Scott Kauffman chats to LBB’s Laura Swinton about a stellar year creatively and financially
If there’s something we’re a sucker for, it’s an underdog tale – and this year MDC Partners has come out fighting. It’s had an incredible turnaround in fortunes and shown ability to grow where the bigger holding companies have stagnated.
This year the holding company (though Chairman and CEO Scott Kauffman prefers ‘partner company’ or ‘federation’) that includes the likes of 72andSunny, Anomaly, Crispin Porter + Bogusky and Forsman & Bodenfors, has defied wider trends in the industry and posted impressive growth. In October, it posted its Q3 and nine month year-to-date results – at that point showing a reported revenue growth of 11.6% to $1.11 billion, compared to 2016. And, at the time of the nine month report, a net income for the shareholders of $14.8m – a stark improvement on the loss of $54.9m at the same time last year.
The end of year figures are not available yet, of course, but the figures from earlier in the year paint an upbeat picture in comparison with the situation faced by some of the industry’s behemoths. In October WPP cut its forecasts, predicting flatlined growth, while at the end of September, Publicis Groupe’s nine month revenue growth compared with the previous year was just 0.6%.
“I think the headline is that creativity wins,” reflects Scott. “If I had to boil us down, as a family of the world’s most admired advertising agencies – a generic term – I’d say our focus is on creativity. For us here at MDC it’s about empowering our agencies to be the best embodiments of themselves, all with their own unique cultures and their own unique sense of relationships with their clients.”
One theory for MDC Partners' success is that its partnership model allows for greater nimbleness in the face of rapidly evolving client needs compared with the older, more hierarchical holding company organisations. And while it’s been a brilliant year for exciting start-up indies, the structure of MDC balances relative autonomy with a safety net.
That entrepreneurial spirit is, reckons Silla Levin, CEO at Forsman & Bodenfors (one of the newest members of the MDC family), key to its success. “We have come to a time where creativity in communication is more important than ever. The dialogue that is central between brands and consumers demands a higher creative quality of work, and the independent agency culture is better constructed for that. The timing for that demand and the true understanding of the entrepreneurial culture is what I think brings success to MDC this year.”
Volvo Moments – from Forsman & Bodenfors
The federal structure also allows, believes Scott, for a more client focused form of collaboration within the group. Case in point, the gigantic $700m General Mills account. The US umbrella company anointed the MDC partnership of 72andSunny and Red Scout as the lead agency.
“It’s important for all of our agencies to be maniacally focused on the needs of the client so when a client is looking for those kinds of solutions and you’re a federation of like-minded entrepreneurs and innovators, it’s that much easier,” says Scott. “I’ve never worked in one of those monoliths but many of my colleagues are refugees of one of them or another, so I hear all the stories about all the past practises that they are very happy to out from under and the different ways that they’re now able to put the clients’ needs and desires ahead of a personal agenda. I hear these stories about how at the larger holding companies there’s actually internecine warfare within the group and the client gets caught in the middle and that’s just not something we see here. We’re very happy that with like-minded organisations and a common DNA of entrepreneurism and innovation and a pronounced core value of putting the client first, you get better results.”
‘Many Chairs. One Table.’ For Walmart by Minneapolis-based Mono. It’s an ad that’s had Scott send many congratulatory notes to the team. “I was very, very pleased that it was part of our family and not someone else.”
That collaboration between the partner agencies allows for bespoke offerings at a time when many beleaguered clients are trying to simplify the structure of agency relationships.
“We feel like were going to be the beneficiaries of those kinds of big company decisions. There was a time when we as a collection of brand names were affectionately referred to as a collection of creative boutiques; it wasn’t that long ago. But again, with the way the infrastructure of how we actually operate our businesses has settled, that has enabled what were once referred to as creative boutiques to become global AORs for some of the world’s most iconic brands. I think that’s been a good bit of our growth strategy, to get deep into some of those categories that seem to be problematic for the traditional holding companies.”
Of course, while MDC’s relative growth is outpacing many of the bigger holding companies, its still significantly smaller in overall size – and that suits them just fine. “There’s a lot of change going on, a lot of reviews taking place, a lot of margins compression, a lot of revisiting budgets. The reality is we have such a tiny overall share of the overall market share that when a marquee piece of business comes up for review, odds are it’s not our client. So, they may be spending less next year than they did this year, but if they weren’t our client this year and they are next year it’s still an incremental win for us.”
But it’s not all about business models and financial success. For Scott, one thing he’s particularly proud of is how the leadership have helped drive forward an agenda of inclusion. Anomaly’s ‘Last Silo’ initiative, which launched in 2016, sought to integrate specialist Hispanic market advertising with the whole agency and has provided an inspirational example to the rest of the group. And you can see the results in their work for the likes of Johnnie Walker.
72andSunny has also created an in-house Diversity Playbook to help it extend and diversify the creative class both within the agency and externally . And the agency has also done its bit to challenge stereotypes in the work it puts out; Lynx’s ‘Find Your Magic’ positioning and this year’s ‘Is it OK for guys…?’ are a case in point.
“If I look back on this year and I think about the importance of culture and how it actually sets the stage and drives creativity, I think what we’re most proud of is how our leaders across our network have really stepped up and embraced the importance of diversity and inclusion and equity amongst our workforce. I could single out a couple that have been recognised nationally or globally for some of the work that they’ve done but it really has been across the family. It has been a rallying cry of the importance of being fair and treating people well and creating work environments that not only encourage risk taking but allow all people to participate in ideation and client service. And that’s as important as any other decision we’ve made this year. It’s about respect, it’s about empowerment and it’s an environment where people from all walks of life can come to our family and do their best work.”
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