The Facebook advertising boycott should, theoretically at least, be coming to an end next week. Throughout July, advertisers including Starbucks and Verizon pledged to pull ad spend from the platform to take a stand against hate speech and misinformation on the social network, which is visited by 1.6 billion people every day.
Mark Penn, chairman and CEO of MDC Partners and managing partner of Stagwell Group, is concerned that social media platforms like Facebook are going to find themselves in a “no-win situation where everybody’s just trying to get their opposing viewpoints suppressed.” Penn knows plenty about opposing viewpoints in politics, having spent the early part of his career as a pollster and was Hillary Clinton’s chief strategist during her 2008 run for the White House.
“Depending upon who’s up and who’s down, and who can get together with a group of advertisers, it has the potential long-term effect of destabilizing something that was really built on being open and available,” Penn told Adweek in a wide-ranging interview ahead of his appearance at the NexTech 2020 summit next week.
Social media, he argues, “has actually allowed so many different political movements to flower during the last 15 years.”
This interview has been lightly edited and condensed for clarity.
It’s been roughly four months since the coronavirus pandemic hit the U.S. and brands started feeling the impact. What are you hearing from clients now? Are things stabilizing, or are they still grappling with what happened?
Both. In general, the phone calls we get now are clients looking to figure out their marketing program for the rest of the year. Those are a lot better calls than the ones we were getting in March. The number of calls for pullbacks has dropped basically as close to zero as I’ve seen.
People are beginning to put their pitches back on; there are a couple of notable new pitches out there that had been on hold. So I do think things are stable. It looks to me like people are settling into this notion that this is going to be with us for maybe another six months, but during that period we’re going to have to move forward with our marketing if we can.
What about agencies? For a while, a lot of layoffs were happening.
On the agency side, we’re beginning to hire people instead of the opposite. Obviously, if you work in experiential, that was a huge issue, and you’re converting over to webinars until experiential will be able to come back. On the digital side of things and basic communications and PR, demand was the same, if not higher. And our media and advertising demand is kind of going with the economy. We adjusted to the change in business, and it seems to have flattened out.
The good part of our work is that it was able to continue. We were able to do cloud-based editing. We were able to do everything but production for a while, and now there are various countries and places where production is restarting.
MDC Partners was in the middle of a transformation process, one that’s largely involved cost-cutting and bundling various agencies into likeminded networks, when the pandemic started. Has it hampered those efforts?
It was not what I was expecting. We had a really strong fourth quarter and first quarter, and I think that we had some great tailwinds building up, so I think we have to use our tailwinds to adjust to the new situation. It set us back from the kind of year we would have had, but changes that we made–changing the cost structure, but most importantly moving to the networks—helped. Instead of having 25 or 30 individual units, we’ve grouped the units together so that they have a common leadership team. That really made a huge difference in being ready to handle what happened.
You recently wrote an op-ed for Fox Business in which you said the marketing industry will play a “critical role” in helping the economy recover from coronavirus. Can you talk a little bit more about why you believe that?
I look at clients and the questions that they’re facing. There’s really three basic questions, and virtually every client is going to face one or more of them. Some brands—like videoconferencing ones, and even products like orange juice and pizza—got a lot more customers than they ever expected at this point. So the question will be, when the pandemic subsides, how do they keep their customers? Will people still use Instacart and other services for groceries, or will they go back to the grocery store? I think the question is, how can marketing sustain the momentum that they’ve built up?
A second group lost a lot of customers, with people saying, “Who needs shaving? What do I need to wear suits for?” There are a lot of trends of informality that got accelerated by this. So they’re going to ask where they can go to get their customers back. The question there is how marketing can play a role in that.
The third group, who not only lost customers but whose services were deemed unsafe—particularly in travel and hospitality—they’re going to ask, “How do I prove to my customers that it’s safe and get my customers back?”
As we come out of this pandemic, answering one or more of those questions becomes the job of marketing. I think the marketing companies were almost left for dead as this broke out, and that hasn’t been the case. Publicis announced their earnings, and sure, people cut back, but marketing as we know it isn’t over, which is I think where the stock market went.
Stagwell Group, where you serve as managing partner, recently proposed a merger with MDC Partners. Can you talk about why you made that decision?
I’ve always thought that they are two halves of an incredible marketing machine that, when and if they’re put together, will stand up quite strong in the marketplace. MDC started from the point of world-class creativity first, while Stagwell really started from the point of digital and data first.
We’ll also have about a $2 billion level of scale, which will give it the ability to start really going after the larger accounts dominated by the huge holding companies.
Many of the holding companies have been addressing systemic racism following the reinvigoration of the Black Lives Matter movement. What is MDC Partners’ approach, or are you leaving it up to the individual agencies?
I think both. The agencies at MDC have always been at the forefront of diversity and inclusion, and it’s been a major component of every one of the agencies for a long time. On top of that, we formed a committee of the different agencies and corporate to go through and evaluate, and see how those efforts can be stepped up and systematized. But a lot of our different agencies have different geographic makeups, so most of the policies will come from individual agencies because they’re going to do what’s appropriate for their communities. An agency that’s in Minneapolis is going to do something very different from one in Los Angeles.
Mark Penn will discuss the “21st Century Privacy Inflection Point” at NexTech 2020, a four-day summit beginning July 27. Join more than 3,500 others and register now for this complimentary virtual event.