‘A slightly different kind of CEO’: MDC Partners’ Mark Penn wants to make his presence felt
Mark Penn looks distinctly uncomfortable when I compliment him on his office. To be clear, it’s a nice office: Books line the wall in an elongated space full of wood finishes and comfortable chairs, 19 floors above Manhattan’s Fifth Avenue.
But it’s then I realize that Penn, the newly appointed CEO of MDC Partners, is barely a month into the office, and the job, and hasn’t had time to redecorate yet. The trappings are mostly of his predecessor, Scott Kauffman, who became CEO after founder Miles Nadal stepped down following an SEC investigation on executive pay back in 2015.
“I guess he really liked flags,” Penn muses as he looks up at one piece of art featuring Alec Monopoly jumping out of an American flag. “All I added were a few pictures, and some Snapples to the bar cart.”
And like with his office, Penn, 65, is in some ways a man caught between the past and the future — optimistic about bringing a new lease of life to MDC, but needing to break free of its old ways of doing things first.
Ahead of him is the daunting, yet enviable task of turning around MDC Partners: the embattled ad holding company that his group, Stagwell Partners, poured $100 million into earlier this year.
First to go might just be the office itself. One of the ways Penn plans to cut down costs is to take a hard look at the real-estate MDC resides: one of which includes the modest, yet by no means cheap 19th floor headquarters his office occupies, in the same building as Bergdorf Goodman in one of the most expensive neighborhoods in the world. “Just waiting for the right buyer,” he says, in response to a question about a reported sublet the agency is planning.
“Real estate done right affords a holding company a great order of flexibility,” he says. “If five agencies get an extra floor each, only two of them will grow. If five agencies say they’re going to grow, you discount by two and only get two floors. Then, you’re able to as a holding company make financially disciplined decisions.”
Not being bloated with costs doesn’t just start with real estate.
Penn is embarking on a long-term and wide-ranging cleanup of the MDC Partners business, which includes storied creative agencies like 72andSunny and Anomaly, as well as a handful of media agencies like Assembly and The Media Kitchen. His first goal is to have the holding company play the role it needs to play: That of a benevolent, yet disciplining figure that can rein in costs and provide resources where needed. It also means bringing in innovation resources if agencies fall behind, but also negotiating better deals on IT, software and benefits.
His other goals are to create and put together growth scenarios that let agencies collaborate and really take on more of a strategic role for their clients. In the shorter term, it’s to make individual fixes with what he calls the “clunkers” in the agency portfolio.
At Stagwell, which made that minority investment in MDC (“They basically said we’ll take the investment as long as you’re CEO,” says Penn of how he got the job), Penn devised a series of metrics for how holding companies should operate that if applied to MDC, would save the company “$100 million, or more accurately, $107 million straightaway,” which will assuage that debt MDC has. And while MDC has been known to be largely hands-off with its agencies, that may soon change too, with Penn rethinking the role of MDC as being much more involved than his predecessors seemed to have.
Penn’s already resolved some smaller issues, including a spat with an activist investor, resulting in new nominations to the company’s board. But big tasks lie ahead of him: MDC has issues like cost control and a stock price that has slid 72% in the past year alone, compared to a drop of 26% for WPP and a gain of 7% for Omnicom. The plan now, per Penn, is a two-year effort to transform MDC into a modern marketing company.
It’s also, like the rest of the agency world, dealing with other threats to its business, from consultancies eating up market share to a growing number of clients cutting agency fees thanks to procurement, as well as the rise of more in-house agency capabilities.
Arguably, MDC is in a weaker place to deal with these issues than most others because it is heavier on creative agencies and lighter on media. But Penn doesn’t think it’s an issue. “Accenture for such a long time was trying to say creativity was dead, and had to throw in the towel and buy it. Creativity is still the front door to any significant corporate relationship,” he says, echoing the refrain that agencies have got to be better at strategic consulting on marketing and business problems. “The consultancies have yet to create a successful link all the way through. Yet.”
As for the death of the agency of record, Penn thinks it’s for the best. “I worked in project businesses all my life. We never knew what we were doing. That meant continually coming up with ideas for clients,” he said. “Our services have to be aligned to solve problems.”
There are, after all, only a few kinds of meetings a holding company CEO can have. One is financial — where is the money being spent, why is it being spent. And the other is more strategic. “I come in as a slightly different kind of CEO,” he says. “I’ve been client-side. I worked in polling, in messaging. I can get into substance. The big difference I’ve noticed in why I’m getting accepted is I am not just a business guy who is going to be a pain in the neck.”
“He’s a bit of a contrarian and sees things differently,” says Bill Knapp, a D.C. political strategist who has known Penn for 20 years. “He does not accept conventional wisdom. That can be challenging, but it can be good. MDC Partners is going to be different than it is now. That’s because he’s very innovative. And he likes winning.”
Penn is probably up to the task. He is perhaps best known, despite having not working in politics for over a decade, as the top strategist for Bill and Hillary Clinton, the star architect of a polling-meets-strategy concept that helped him serve as pollster and advisor to former President Clinton, after his first term’s midterms and leading him to help the president win re-election in 1996, thanks to a key focus on the “soccer mom vote.” He also was an aide to Hillary Clinton during her senatorial run and her presidential run in 2008. (He’s also done plenty of other political work, including, as he mentions during our interview, helping “one presidential campaign in Venezuela, two in Colombia,” a Tony Blair prime minister run in the U.K., and, before that, both Ed Koch mayoral campaigns in New York.)
Knapp, who was also a partner in PR firm SKDKnickerbocker, which Penn’s Stagwell Group acquired in 2015, recalls that at dinner, Penn used to have two phones, one for Clinton and one for Blair. “The hardest part was knowing which to pick up when both called,” he says.
It’s a political past that he seemingly embraces, as well as tries to distance himself from.
“The point here is, the truth is 90% of my clients have been nonpolitical for decades. Let’s not skip over the fact that I worked at Microsoft, I took them to the Super Bowl, I’ve worked with them,” he said.
That’s true: The nonpolitical work has actually bookended Penn’s political work. Penn, a Harvard grad who grew up in Riverdale, New York, did his first “poll” at age 13 while he was at the elite Horace Mann school (it proved that the faculty at the school was more liberal than the country). With a keen interest in law, driven mostly by his father’s early death when he was 10 and “things that happened after” as well as polling and strategy, he founded what later became polling firm Penn Schoen Berland alongside his business partner Doug Schoen, with early clients including AT&T, Texaco, McDonald’s, and the “Wintel alliance” of Microsoft and Intel. The firm was sold to WPP in 2001.
After the political work of the 1990s and 2000s, a long stint at Microsoft saw him begin a PR campaign against Google for Bing that had shades of political oppo advertising, the 2014 Super Bowl ad for the company, and the “Don’t get Scroogled” ad campaign.
But it’s hard to divorce the man from the politics. It’s also easy to see why: Up until very recently, Penn has been a fixture on television news programs, most recently arguing that a president cannot be expected to function and do his job when there’s a special counsel investigation into the person holding the highest office in the land — the same point of view he has with Mueller is one he had in the Clinton days against then-special counsel Ken Starr. (And unsurprisingly, his office has pictures of him with both Clintons; he just spent time the day before our interview with Karl Rove, Neera Tanden, and Jim Messina, he casually says.)
“These days I’m a bit more of a commentator and an observer than in politics,” he says. But at the same time, he sees parallels. “A 50-state strategy is not a strategy. If you see a candidate betting on the Midwest, that’s a strategy. I believe MDC has to place a couple of big bets that need to create a strategy. In political campaigns, the message dominated the creative. The creative ideas would never exist on their own without a creative strategy. That is exactly what clients are looking for.”
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