Havas Advertising traces its roots to 1835, when former shipping magnate Charles-Louis Havas created the world's first press agency, Agence Havas, and set out to become the principal supplier of foreign news to the burgeoning French media. The press agency traded its foreign dispatches to newspapers for advertising space that it later sold to shopkeepers and small businesses.

In 1881, the activity of Havas, by then a limited liability company with offices throughout Europe as well as in Africa and the Middle East, was stoked by a law that radically extended freedom of the press, creating new competition in the media business and fresh opportunities for raising advertising revenues. The company was split into two divisions, one for news coverage and another for advertising operations. It began working with an American adman, John F. Jones, whose Compagnie Gen?rale de Publicit? brought new sales and communications methods to the French market. By the beginning of the 20th century, Havas was producing and placing distinctive press-ready ads in newspapers and magazines for clients such as Comio motorcycles, the Menier chocolate company, Path? cinemas and the Cosmydor line of soaps.

Havas Publicit?

Following World War I, Havas' advertising division experienced its own "golden age" from 1920 to 1939, operating as Havas Publicit?. The company won distribution rights to massive amounts of government advertising, which allowed for rapid growth of private sector activities. Havas began offering clients brand counseling, consumer research, media planning and ad creation. It ran ad sales networks for the print press, radio and cinema, and operated an extensive stable of outdoor advertising infrastructure divisions.

Havas' campaigns from this period turned the antiflea powder Marie Rose into one of the country's leading brands. It hired crooner Charles Trenet to sing radio jingles that turned a brand of tea, Th? des Famille, into a national leader. Similarly, musician Ray Ventura led an orchestra at the Lustucru Theatre, which made the packaged-foods marketer Lustucru a household name.

The advent of World War II ended Havas' golden run. The Vichy government, which came to power in 1940, nationalized the news service as the French Information Office, and forced it to work under Germany's military occupation force. The office maintained a monopoly on government advertising, leading to resentment against Havas and charges of collaboration that lasted long after France was liberated in 1944.

France's first postwar government turned Havas' former news service into Agence France Presse, an ongoing wire service, and moved many of its advertising assets into the newly created National Publicity Office. The office, based in Havas' headquarters, was granted wide-ranging powers over the advertising industry as well as a temporary monopoly on the distribution of government advertising.

It did not replace Havas, which gradually came out of hibernation during the late 1940s. By the early 1950s, the agency once again assumed the principal role in distributing government advertising and reclaimed its place as a leading provider of advertising and publicity services to the private sector. It also diversified into new activities, including directory services production, travel services and media operations.

State-owned agency

In 1958, the company's advertising activities were grouped under a new state-owned company, Havas Conseil, which was completely separated from other businesses in 1968, when it reported $70 million in billings, or about 12% of all French advertising.

The 1970s marked a period of rapid growth and diversification for Havas Conseil. International division Univas, comprised of 21 Havas agencies in 13 countries, formed a nonfinancial partnership with S.H. Benson, London, and Needham, Harper & Steers, New York, in 1971. The new joint venture created the world's No. 11 agency network, with international billings topping $300 million, but never led to full integration of business activities.

In 1972, the government decided to restructure Havas, beginning with a partial privatization of Havas Conseil, France's No. 1 agency, with billings of more than $100 million. In 1974, Havas management created the Eurocom holding company, consolidating the group's advertising companies into four divisions: Havas Conseil; Ecom, partnered with the Univas international agency network; Futurs; and the Belier Group.

Eurocom expanded internationally in 1976 when its Univas division bought a 50% stake in Boase Massimi Pollitt, London, marking the first time a French agency had made such an important acquisition across the English Channel. Eurocom continued its expansion in 1978, picking up $70 million in billings with the acquisition of the U.S. agency Kelly, Nason and winning its first business from a future anchor client, automaker Peugeot. (Havas Conseil won the entire Peugeot automotive account in 1981.)

In 1982, Eurocom acquired a controlling stake in the Paris-based packaging, retail and restaurant holding company Goulet, a controversial diversification strategy aimed at staking a presence in nonmedia areas linked to its main clients. Later that year, it acquired the Bazaine agency, securing its control over the top of the French advertising industry, and listed Eurocom SA on the Paris Bourse.

In 1984, Alain de Pouzilhac, then president of Eurocom's leading division, Havas Conseil, negotiated a joint venture between Havas Conseil and Young & Rubicam's Marsteller Inc. unit. The HCM network was born in January 1985, with billings topping $500 million and a blue-chip client roster led by Peugeot and Philips N.V. By year's end, it had added more than $140 million in new billings from clients such as Danone Group and the Jack-in-the-Box fast-food chain.

The HCM deal furthered the financial clout of Eurocom, by now a corporate holding company with 144 divisions, 6,000 employees and billings topping $4 billion. The year 1987 was marked by two events: the partial privatization of Eurocom's corporate parent, Havas, and a move toward internationalization across the advertising group. In May, the Paris-based creative shop Alice joined the CDP international network. In July, the HCM venture was extended to include the Japanese agency network Dentsu, and the newly formed entity was named HDM. In September, the Belier Group, already No. 1 in the French market, allied itself with the U.K.-based WCRS Group, owned by Aegis, creating an international agency network with a strong presence in both Europe and the U.S. Finally, in December, Eurocom's Polaris division merged with Synergie, the French division of Bozell Inc., to create a new French powerhouse linked to an international network with offices in more than 40 countries.

By the end of 1988, following the consolidation of prior acquisitions and the $90 million acquisition of top free-press publisher Comareg, Eurocom reported billings topping $5 billion, making it the world's No. 6 holding company. Billings hit $6.2 billion in 1989 after Eurocom increased its stake in WCRS from 20% to 60%, taking it to No. 5 globally. Mr. de Pouzilhac, now president of Eurocom, rolled the WCRS holdings into a new network, EWDB, comprised of Eurocom; WCRS; Della Femina, McNamee WCRS; and the Ball Partnership, WCRS' Asia-Pacific unit. Eurocom also struck a deal with WCRS to buy a minority share in the Carat International media-buying unit.

Restructuring

Eurocom entered the 1990s with a new passion: restructuring. The company sold its Techpack packaging unit to Pechiney Group and began consolidating divisions. HDM and EWDB were merged into a new holding company, Eurocom Advertising, which merged with French rival RSCG in October 1991. The deal linked the creativity of legendary French adman Jacques S?gu?la and the business acumen of Mr. de Pouzilhac and brought together more than $6 billion in billings and operations in 27 countries to form the No. 7 global agency. Its client list included car brands Citroen and Peugeot, French carrier Air France, cosmetics leader L'Or?al, and various brands from food giants Nestl?e and Danone.

The following month, Euro RSCG merged the Belier agency and HDM into Eurocom France, making it Europe's largest agency with gross income of $250 million.

Euro RSCG was renamed Havas Advertising in 1996, after the company's largest shareholder, Havas, which held a 37% stake. Euro RSCG Worldwide was retained as the name for a holding company unit of Havas that is comprised of its European Euro RSCG agencies as well as Messner Vetere Berger McNamee Schmetterer/Euro RSCG in New York and other shops.

Mr. de Pouzilhac, now president and managing director of Havas Advertising, divided the company into four divisions:

• Euro RSCG, a global network with offices in 61 countries and a client roster that included Citro?n, Danone, Kraft General Foods, L'Or?al, Nestl?, Peugeot, Philips and Procter & Gamble Co.

• Campus, a European network with agencies in France, Germany, Italy, Spain, and the U.K.

• Diversified Agencies, a group of 30 agencies across Europe specializing in marketing services.

• Mediapolis, the joint venture space-buying arm operated since 1994 with Y&R.

The French utilities and communications entity Compagnie Gen?ral des Eaux?later renamed Vivendi Universal?acquired a majority stake in Havas, including the controlling stake in Havas Advertising, in 1997, but reduced its stake in Havas Advertising to less than 10% in 2000.

U.S. acquisition

The new century brought another major development for the French group when Havas Advertising announced plans in February 2000 for a $2.1 billion all-share buyout of Bethesda, Md.-based Snyder Communications, parent of Arnold Communications. The transaction moved Havas to No. 4 in the global rankings, creating an international holding company with 20,000 employees in 75 countries generating billings of almost $20 billion and income topping $2 billion. The deal was completed with Havas Advertising listed on the U.S. Nasdaq exchange in September 2000.

In October 2001, Havas Advertising announced a wide-ranging restructuring program aimed at heading off revenue shortfalls linked to the economic downturn affecting the advertising industry. The restructuring focused primarily on the dismantling of the group's Diversified Agencies division, whose assets and operations were merged into Havas' three principal "brands": the Euro RSCG Worldwide and Arnold Worldwide Partners advertising networks and media specialist MPG. At the end of the year the company announced plans to change its name to simply Havas.

Following 2001, Havas struggled financially, burdened by debt and hurt by a global economic downturn. In 2003, the company set out an aggressive restructuring plan that included paring costs and selling or closing under-performing units. The reorganization left Euro RSCG Worldwide as the holding company?s one global agency network; Arnold Worldwide is positioned as a mid-size creative entity.

In 2003, Havas had worldwide revenue of $1.9 million, down 0.6% from 2002, and was the No. 6 ad organization in the world, according to Advertising Age.