Eyes on Grey, Havas CEOs as they chart course for future

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If I were Ed Meyer or Alain de Pouzilhac, columns like this would drive me crazy. However, no matter how much they chafe against it, as the experienced and smart CEOs of, respectively, Grey Global Group and Havas, they will know that the recent Cordiant/Zenith deals put the spotlight on their groups' futures.

Havas and Grey occupy the new middle ground as the sixth- and seventh-largest groups, some ways off from "the big four" of Omnicom, WPP, Interpublic and Publicis. (Dentsu is No. 5). Names are disappearing fast: D'Arcy, Lintas, BDDP and, soon, Bates. Smaller names will follow, given Havas' decision to abandon plans to build Arnold Worldwide into a global network. The first to go was London's Partners BDDH (formerly Butterfield Day DeVito Hockney), to be merged into Havas' Euro RSCG Wnek Gosper.

The differing fortunes of Havas and Grey became starkly visible in their recent first-half results. Although the strength of the euro against the dollar helped Grey and hindered Havas, Havas reported a drop in revenue of 18.8% (a 6.8% drop after currency and acquisition adjustments) while Grey reported revenue up 7.3% (up 0.7% after adjustments).

Havas will look at Grey's 4.9% North American revenue growth in the second quarter wistfully (and this before Grey's $275 million Kmart account coup). This kind of new-business growth is the holy grail after years of cost cutting that have left little left to cut. Long term, cost cutting is not a strategy. So it will be fascinating to see just how analysts react to the charming de Pouzilhac's latest new plan when it's disclosed Sept. 18.

We know already that Arnold now will be "a creative alternative" for Havas in certain key markets; that the MPG media buying network will enjoy greater autonomy; that specialized areas, such as health care and recruitment advertising, will be merged into Havas' Euro RSCG where possible, or sold off. But de Pouzilhac will need to offer analysts more than this.

In contrast to Havas' flip-flops down the years, Grey has stuck to its knitting: integrated client service on big international accounts. It has its single advertising network and its MediaCom media buying arm and a single brand per discipline, where it needs one.

Grey is what it is. At times, Grey has appeared uninspiring-particularly during boom times. But it makes money, and it rewards shareholders consistently. That's why the extraordinary septuagenarian Meyer thrives still, while younger competitors fall by the wayside.

Grey's biggest cloud appears to be "the succession question"-once again thrown up by speculation surrounding the future of Grey's New York president, Steve Blamer, Meyer's heir apparent. But we have been down this succession road at Grey so many times it is embarrassing to comment. More interesting is to watch Havas maneuver itself to become more like Grey-the very competitor it was trying to distance itself from not so long ago.

The vultures will be circling both groups looking for any slip up. Ed Meyer's skin has proved to be too thick for them for years. Is Alain de Pouzilhac, the aristocratic French count, made of the same tough stuff as the native New Yorker? He'll need to be.

Stefano Hatfield is contributing editor to Advertising Age and Creativity

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