Stagwell Group’s Mark Penn wants its holding company rivals to be alarmed
Having finally completed its merger with MDC Partners, the newly-listed Stagwell Group is preparing to take on industry incumbents. Founder Mark Penn tells The Drum about his plans for the company.
Mark Penn, chief executive of Stagwell Group, outlines his future plans to The Drum
Mark Penn, the co-founder and chief executive officer of Stagwell Group, has been discretely building his alternative agency network for six years. ”I think it’s fair to say we snuck up on the marketplace. It’s been part of the strategy,” he says.
Last week, however, Penn broke cover and ended Stagwell’s time in ’stealth mode’ with a move intended, at least in part, to set off alarm bells at his agency rivals. Specifically, Penn showed up at Nasdaq on Times Square, ringing the stock exchange’s closing bell.
”It’s a bit of fun,” says Penn, speaking to The Drum on the morning of the bell-ringing ceremony. It comes shortly after the completion of Stagwell’s merger with MDC Partners, a deal that has been in the making since 2019. ”Everything’s come together now, so we’re capping it off with the bell-ringing. But of course, the work has just begun.”
With the merger finished – a process that has brought Stagwell’s headcount to almost 10,000 and dozens of respected agencies within its umbrella – the network is looking to compete with the holding companies on a level playing field.
Extra horsepower
The addition of creative shops such as 72andSunny and CPB adds ”a little creative horsepower” to Stagwell, alongside its research, media and strategy arms, he says.
”Our goal is to increasingly compete with them on their terms. Part of our strategy, of putting together creative and digital talent, is to be able to turn around and say [that] if you’ve been using those four majors, but you’ve been dissatisfied, they’re not digital and their creative isn’t immersive enough, that we can be a real alternative.”
”We aim to dislodge some of that $60bn that’s sitting over there in the majors, because they’re the people that most clients love to hate,” he continues. ”The marketplace is ripe for this kind of opportunity.”
The first half of 2021 saw a deluge of client activity and ad spend, and though Penn agrees with Publicis’s Arthur Sadoun on its ”exceptional” nature, he’s optimistic about market conditions.
”There are two aspects. One is more temporary – the renewal of marketing efforts that were halted during the pandemic. The other is more permanent, which is the shift toward increased digital transformation, increased online shopping and, as a consequence, increased online advertising. I estimate this is a three-to-five-year acceleration of those trends.
”We had Zoom and Peloton before, but we didn’t use them. A lot of these tools, such as InstaCart, were developed before the pandemic, and then they kind of had their day.”
In this context, Penn is betting on Stagwell’s triple-headed offer to clients – digital media, creative and strategy – to tear strips off account incumbents. ”The combined company really has the capability not to do one or two of those things, but to do all three well, and that’s what clients are looking for.”
The company formed the Stagwell Media Network in August, a parcel of media agencies (including Media Kitchen, Assembly and Multiview) that account for a quarter of its staff and close to $5bn in media spend.
”Some people think it’s all about old-style creative and some people think it’s all about having a black box. I believe it is really about having the right combination.”
He also points to Stagwell’s stable of research and insights firms, and its political consultancy units – Penn was a pollster and political strategist on scores of presidential campaigns, including the Clinton election bids – as magnets for further growth. Political fundraising is ”the fastest growth market of them all,” and one that he claims the company enjoys a 40% stake in.
Expansion opportunities
Next on the to-do list is overseas growth, particularly in Latin America, Russia, the Middle East and India. Penn has ambitions to grow through international acquisitions, particularly in the former territory. ”We’re very strong in Europe, Canada, the United States and reasonably strong out of Asia. I think we’ve got room to definitely grow.”
Recruitment is Stagwell’s other focus. Penn says the network can offer would-be recruits something its holding company rivals can’t: space and forward motion. ”Stagwell agencies have a tremendous kind of entrepreneurial control. We’re not a big bureaucracy ... I’ve worked to really foster an atmosphere of collaboration.”
It appears to be working; over the last six months, Stagwell has hired 1,000 new staffers across its agencies. ”We’re on the way up. That’s where people want to go, somewhere that’s growing and growing.”
Despite his own experience of the US tech sector (Penn was chief strategy officer at Microsoft until 2015), which has been lately credited with drawing agency talent away from advertising, he says the sector should still be considered a decent place to make a career.
”Frankly, the industry has a lot of great jobs in it. You get to express your creativity, you get highly paid, with a college degree (without having to get a second or third degree). I think it’s actually an industry of opportunity ... I think we will continue to draw very strong talent around the world.”