• by Joe Mandese  @mp_joemandese, December 4, 2007

Havas Media, the media services division of Havas, the sixth largest agency holding company in the world, has quietly entered the media brokerage business, launching a new unit that packages and resells online inventory to clients. The unit, dubbed AdNetiq, is partly an online advertising network, and partly the byproduct of a sophisticated database management system Havas has developed to identify surplus online ad inventory that matches client brands with consumer targets. Details of the new service were unveiled Monday during a presentation of Havas' management team at the UBS media conference in New York.

"What we've seen here is an opportunity for media trading," Coleen Kuehn, chief strategist for Havas Media said during an update on Havas' media portfolio.

The system, which has only recently become operational, comes at a time when the lines are blurring between the buyers and sellers of online media following deals such as Microsoft's acquisition of aQuantive, WPP's acquisition of 24/7 Real Media, and suggests that agencies may see online as an opportunity to re-enter the media brokerage business. If so, it would be a full circle for Madison Avenue, whose roots were established when early newspaper advertising reps like NW Ayer & Sons and J. Walter Thompson morphed into full-service agencies, and adopted a commission-based system that derived revenues from a percentage of media billings.

Over time, agencies have moved away from their media rep roots and have abandoned the commission system in favor of fee structures tied directly to client service, but Havas' Kuehn implied there are new opportunities for agencies to profit by aggregating, packaging and re-selling online inventory to clients that might not otherwise have value.

At the core of Havas' strategy is a powerful database management system dubbed Artemis, which Kuehn said has already profiled 33% of the online user population. By matching online user behavior data with proprietary information on the targets of Havas' clients, Kuehn said the agency can create its own online advertising networks tailored to meet the needs of individual brands.

She said that Havas does not see itself as competing with established online advertising networks and behavioral targeting firms, and plans to continue working with them, but said the media agency believes its system creates new value in the marketplace by applying unique marketing intelligence to the equation.

"We are not in business to compete with them. We want to work with them," she told MediaDailyNews following the Havas presentation, "Why can't we get a piece of the pie?"

Kuehn emphasized that plans for AdNetiq are still formative and that the unit falls under the management of Don Epperson, CEO of Havas Digital, and is one of several entrepreneurial ventures the digital advertising services unit is exploring.

During her presentation she described scenarios in which remnant online inventory that might not seem important to one client or brand could be repackaged to have high value for another.

"An ad on Saturday morning in Florida is much more valuable to some in the travel market," she noted, adding, "We can use the inventory differently."

While the rapidly changing nature of the online advertising marketplace undoubtedly is blurring the lines between media buyers and sellers, the notion that a major media services network would also become a big media broker might not sit too well with some parts of the industry. The history of agencies serving as media reps has been spotty, and the practice has generally been looked down upon.

Carat Espace, a French media buying agency that was the precursor to the U.K.'s Aegis Group, was notorious for buying and reselling media to clients at high margin mark-ups until it ran afoul of French business laws and was barred from doing so. Over the years, a number of agencies have created "time banks" that procured media inventory and re-packaged or re-sold it to clients - some successfully and below the radar, and others less successfully and quite infamously like a scandal during the 1980s when a J. Walter Thompson syndication executive was caught overbilling clients for syndicated television time that never aired.

But it's easy to understand why Havas would jump into the media brokerage business online where there are high margins and the lines are once again blurring. Havas Digital, which includes MPG's Media Contacts unit, already is the jewel in the crown of Havas Media, and media has become a critical part of a reinvigorated Havas, which CEO Fernando Rodes Vila said has been outperforming the rest of the industry in the 18 months since its new management team has taken control. Nearly a quarter of Havas' gross income now comes from media services, and if Rodes Vila would have his way, that percentage could grow substantially following a merger with another major media services network.

Responding to a veiled question from an analyst at the UBS conference, Rodes Vila implied that merger talks between Havas and Aegis Group have cooled, but that he still sees a hook up of the two companies as compelling. French financier and Havas Chairman Vincent Bollore is the largest shareholder of both agency holding companies.

"It's a natural association," Rodes Vila said, adding, "And I personally expect that that role some day will be enforced." He alluded that the new, relatively lower prices of Aegis' shares "may be favoring" a deal between the two companies, and said that it was worth a study to see how a merger "would generate value for shareholders on both sides."