Stagwell CEO Mark Penn: how a former Clinton pollster built a $2bn ‘Big Four’ challenger
The Media Leader Interview
Mark Penn, founder and CEO of Stagwell Inc, talks to The Media Leader about his background as a pollster for Bill Clinton and Tony Blair, exec at Microsoft, and how his experience at WPP under Sir Martin Sorrell has taught him ‘what not to do’.
Mark Penn conducted his first poll when he was just 13 years old.
Then a student at Horace Mann School, the young Penn watched a CBS program on race relations in America that included a public opinion poll. He was enamored, and took to recreating the same poll of the faculty at his elite prep school, finding that they were, in his words, more advanced, more tolerant, and better citizens than the public at large.
He was fascinated by the findings, and by the detective work required in asking the right questions to uncover them. Years later, by which time he had ascended to become an “inside-the-beltway genius”, working for the Clintons, Microsoft, and countless other corporate entities and international political parties, a teacher from Horace Mann sent him the poll as a reflection of his humbler beginnings.
Today, Penn is CEO and founder of Stagwell, a “digital-first” global marketing and communications holding company that is looking to challenge the biggest names in media and marketing.
Between soccer moms and Bill Gates
After graduating from Harvard and beginning a law degree at Columbia, Penn and close friend and associate Doug Schoen started Penn & Schoen, which would go on to become the global research consultancy firm Penn, Schoen, & Berland (PSB). His first political work helped Ed Koch win the New York City mayorship in 1977, thanks in part to the, at the time, novel use of overnight polls that allowed for rapid analysis of messaging tactics.
In the following years and as the firm acquired more and more clients, Penn was tasked with aiding several international political campaigns in Venezuela, Bolivia, Ecuador, Thailand, and more throughout the 1970s and ‘80s.
“I was taking the technique of polling into foreign situations for foreign leaders who, at the time, didn’t really understand what their voters and citizens were thinking.”
At Penn’s behest, however, the firm began expanding into commercial enterprises in the late ’80s.
“I said, ‘Doug, you know, we lose one more governor’s race and we’re out of business. How about taking this stuff to commercial so that we can still do our political thing, but we could also have a lasting career for everybody’”.
And so they did, providing marketing research for companies like AT&T, McDonald’s, Microsoft, and Major League Baseball.
In the meantime, Penn was hired by the Clinton administration to aid political strategy in the leadup to the 1996 presidential election. He advocated for pushing Clinton to the center on various issues to appeal to more voters, such as “soccer moms” (a term coined by Penn), as a New Democrat. Following Clinton’s victory over Bob Dole, Penn stayed close to the president as a key aide through the rest of his tenure.
He later went on to advise Hillary in her 2000 senatorial run and 2008 presidential campaign, with varying results, as well as British Prime Minister Tony Blair in 2005.
The firm’s successes led to PSB being sold to WPP Group in 2001 where it became a division of Burson-Marsteller (now Burson Cohn & Wolfe).
While working for Microsoft, Penn earned favor with executives for successfully reframing then-CEO Bill Gates as trustworthy amidst antitrust litigation.
Following a continued relationship with the tech giant, wherein he eventually became its Corporate Vice President for Strategic and Special Projects and then Executive Vice President for Advertising and Strategy, Penn started to become convinced that companies were not making the transfer to digital fast enough.
‘Too much creative, not enough digital’
With $250m in financial backing from former Microsoft CEO Steve Ballmer and himself, Penn founded and today operates Stagwell, of which Ballmer remains a limited partner alongside Dutch private equity group AlpInvest.
Speaking to Penn over an at-times poor Wi-Fi connection from a hotel in Miami, the CEO and long-time pollster was cheery and cordial as he explained with confidence how his company is situated to take on the “Big Four” marketing holding companies of WPP, IPG, Publicis Groupe, and Omnicom.
“If you look at the big holding companies, there’s too much creative, not enough digital. And if you look at the consulting companies, there’s too much engineering, not enough creative. I think we have really come out here as having a full balance in line with the marketplace.”
Eight months on since Stagwell’s merger with advertising and marketing holding company MDC Partners, Penn spoke with a high degree of optimism.
“The merger is clearly working,” says Penn, citing measurable improvements in the size and scale of the clients that have come in since the merger was completed last August.
He notes how big recent signings with Lenovo, H&R Block, Dunkin, and an as-of-yet unannounced healthcare company have all been major assignments of $10m and above, showcasing an increased confidence in the combination of holdings created by the merger.
“We don’t just talk about being the challenger holding company – we are the challenger holding company,” Penn insists.
“We now have a $2bn platform. We’re a credible competitor. If we’re in a pitch against the majors, we can win it, and we are winning it at least now in the $10m to $20m level.”
And Stagwell is experiencing strong pro forma organic growth to the tune of 14.5% in 2021 according to its most recent earnings release. Although so are the industry’s incumbents: IPG had 11.9% organic growth, Omnicom 10.2%, Publicis 10.0%, and WPP 12.1%
Big contract wins at its agencies, such as Assembly, are helping to propel the holding company, with 75% of Assembly’s revenues coming from digital channels.
Success in business, recent controversy in politics
Despite shifting much of his focus toward corporate interests over the years, Penn never left politics behind, and it has gotten him in trouble with left-wing members of the press and public in the recent past.
Though a moderate Democrat throughout much of his life, Penn has trended to the right since working on Hillary’s 2008 presidential campaign, where he clashed with other staffers before eventually stepping down as chief strategist.
While CEO at Stagwell and MDC Partners, Penn has remained active as a political and polling analyst.
“Polling keeps me very close to what’s happening out there,” he says.
On top of hosting a monthly podcast on Harvard-Harris Poll data alongside The Hill editor-in-chief Bob Cusack (Stagwell owns The Harris Poll, which it acquired from Nielsen in 2017), he has further penned numerous, sometimes-controversial op-eds for various publications including The New York Times, Fox News, The Hill, and The Wall Street Journal, and has appeared regularly on Fox’s cable programs.
His latest piece on rising fear among American voters headlined yesterday’s New York Times opinion section.
Drawing ire from Democrats, he advocated against Robert Mueller’s investigation into Russian interference in the 2016 election and against President Trump’s first impeachment trial in January 2020, even reportedly meeting with Trump to discuss the latter, though he denied working for and officially counseling the former president at the time.
Penn’s comments and actions led to a booking freeze from CNN and MSNBC, though he is optimistic the tides will change, and he will soon be asked back on the networks.
For his part, he has consistently held firm to an air of centrism, including to The Media Leader, maintaining that his opinions have come for free and that he welcomes invitations to come and speak on any platform that will have him.
“I think that my role here, and I think particularly in sync with the businesses I operate, is not right or left, or all the years I represented Democratic candidates. It really is just being a kind of sober analyst for what’s going on.”
He notes that he has “pulled back” from consistent Fox appearances, though he conceded he shared his criticisms of Biden’s Russia-Ukraine policy with the news site, a topic he “felt strongly about”.
He adds, hopefully, that “the media will open itself to broadening its analysis, and that will probably broaden the requests I get.”
‘We’re positioned to grow market share’
As for the future of Stagwell, Penn laid out a strategy for maintaining growth.
“Continuing in organic growth, we’re looking at two important areas. One is expanding the global reach so that we can continue to again get larger clients and get full global servicing across the digital world. Second, areas of developing digital services, which might be more ecommerce or more new marketplaces or to get into the metaverse.”
As to the first point, Stagwell has indeed been expanding its global reach, opening offices in Singapore and Brazil since the start of the new year.
As to the second, Penn pointed, as one example, to the recently announced in-house marketing team at Stagwell Marketing Cloud.
“I am also using my experience as chief strategy officer at Microsoft to build a series of products that will be a unified offering for do-it-yourself marketers,” said Penn.
“This is something that none of the other holding companies have the capability to do, and that we’ve gradually built up over the last few years so that the products are nearing completion. I’ve added a team that is going to bring them to market by next year, so you’re going to see a full suite of digital products for the do-it-yourself marketplace. And that’s going to be something that also catapults us to the next level of value.”
Penn, like other industry leaders, is acutely aware of the changing media landscape, and has positioned Stagwell to be a competitor through the adjustment period.
“All media is becoming addressable outside of news and live events; all media has to become addressable because people are choosing what they watch and when they watch it. And I think it benefits [Stagwell] because we have the ecosystem to deal with the addressability and the creative system to also create the content that’s necessary to make those things work.”
And he’s betting on himself and his 40+ years of experience in marketing and public opinion to lead Stagwell in bringing the challenge to the big holdings companies.
At 68, Penn boasts his wealth of knowledge in polling, marketing, and politics while also taking note to stay agile, informed, and in touch with an ever-changing media ecosystem. He hasn’t picked up a physical newspaper in over a decade; instead he describes himself as a voracious reader of digital news across at least 10 different sites.
“I’ve always been someone who’s at home with identifying and marketing to the sliced and diced, the niche electorate or consumer base. And so [addressable media] is something I’m quite comfortable with, and that’s the prime development. Our media operations are 25% offline, 75% digital. And that’s a great mix.
“We’re positioned to grow market share. I’m not gonna say we’re better for every single thing, but we are positioned to grow market share here because we have a nimble digital first operation. And I think [the big holding companies] have been stuck with the innovator’s dilemma, where disruption moved faster than they could innovate. And that disruption of moving from linear media to addressable media is accelerating.”
‘If there’s an inferior product, it’s incumbent upon people to point that out’
Penn attributes much of his success to lessons he has taken away from working with some of the most influential Americans throughout the late 20th century.
“All of the great people that I’ve been privileged to work with have been my mentors. Whether it’s when I worked with President Clinton, or when I worked with Bill Gates and Steve Ballmer.”
“I have had incredible opportunities to see how Bill Clinton synthesized things, how Steve ran a scaled organization and thousands of employees that he ran like a machine. Even Martin Sorrell, I could learn what not to do.”
Penn feels that at the time he worked under the holding company that WPP, then-headed by Sorrell, was not making a fast enough transition to digital, did not incentivize adequately top talent, did not encourage wider share ownership, had too many competitive companies within its holdings, and did not adequately foster collaboration.
Sorrell left WPP in 2018 after 33 years, and started S4 Capital, another challenger advertising agency holdings company.
In 2012, Penn wrote for Time that negative advertising is good for democracy. Today, he feels differently.
“Political advertising and negative political advertising have become largely too formulaic and too dominant, and I think overdue for a change.”
“I did the 3:00 AM ad, which was a good example of [a negative ad] – it was negative in that it only asked a question. You have to be artful in the way you pose an issue. Where it gets wasted is when people think it’s an automatic formula.”
On the other hand, there’s more room for negative commercial advertisements.
“If there’s an inferior product, it’s incumbent upon people to point that out.”
That philosophy is clearly important to Penn as he tries to grow a credible agency group challenger in Stagwell. One suspects there will be a great deal of ‘pointing things out’ along the way, too.