Stagwell creates unit to advise executives on social and political issues

Agency holding company Stagwell today launched a new business unit dedicated to teaching C-suite leaders how to approach controversial social and political issues. The formation of the new “Risk and Reputation” unit comes as corporations face “more pressure than ever to mix business and politics,” according to a statement from Stagwell CEO and Chairman Mark Penn. Companies have been pushed more heavily in recent years to take a stance on issues ranging from racism, after the murder of George Floyd, to the alleged genocide of Uyghur Muslims, which became a focal point during the Beijing Olympics earlier this year. Brands are also facing pressure to act on environmental and sustainability issues, such as climate change. For the new unit, Stagwell has included advisors from both sides of the political spectrum. The unit includes specialists from SKDK, a Democratic strategic communications and advisory firm bought by Stagwell in 2015; and Targeted Victory, a Republican strategy and marketing agency that Stagwell invested in in 2017. Financial communications firm Sloane & Company is also part of the unit. Although PR firms such as Edelman have established similar crisis and reputation management units, Penn, a former pollster to Bill Clinton and strategist to Hillary Clinton, said in an email interview that Stagwell's unit is differentiated because of its “bipartisan” nature and “convergence of disciplines” including finance and international relations. “We help brands further upstream” by reviewing the issues most important to their stakeholders and creating company opinions, he said. The main mistakes brands make when approaching sensitive issues are “making knee-jerk decisions without studying the issues, understanding their stakeholders, or ensuring that their engagement is consistent with the platform or product their brand offers,” he said. In a recent op-ed published in The Drum, Penn argued that companies should imitate political advertising methods to get ahead. He wrote that corporations need to “take some risks and be bolder” and encouraged brands to speak about their competitors in the same way politicians do. In this vein, Targeted Victory worked for Meta-owned Facebook to sour public opinion of one of the social media brand’s competitors, TikTok. The creation of the business unit comes as Stagwell expects revenue to rise during the third and fourth quarters due to the U.S. midterm elections, according to the company’s second-quarter earnings call transcript. The holding company’s revenue increased by 21%, from $555 million to $673 million, year over year in the second quarter. Both political consulting firms bring in millions in campaign financing funds. Targeted Victory is one of the biggest recipients of spending by political campaigns, receiving a total of more than $237 million in 2020 with its biggest spenders including pro-Trump super PAC America First Action, according to data from OpenSecrets and reporting from The Washington Post. SKDK received over $69 million in 2020, including spending from Mike Bloomberg’s super PAC and President Biden’s campaign, according to OpenSecrets.

Stagwell creates unit to advise executives on social and political issues

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