Mark Penn — chairman and CEO of MDC Partners — joins Yahoo Finance Live to discuss MDC’s recent merger with Stagwell Group, as well as his insights on the current state of politics and big tech.
MYLES UDLAND: Well, at the end of 2020 we saw a real pickup in M&A activity. One deal going down in the marketing space, MDC Partners combining with Stagwell to create a new marketing group. And we are joined today by Mark Penn. He’s the Chairman and CEO of MDC Partners, President and Managing Partner of the Stagwell Group and the Chairman of the Harris Poll.
Mark, great to speak with you this morning. Thanks for joining. Let’s talk a bit about the deal, and maybe for some of our viewers who have certainly been in touch with the content that comes out of Stagwell and MDC, but maybe just set up for viewers who aren’t familiar with the group, sort of where you sit within the modern ad stack, if you want to call it that.
MARK PENN: Sure. About five years ago, as I left being chief strategy officer at Microsoft, I set up with Steve Ballmer as my core investor at the Stagwell Group. And that was really going to accumulate digital marketing services, core marketing services, building consumer experiences, performance marketing, online advertising, influencer marketing, all of those core, all of those core services that I thought had been under-served.
And we’ve gone from $0 to almost $900 million in GAAP revenue this year, in the last five years. And now we’re working to combine with MDC, which has agencies like 72andSunny and Anomaly and Doner and F&B, some of the greatest creative agencies in the world. And together, we’re going to bring the talent and technology that really creates a modern marketing machine.
And we’ll compete and upend, I think, the marketing space, and at the same time, leveraging my technology experience, we are also building a series of technology products themselves. We’ve released an influencer marketing platform. We’ve released a data and brand platform. We’re going to be working on an AR platform for the Apple glasses.
We’re going to have a stream of digital products here that I think are going to be critical complements to what we’re doing to provide digital marketing services. And as we know, if there’s one trend from this pandemic, is that more and more people move to shop. Market and spend their time online. And that means online marketing services are going to be more valuable than ever.
MYLES UDLAND: You know, Mark, a phrase that came up in your investor presentation that stood out to me, was the post cookie world. I’m wondering if you could maybe outline what that means. I think people have gotten a little bit more familiar maybe with GDPR and some of the ways they’re tracked across the internet these days. But what really is a post cookie world for I guess both users and for advertisers?
MARK PENN: Well, that’s right. I think people have gotten used to kind of using the cookie for marketing and tracking, and they’re going to have to instead use other ways of targeting and finding their audiences. What we’re developing is called the CUE platform, consumer understanding and education platform, that does not rely on cookies–
–That has as its base really seven million interviews or so that we conduct annually here and in 14 other countries, and use that, along with a client’s first party data, along with some available third party data. And we can both generate the audiences, and then put through the acquisition plan on those audiences in a post cookie world. And I think a lot of marketers are going to be scrambling here as cookies go away in order to have effective targeting and acquisition.
BRIAN SOZZI: Mark, you briefly mentioned the Apple Glasses. How might a product like that, when they hit the market, how might that transform the marketing industry? Is it a matter of, so I’ll be walking down the street wearing these Apple glasses and I’ll see things in the external environment and I can buy them in real time? How does that change?
MARK PENN: Well, I think you’re, in glasses like that, when I think Apple gets to maybe a level 2 implementation, they will, if you look at say a storefront, the storefront could say CVS or it could say Walgreens. Walgreens in an augmented reality world, it could have an advertisement. Or CVS could have paid to have when you look at the CVS store, say, hey, there’s a two for one special on paper towels, come in.
So what will happen is, people will see real time information and advertising as it applies to what they’re looking at through these glasses. Obviously, Google Glasses were really an experimental product that really was not of any value. But I expect Apple will now, this number of years later, be able to do this technology right, to make it comfortable, and it will be, I think, the next big change, and we plan on being there.
JULIE HYMAN: Mark it’s Julie here. I want to switch gears to politics. I cannot resist, I apologize. Because you’ve spent a lot of your career working on these issues that you’ve been talking about, but before that, of course, you are well known for having supported the Clinton, the Clintons in their various campaigns.
And so I am curious what you make of our current moment. And if to sort of intersect your two lives, if you will, what we saw occur last week in Washington and the sort of migration onto social media of these various threads in American politics and American extremism. Is there any putting that genie back in the bottle? I mean, what’s the next sort of phase of all of that?
MARK PENN: Well, I think a lot of this is going to be up to the leadership of the incoming administration. I think that obviously, Trump’s actions were completely wrong. He incited maliciously, I think, the violence that occurred. But I think that we are a genuinely divided country. And so the Biden administration is going to have to come in here and say, look, do I want to keep dealing with Trump, the Trump administration and having him in the headlines for another 100 days, or do I want to establish my own administration?
And remember, this country is 27% liberal, 38% moderate, and 38% conservative. So there are a lot of moderate and conservative voters there that are not on either extreme. And they’re the ones that they want to be, you know, be comfortably addressed by, and they want a new president that is going to bring a kind of a fresh air to Washington.
And I think that’s, I think when you come right down to it in the inaugural speech, the Biden team will recognize that. And that is the direction they will go in. They will not want to repeat what Trump did, which was to be incredibly divisive in that speech. And if that is genuinely unifying, I think you’re going to see this administration off to a great start, and I think you’ll see America put in a better place.
MYLES UDLAND: And Mark, I’m curious how you see the role of these social platforms and big business generally in politics going forward. Obviously, it all kind of happened without anybody realizing what was happening, if that maybe makes sense. In the middle of the last decade, all of a sudden it’s like, wow, so Facebook is really in charge of this whole thing. I mean, where does this go from here? And I mean, this again, intersects with the business side of what you’re doing and also creates this brave new world of politicking that you know so well.
MARK PENN: Well look, for a long time, I’ve called for standards in terms of information that each of the tech companies, look, if I were to go back when I was working in the Clinton administration, we had problems with the entertainment industry. We came up with a rating system. And the rating system then was voluntary. It worked. It took this issue off the table.
Right now, you have, I can tell you, 40% of the country thinks that liberals are discriminated against on tech platforms, and 60% believes that conservatives are. Which means everybody is unhappy. Which means that the tech companies are going to have to put into place voluntary standards of some way that they adhere to and that are fair and that bring people together around the freedoms that they really want to enjoy on social media without the real violence and extremism.
And that’s got to apply to Ayatollah Khamenei just as much as it’s going to apply to anybody here. And I think that they’ve got to eliminate some of the questions around double standards. So I think there’s a lot of work here that can be done. I think either the industry is going to do it or government is going to step in.
MYLES UDLAND: All right, really interesting conversation. Mark Penn, Chairman, CEO of MDC Partners, President, Managing Partner of the Stagwell Group. Mark, great to get your thoughts this morning. Thanks so much for joining the show.
MARK PENN: Thank you.