name Eurocom. This entity began tentative explorations abroad, acquiring minor agencies in the United States and entering into a joint venture agreement with Marsteller Advertising, a subsidiary of Young & Rubicam (a partnership that would unravel in the early 1990s).
In 1989, under newly appointed CEO Alain de Pouzilhac, Eurocom took a 60 per cent stake in UK advertising group WCRS. This was later increased to full ownership. Then, as we’ve heard, Eurocom acquired RSCG, eventually fusing all of its creative agency units under the Euro RSCG banner. By now Eurocom was operating virtually independently from Havas – which had become an unwieldy collection of businesses embracing television (it had launched Canal Plus in 1984), media sales, publishing and tourism.
In 1997, the structure was subsumed into the Compagnie Générale des Eaux (CGE), a former French utilities company that chairman Jean-Marie Messier was busy transforming into a media conglomerate, soon to be re-branded Vivendi. As the Vivendi saga unfolded, the empire once known as Havas was dismantled and sold off. Although it had been unthinkable only a few years previously, all that remained of the giant organization founded by Charles Louis Havas was the advertising division – now renamed Havas and functioning as an independent entity.
But the drama was by no means over. At the turn of the millennium Havas made two important purchases. In 1999 it merged its lacklustre media capabilities with those of Spain’s giant Media Planning Group and the veteran New York media buyer SFM (which you may recall from the previous chapter). And in 2000 it bought the US group Snyder for US $2.1 billion, instantly propelling it into the prized top tier of communications groups.
Then the bad news began. A tentative bid for the British-based Tempus Group in 2001 was trumped by WPP. Economic turmoil, combined with restructuring costs, resulted in a loss for that year of 58 million euros. The company seesawed between profit and loss over the next couple of years. Its fragility attracted the attention of French businessman Vincent Bolloré, who built up a 20 per cent stake in the company. An urbane Breton with a wide range of interests, including paper, cotton, shipping and media, Bolloré was portrayed by the press as a corporate raider. Havas CEO Alain de Pouzilhac made no secret of the fact that he was violently opposed to what he described as a ‘creeping takeover’ of the group.
In early 2004, Havas confirmed that it was considering making a bid for Grey Global Group. This worried some shareholders, who felt that the company might be overstretching itself. The situation was resolved when Havas was once again beaten to its prey by Martin Sorrell and WPP.
Meanwhile, the antagonism between de Pouzilhac and Bolloré had escalated into a battle – magnified and encouraged by the media. Bolloré had demanded four seats on the Havas board, which de Pouzilhac was ill-inclined to give him. The Havas CEO feared for the future of the company – was it to be pillaged and sold on for profit by the Breton buccaneer? Why hadn’t Bolloré clearly stated his intentions? The scene was set for a showdown at the Annual General Meeting of 9 June 2005. As shareholders and reporters filed into the auditorium at the Maison de la Chimie – an 18th-century mansion on the Left Bank – there was a sense of anticipation rarely present at such dry gatherings.
Taking the stage, Bolloré assured shareholders that he was not ‘Darth Vader’ and that this was not a corporate raid: he had plans for the future of Havas. ‘I have invested in [the company] in order to develop it and I intend to remain for the long term. I’m committing myself here, before you… My only wish is to regain some of the ground that it has lost over the last two years.’
When the votes came in, Bolloré won his seats on the board. Two weeks later, Alain de Pouzilhac resigned as CEO. In July 2005, Vincent Bolloré was appointed chairman of Havas. When the dust settled, Havas remained the world’s sixth largest marketing communications group.
So now you’re asking yourself: ‘The sixth? What happened to the fifth?’
Well, the fifth has certain idiosyncrasies that set it apart from the other organizations in the top tier, so it deserves special treatment.
It’s called Dentsu.
12
Japanese giants
‘Fifteen seconds and counting’
The 47-storey Dentsu building slices through the Tokyo skyline like a shark’s fin swathed in glass. Every day, around 6,000 people come to work here for the world’s fifth largest advertising organization, whose net income of more than 40 billion yen (US $453 million) is largely generated in Japan. Entering the building – which was designed by the French architect Jean Nouvel – is like stepping into the first-class lounge of a spaceport. The lobby is an infinite ballroom lined in marble and steel. The round reception desk seems to hover silently, cradled by softly glowing panels. Glossy-haired receptionists in silver-grey uniforms beam immaculate Shiseido smiles. An exposed glass elevator threads through a mesh of steel as your stomach plunges into the receding city.
I spent almost a week visiting Dentsu and I never got a handle on the geography. Perspectives seemed to warp and elide. There were entire floors of restaurants. The executive floor looked more like a museum, with priceless works of art on the walls. On other floors, rows of desks tapered into the middle distance. To get an idea of the organization’s bustle and hum, I was encouraged to visit its website, where vertical multicoloured columns tracked the elevator movements in real time.
I was an honoured guest of Dentsu, which was an extremely useful position to be in. The Japanese know how to take care of visitors. There was no way I’d be allowed to leave before I knew everything there was to know about the company. But first, I was given a little background.
A short history of Dentsu
It’s easy to find out about the history of Japanese advertising while you’re visiting Dentsu, because the Advertising Museum of Tokyo is located right next door to the agency’s headquarters in Shiodome. The museum was established i
n 2002 to commemorate the centennial of the birth of Dentsu’s fourth president, Hideo Yoshida, who is widely regarded as the father of modern Japanese advertising. We’ll get to him shortly.
Although the company that became Dentsu was founded in 1901 – and its rival, Hakuhodo, in 1895 – forms of advertising existed in Japan long before then. From the earliest days of the Edo period (starting in 1603) advertising flyers were posted on the pillars of Shinto shrines and Buddhist temples, as well as on fences and gateposts. Japanese newspapers had yet to appear, so ads were often inserted into books. Owing to the shogun rulers’ policy of sakoku or ‘isolation’ – under which no Japanese was allowed out of the country and foreign entry was strictly controlled – news of the outside world came in the form of Dutch newspapers, the Dutch East India Company being the only overseas organization permitted to trade with the country.
During the Meiji period (1868–1912) under the Emperor Meiji (meaning ‘enlightened ruler’ – his given name was Mutsuhito), the country opened up to foreign influence. Along with other trappings of Western-style civilization – from the telegraph and the railway to certain styles of dress – newspapers and magazines finally arrived. Modernization further accelerated after the end of the Sino-Japanese War in 1895. As the press became increasingly dependent on advertising for revenue, the first advertising agencies were founded to trade in media space.
In 1901 a journalist named Hoshiro Mitsunaga laid the foundations of Dentsu by creating the news agency Telegraph Service Co. to cover the stormy political events of the day. In a barter-style arrangement, many newspapers paid for his stories by donating advertising space, which he sold on through a subsidiary company, Japan Advertising. In 1907 these two units were merged under the name Nippon Denpo-Tsushin Sha, eventually shortened to Dentsu. The company won exclusive rights to distribute the United Press wire service in Japan – and it used this monopoly to negotiate even cheaper rates for advertising space. Advertising itself was becoming increasingly prominent, with the emergence of full-page spreads and a significant rise in the number of women’s magazines. In the run-up to the First World War, Dentsu was already a force to be reckoned with, operating out of offices in the Ginza district.