The empire strikes back: Hear from Havas Media Chair Mike Wilson, CEO Matt Houltham and newly minted Hyland Division leader Virginia Hyland on why culture and ideas need to step-up on tech obsession:

Not your average holding group

Vivendi was founded by Napoleon III, who knew a thing or two about empire building. For more than a hundred years it was a water company called CGE before beginning to diversify in the mid seventies, breaking into TV in the eighties, then focusing more squarely on mass media from the nineties when it rebranded to Vivendi.

Today, alongside global media and communications arm Havas, Vivendi owns Universal Music, pay TV and international film group Canal+, mobile gaming giant Gameloft, as well as book publishers, ticketing firms, a video sharing platform and significant interests almost too long to list.

Suffice to say, it’s not your usual holding company. As of last week, Sydney independent agency Hyland has joined its ranks. Both parties say the attraction was mutual, centring on growth opportunities while doing things a bit differently, according to Havas Media Group AUNZ chairman, Mike Wilson.

Why Hyland, why now?

“Firstly, you have to remember Havas Media is only six years old. So unlike all of the other holding companies, which have had media agency brands in the market, in some cases for decades, we're pretty new,” says Wilson. “There’s been a pretty strong growth in that period and during that time we've always been open to potential strategic partnerships.”

Yet while there were several potential deals to be made, “frankly, none of them has been as perfect as Hyland,” says Wilson, who has known founder Virginia Hyland for 20 years.

At the start of this year, Wilson shifted from CEO to chairman with a remit to grow the business through mergers and acquisitions, with Matt Houltham stepping up as chief executive. Wilson says completing the Hyland deal, commenced pre-Covid, shows the group is serious about following through on its strategy despite coronavirus. Closing the deal, he says, offers “a real clue” about Havas’ continued intent going forward.

In the immediate term, Houltham says it affords Havas greater scale, “so we can present ourselves at the top end of town and some bigger pitches”.

Why Havas, why now?

Virginia Hyland founded Hyland Media in 2005, racking up longstanding major clients such as Coty and diversifying into creative and content. Over the years, Hyland has discouraged advances.  “I wasn’t looking to be acquired by a global holding company, to be honest”.

Yet of the global players, she suggests Havas offers both the greatest upside and the most freedom, with the deal enabling her to run Hyland as a division within the holding company, while tapping its broader capability and retaining all her staff.

“Over those years [in business as an indy], you get to really understand all of the global holding group strategies, how they treat people in the industry, the way they support entrepreneurs, or whether they have a complete disinterest,” says Hyland.

Her observation of Havas is that it genuinely does things differently, “embracing entrepreneurs into the business” when acquiring them, and retaining them for the long haul. She cites Host/Havas by way of example.

“That was a real appeal for me, because I'm not done with what I want to do,” says Hyland. “I want to prove what an indy can do on a greater scale.”

Should indies be worried?

All that said, it could be read as an ominous sign for the independent sector if a stalwart like Hyland is selling out now.

Hyland suggests the opposite it true.

“I don’t think it is ominous at all. What a fantastic opportunity for an indy to build a business, develop an offering that's new and modern and then have the appeal of a global group come and say, ‘we want you to work with us now’,” she says.

“I haven't sold out on my clients. I haven't sold out on my team. We're all going into this together, with great support. For me financially, yes, I get to pay off part of my mortgage and not have to worry about the effects of covid,” adds Hyland.

“But it also gives me the opportunity to drive new growth and invest in the team to build a better opportunity. So as an indy, I think it's a fantastic time to be in the market.”

Culture shades tech

CEO Matt Houltham expects “Virginia will be around for decades” at Havas. Her agency and its people, “is a wonderful cultural fit,” he says. “That is the first and most important thing when you're looking at any of these kind of acquisitions. If you don’t have a good cultural fit, it's doomed to fail from the start.”

While most of the holding companies and consultancies are racing to acquire tech and build out digital transformation capabilities, Houltham says culture and creativity come first.

“Do we think that stuff's important? Of course. Do we think it's the be all and end all? Absolutely not. I think it's very easy to get a little bit of tech myopia, to focus on delivery tools and platforms and lose sight of the ideas that bring great communications to life,” says Houltham. “So our view is very much about balancing the needs of technology with the needs of great ideas and creativity, whether that's in a traditional creative sense or in a media sense.”

However it is termed, the agency has “strong martech-CX-e-commerce capability already within the media team and within the broader village”, adds Houltham.

“So we're already investing in those areas. For us there is a balancing act; making sure that you have all the technology and data skills to help to deploy comms effectively, but also making sure that the strategic part of the process up front is spot on.”

While it might appear that media is being usurped by technology and cloud companies, Mike Wilson doesn’t see it that way.

“We launched our business as a digital company and a tech-centric company. We've always been that from day one and we've had a degree of success there,” he says.  “Is media being usurped? No, it's doing what media always does with any technological innovation, it's morphing and it's changing constantly. So we have to be constantly evolving and investing … So no, we’re not afraid of it.”

Post-covid opportunity

Equally, Wilson thinks there is opportunity for traditional media owners post covid – at least for those that can drive change.

“When I've been talking to what we might call ‘traditional legacy media businesses’ over the last few months, there's for obvious reasons, a lot of doom and gloom,” he says.

“But when you talk to some of the more innovative entrepreneurial businesses and some of those leaders who are in fact, still within the traditional companies, there's opportunity to be found,” Wilson adds.

“The one thing we know is there's going to be a very significant bounce back. It's hard to put an exact timing on when that might happen. I think we're all hopeful that we'll be in the next calendar year. But with that bounce back will definitely come opportunity,” he says. “Survival of the most adaptable is certainly going to be true, not necessarily the biggest.”

Brands spending to make up lost ground

A bounce back is already underway, according to Virginia Hyland, with brands spending again after initially freezing everything. She suggests the virus has underlined “the importance of media, because audiences are no longer dwelling in a store browsing “

As a result, “we're seeing in the last quarter of the year enormous pick up from all of our clients across the board, funnelling enormous spend back into media channels, whether digital or above the line,” adds Hyland, citing brands such as KitchenAid as gaining “cracking” results from investing at both ends of the funnel. Across the board, she says “there's a real sense of urgency now to make up ground they may have lost.”

Matt Houltham agrees.

“We're certainly seeing a return to spend in Q3 and Q4. While initially we saw a hesitant return - smaller budgets and more of a skew to digital channels - it's coming back to normal now. We're seeing a broader spread across the whole funnel.”

While there has been much debate around maintaining brand during a recession versus the need to deliver immediate results, Houltham says it is all about striking the right balance.

“Common sense marketers know that they need to return to spending to stimulate that reappraisal and the kind of audience expenditure that's critical to them,” he says. “I was in a conversation with a client today and his own version of that was, ‘We need to continue to build sales overnight for the brand to grow over time’. I think that's absolutely what we all need to focus on and that's certainly the behaviour we're seeing from our clients.”

More deals ahead?

Havas is also in growth mode – organic or inorganic. While giving nothing away, Mike Wilson says there is further opportunity for independent agencies that think they could find a new home within the Havas Village.

“If there's something or somebody out there that we think is a good complement to the group, something that can enhance our capabilities, the door is always open,” says Wilson.

“I’m not going to mention any names just here. We're always open to discussions with appropriate potential partners.”