This story is part of the Digiday Masters of Uncertainty series, a look at the people and companies at the center From the storylines that define the media. Find the rest here.
With political chops and strong public relations — its founder Mark Penn has a long track record of running political campaigns behind the scenes — and expected $8 billion in political advertising spending to cover the US, the Stagwell Group, the new agency’s holding company, is entering the new year poised for To succeed in what he is good at.
But beyond the windfall of political marketing, the holding company has its sights set on an even bigger prize – expanding the opening for Stagwell’s offering, both geographically through expansion into Latin America, Asia Pacific, Europe, the Middle East and Africa, as well as through discipline, as it The company loads. On digital assets first. In this way, it can continue to focus on its strengths but also compete on a level playing field with its rival holding companies in its portfolio of customer services.
“We are looking to connect the consumer all the way through the whole [Stagwell] The Foundation “for its agency clients,” said Jason Reed, chief investment officer at Stagwell. We’ve made some secular bets: political, communications, research. And now we’re adding additional services to our portfolio to become a marketing services provider that can win contracts for anywhere from $20 to $30 million. American or more.
For the past six years, Reid, who runs an annual investment war of between $50 million and $100 million, has been responsible for finding suitable candidates to buy, then negotiating and closing deals.
At the time, observers say Reid drew a distinct Stagwell identity from old competitors such as WPP, as well as newcomers such as S4 Capital. But these observers also believe that Stagwell is still looking for bigger gems to bolster her crown, particularly when it comes to her media business. And as it continues to grow, it must continue to prove that the assets it acquires can be greater than the sum of its parts.
“We are a different animal,” Reed said. “We are not like WPP, because through them you are basically selling yourself to a company that already has four or five competitors in your space. We are creating a loose association to gain business locally.”
Reed and Ben go back six years when they met and worked together at Microsoft – Ben Chief Strategy Officer and Reid Senior Business Strategy Director. But when Ben became president and managing partner of Stagwell in 2015, he took Reed with him.
At the time, Reed and his team cut 35 transactions for Stagwell, Ben said, including Code and Theory, as well as a respected media agency network formed from The Media Kitchen, Assembly, Gale Partners and ForwardPMX, handling about $5. $1 billion in media spending.
“Jason takes a very thoughtful and thoughtful approach to evaluating Stagwell’s mergers and acquisitions,” Ben said. “He really has the numbers skills you need. On the other hand, the acquisition is often a leap of faith, and I think he really understands the personal aspects of that too. [being acquired]It’s usually the only transaction they’ll make in their lives so it’s important that we understand them and they understand us.”
Dan Gardner, CEO of Code and Theory, not only acquired Stagwell through Reid and his team but also went on to research with Reid to expand Code and Theory’s reach in the communications landscape, acquiring specialty stores like TrueLogic and, most recently, Kettle. He declares himself a believer in their approach and methods.
“Jason is very creative and flexible in the partnership to figure out how to seal the best deal,” Gardner said. “There is a closing of the deal and then structuring it so that incentives and performance align with business outcomes — whether it’s how to bring certain central capabilities together, the outcome of the economy’s performance, or even how to scale up to a broader Stagwell perspective. He’s very good at making sure that the structure of the deal is done in a way that’s more efficacy for long-term operation.
The pace of the Stagwell acquisition isn’t going to stop any time soon. Besides searching in Asia, the Middle East, and Russia, Reed said Latin America is a particularly interesting region to look for skilled digital stores to acquire. Not only are they in similar time zones, but the talent pool is amazing there,” Reed said. “People have grown up on their cell phones – and the younger generation is so focused on digital technology.”
Stagwell knows it’s not the only holding company looking for stores to sell. But Ben and Reed feel confident that they have a successful approach. Both dismissed companies like S4 Capital and traditional holding companies as too much competition when it comes to finding new business to buy into.
“We’ve built a $2 billion network in the past six years that’s dwindling a lot [Sorrell] Ben said. Our biggest competitor is usually the errant private equity firm that thinks they know something about the space. They tend to pay more than is appropriate. but then [the acquisition] Goals tend to know [PE firms] We don’t have a strategic system like we have.
“We’re generally not the first bidder, we’re usually the second,” he added. “Because when someone looks at their return, it won’t be the money they receive. It will be how they grow. The overall benefit of the deal for the next four or five years could be much greater.”
One agency CEO, who has watched Stagwell from afar but has gone through several acquisitions himself, including owning a previous agency that was bought by a holding company (not Stagwell), credits Stagwell with its focus on public relations and communications.
“Ben led this very interesting wave of the last few years, which was really driven by PR, but then I went out and bought Code and Theory, which is one of the best companies in the industry,” the CEO said. They added a bunch of digital assets.
But, the CEO added: “They have all these talented agencies that are becoming mediocre in their ability to grow, like Crispin. [Porter & Bogusky]. And the media isn’t just a big part of their business – how do they tackle that? What is Stagwell’s crown jewel? “
Jay Patisal, Forrester’s principal global agency analyst, credits Stagwell for at least trying to monetize more of the media side’s assets by bundling them together into a single network. “It is much more than the grouping itself or forward PMX on its own. The group has doubled its size in terms of purchasing power,” Pattisal said. “What were previously two separate media agencies suddenly emerged as a smaller but significant media network.”
However, this crown jewel may not have been purchased yet. Whatever business Stagwell buys in the future, Penn promises there will be no duplication. “We are not going to buy six of the same thing – we are going to mobilize all skills so that we are the most effective marketing organisation,” he said. “Strategically, after the merger, we will look for acquisitions that really make sense in terms of business growth and individual needs.”
As Code and Theory’s Gardner emphasizes, Reid and his team consciously eschew a typical approach, in order to accommodate the individual elements of each acquisition. “There is flexibility in deal structures — it’s not one-size-fits-all,” he said. . “Other holding companies have coordination on how deals are done. But Jason is good partners in structuring deals, to deliver both business and human outcomes.”