Mark Penn Wants to Build a New Kind of Holding Company
Mark Penn in September will leave Microsoft, where he has served as exec VP and strategy officer, to start a company that will invest in advertising, research, data analytics, public relations and digital marketing companies.
Ex-Microsoft CEO, Steve Ballmer, is an investor in the company, called Stagwell Group, which will be based in offices at 1700 K Street, in Washington D.C. The company has already closed $250 million in investment capital, but it's not currently accepting new investors, according to a statement. Currently he and Mr. Ballmer are the only investors and will build their team over the next few months, said Mr. Penn.
Prior to joining Microsoft, Mr. Penn served as CEO of WPP PR firm Burson-Marsteller and before that he was co-founder and CEO of Penn Schoen Berland, a market research and polling firm that eventually became part of WPP and Burson-Marsteller. He has been a senior adviser to political leaders including U.K. Prime Minister Tony Blair, Israeli Prime Minister Menachem Begin, Senator Hillary Rodham Clinton and President Bill Clinton.
He talked to Ad Age about what he wants his company to look like, why the small holding company trend makes sense today and how he expects to compete with the big holding companies for marketing dollars and agency acquisitions.
Ad Age: What types of companies will you invest in?
Mark Penn: We'll put together a mix of companies. One of the problems in big holding companies is that there are 10 people competing against each other. One of the things we can do there is take a best in class in key disciplines so they can support each other. I think we'll have to have a mix of creative companies, companies that have research and data analytics at their core and companies with experience in new digital placement, whether it's new forms of programmatic buying or [firms] that are really able to sweep the most effectiveness out of your digital buy.
Ad Age: What will you do differently from existing agency networks?
Mr. Penn: I hope to also bring together this experience to create a new kind of fund and one that also is managed by people with deep experience in their fields. Too often people who are doing these investments and managing and growing a firm have experience in accountancy and not deep into the fields themselves. I want to be more helpful in nurturing and growing great mid-sized companies into being really big companies.
Ad Age: How big will Stagwell's investments be? Are you looking to be MDC & Partners?
Mr. Penn: We're looking at a majority or more stake. We're a digital-first place that values creativity and data. It's something the marketplace doesn't yet have.
Ad Age: Why leave Microsoft now to build a small holding company?
Mr. Penn: There's a tremendous amount of uncertainty on where is the best place to go for advertising, and the best way to extend advertising dollars. People don't fully understand the impact of competitive marketing yet -- the power of message combined with data -- and I think there's an opening.
There's also an opening for smaller firms to take on bigger assignments. You can create incredible content that can go global instantly with a tightly knit creative group and may not need as big an infrastructure as it did in the past. That's what's opening deals up to companies like ours.
Ad Age: Would this have worked a few years ago?
Mr. Penn: It would have been a lot tougher a few years ago. It's helpful, the fact that clients are searching around for some of these answers now.
Ad Age: Who will you compete with for acquisitions and investments, and how?
Mr. Penn: We expect competing against some of the largest holding companies for some of these acquisitions. It's important to balance making deals and acquisitions and nurturing talent for the long-term. I sold my firm many years ago and in those days no one expected you could possibly sell your firm. Today people see the marketplace differently. They don't want to get lost in competitive bureaucracy.
Ad Age: What does the M&A marketplace look like?
Mr. Penn: There's a good number of companies where they've achieved some growth and want to get to the next level, and there's some good competition out there as well.