CEO Mark Penn on How MDC Partners Is Weathering the Pandemic

Holding company has implemented pay cuts, furloughs and layoffs in recent weeks

Mark Penn became CEO and chairman of MDC Partners last year.
MDC Partners

Key insight:

Mark Penn, CEO of MDC Partners, said the holding company’s agencies—which include 72andSunny, Anomaly and Doner—have, on average, reduced payroll by 10% in response to the business impact of Covid-19.

“Each company really had to formulate its own plan based on what would be appropriate for the kinds of clients they have,” he told Adweek. “It’s gone company by company.”

Penn said cuts have been made through a mix of pay reductions and furloughs, but did not share the extent of layoffs at individual agencies. However, agencies including CPB and 72andSunny have confirmed staff reductions in recent weeks. According to Penn, roughly 1,000 of MDC Partners’ part-time employees who normally focus on events have been impacted due to the virus, since they cannot work for the time being.

Last month, MDC Partners reported organic growth of 2% for the first quarter of 2020, with net new business totaling $8.4 million. On the holding company’s first quarter earnings call, Penn said it marked the first time MDC Partners experienced net organic growth since the third quarter of 2018.

Penn became chairman and CEO of MDC Partners last year after his private equity fund The Stagwell Group invested $100 million to buy just under 30% of the struggling holding company. His turnaround plan has largely involved cost-cutting measures and grouping its various agencies into networks, the latest of which is a creative collective the company is calling a “constellation” that includes 72andSunny, CPB, production company Hecho Studios, digital shop Instrument and design consultancy Redscout.

On last month’s earnings call, he described this strategy as “turning what was a loose confederation of companies into a nimble set of talented networks.” He told Adweek it was “time for the group of disparate agencies to be able to work together, because functionally, they have a lot of complementary services that weren’t really being used to the maximum extent against a fabulous client list.”

Managing the crisis

Penn said the pandemic hit just as MDC Partners was beginning to accelerate, describing it as “firing on all cylinders” at the start of the year. However, the changes he’s put in place over the past year have “situated us to go through this crisis and to get through it in an excellent position.”

For the year ahead, he expects organic revenue to fall between 10% and 15%, but said that could change depending on how quickly its agencies recover after what is likely to be a “pretty severe second quarter” because of coronavirus.

“If we get an accelerated recovery, I think it will be better than that,” he said, “If we get no recovery, it will do worse.”

Penn noted that MDC Partners’ digital agencies, such as YML and Instrument, have fared particularly well in recent weeks because of their offerings. He also said its PR agencies, in particular Allison+Partners, have done well since clients are shifting their messaging right now.

“The digital businesses are not experiencing any pullback at all,” he said. “Most digital businesses actually have had some of the busiest months, because a lot of clients are moving to make sure that their digital layer is in place.”

At the moment, he said MDC Partners is working with a consultant to put in place a “set of standardized policies and procedures” that will dictate how it goes about reopening its offices in the coming months.

“We expect to make sure that the workplace is clean, bring people back in stages, [and] be able to have proper masks and other things,” Penn explained. “Not everybody’s going to do these things at the same time, but they’ll do these things in the same manner.”

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