Havas Agency Is Expected to Land Circuit City

Euro RSCG's Dan Says Research, New Leadership Buoyed Turnaround at Firm

By Suzanne Vranica
Published December 6, 2006; Page B3 in the Wall Street Journal

Euro RSCG Worldwide, the Havas-owned ad agency that has been on a winning streak lately, is expected to land Circuit City Stores' ad account, according to people familiar with the matter. The expected win would be the latest sign of a turnaround at the agency, Havas's biggest operation, which over the past 18 months has picked up such clients as United Kingdom consumer-goods maker Reckitt Benckiser; Boniva, an osteoporosis drug from GlaxoSmithKline and Roche Holding; and Alcatel-Lucent, the newly merged telecommunications-equipment maker.

'In the '70s and '80s new business was done on the golf course,' says Avi Dan, Euro RSCG Worldwide's global executive director of new business. 'In the '90s, it started changing drastically and some agencies started to be strategic.'

It is a far cry from the executive turmoil and account losses that plagued the agency two years ago. Then, the problems symbolized the challenge facing Havas -- a midsize advertising company competing with bigger corporations.

But the situation turned around after French investor Vincent Bolloré took over the board and shook up management, which included appointing Euro's New York chief, David Jones, as chief executive of the agency.

Circuit City spent $247 million on ads last year, according to TNS Media Intelligence. A spokeswoman said the company has "not made any announcement at this time."

Avi Dan, Euro's New York-based global executive director of new business, talks about the firm's turnaround and how the hunt for new business on Madison Avenue has changed over the past 30 years.

The Wall Street Journal: How has Euro RSCG managed to reverse its fortunes and create this new-business hot streak?

Mr. Dan: Over the past 18 months we have been pretty good at new-business acquisition. But we didn't get here by saying we need new clients. We started to say, "How do we better serve the ones we have." By doing that, we got more business from existing clients such as Reckitt Benckiser and Verizon....

Our success is due to three things that we focused on. First, it was a matter of leadership. David Jones gets full credit for a lot of the wins. The second thing is talent....We have been on a mission for the last year and a half to have a disproportionate share of the talent that exists in the industry....Third thing is we invested in research. A lot of agencies stopped investing in research over the past few years because of financial pressure. We invested in the seven figures in proprietary research.

WSJ: Why are agencies' relationships with marketers getting shorter?

Mr. Dan: Some relationships are short, and some are very long and can last for 60 to 80 years. But the latter is happening less frequently. For the past five years, I think clients have been in an environment that has lots of competitive pressure. The pressure has caused them to look for ideas elsewhere....Also, a lot of what is going on has a lot to do with chief marketing officers' tenure. When there is new management at the client, new management tends to wants to look at what's out there before they are willing to commit to a new relationship. Latest data from Spencer Stuart showed that the average tenure of a [marketing chief] is about 23 months, which is much lower than it was years ago.

WSJ: Ad executives often complain that there is a lack of new industries coming to the marketplace, which forces ad shops to fight more ferociously over existing accounts. What effect has that had?

Mr. Dan: It's tough, but the way we look at it is there is tremendous growth in other markets. For example, advertising in the U.S. is growing at about 4% to 5% annually. If you look at China, advertising is growing at about 18%, and in 2008 China will be the second-largest ad market. India is also growing really fast. For us, we are finding that Latin America is also a growth area. I don't just look at the U.S. now; I look for more opportunities globally.

WSJ: Are there sectors or industries on the horizon that have the potential to be growth areas?

Mr. Dan: Right now, it's gaming. The [videogame] console wars are the new cola wars. Mobile devices are big, especially in Europe and Asia. Superpremium vodka is also a growth area.

WSJ: What is the biggest change to how new business is sought today on Madison Avenue compared with when you first started in the business 30 years ago?

Mr. Dan: Having procurement people involved in agency selections is a big difference....Also, I think that in the '70s and '80s new business was done on the golf course....In the '90s, it started changing drastically and some agencies started to be strategic and hired different people. New business is about coming up with a big idea. To do that, we now analyze a category and the trends in a specific industry. Based on that research, we try to develop a proposal that a client would be interested in looking at.

WSJ: Is ad business on the golf course really dead?

Mr. Dan: There is some sociability still involved, but it's much less nowadays. Clients are under pressure, and they want you to build their business.

Write to Suzanne Vranica at suzanne.vranica@wsj.com.