Havas Looks to Digital for Recession Salvation

15 January 2009

PARIS: Amid the throes of global recession, world number five marketing services holding company Havas sees salvation in digital advertising. The road to fiscal Valhalla, it seems, is paved with binary notations – or so Havas and most of Planet Adland believes.

Confided the French company's ceo, Fernando Rodes Vila (pictured above) to Dow Jones Newswires: "By the end of 2008, digital activities should generate about 13% of revenue; by the end of 2009 we should be at about 15%".

Havas, he claimed, is "well on track" to make 20% of its revenue from digital advertising by 2010.

Moreover, says Rodes Vila, his firm looks set to meet its 2008 targets, which were revised down only two months ago from 5% to 6% to 4.5%-5%, a decline equivalent to 13.6 percentage points.

Havas' operating margin target is between 11% and 12%, although Vilas did not venture a view as to its attainability in current conditions.

And while digital revenues expanded by around 25% last year, they failed to match 2007's 27% growth. Whereas at Havas Media international digital growth in 2008 was even more robust tnan the group as a whole, soaring 40% by income.

As to digital prospects for 2009, Rodes Vila declined to reveal the holding company's growth objectives and sought refuge in vague generalisations.

Havas "hopes" to achieve higher growth in the digital area this year than it did in 2008 "but it all depends on how the market is going to be next year". Online media, ventured the ceo, will feel less pain than its  traditional rivals.

Meantime, clients are upping their online budgets for the current year, building on 2008 spending increases that ranged from 2%-3% of total marketing budgets to 10%-15%. 

Opines Rodes Vila: "The advertising market is currently suffering its most significant transformation since World War II, marked by a shift from a TV-dominated model to a one-to-one model dominated by the consumer and with digital at the center." 

The current economic crisis, he added, is accelerating this trend.

Data sourced from Wall Street Journal Online; additional content by WARC staff