Stagwell posts nearly 15% organic growth in 2021

Stagwell Global reported Q4 and 2021 earnings on Tuesday, closing out the first year after finalizing its merger with MDC Partners in July. 

The holding company said during an earnings call that it grew 10.4% organically year over year in Q4 and 14.5% organically year over year in 2021, reaching $520 million and $1.93 billion in net revenue, respectively. Margins grew nearly 20% year over year on net revenue in both Q4 and 2021. 

Stagwell’s advocacy business however, suffered declines after lapping the 2020 election, creating a drag on earnings. 

Still, the new holding company’s growth outpaced that of its legacy competitors in 2021, which all posted between 10% and 12% growth for the year. Stagwell is projecting between 18% and 22% net revenue growth in 2022.

“The bottom line is that the merger is working even better than I expected,” CEO Mark Penn told Campaign US in an interview following the earnings call.

Penn credited Stagwell’s growth to three tailwinds: digital capabilities, which grew 29% to account for more than half of net revenue (ex-advocacy) in 2021; the Stagwell Affiliate Network, which has expanded Stagwell’s global presence; and larger client wins.

In 2021 Stagwell added eight clients worth more than $10 million to its roster, leading to a record $75 million in new business revenue in Q4. The holding company also expanded partnerships with blue-chip clients including Nike, Amazon, Google, Apple, Johnson & Johnson, Epic Games and Novo Nordisk.

“We're being looked at in a different way and therefore we're getting into bigger assignments and pitches,” Penn said. “It's been a long time since anybody got up to this scale from scratch.” 

Stagwell’s media capabilities are also being taken more seriously by larger clients after the holding company merged Assembly with ForwardPMX in September into a $5 billion agency. Assembly also acquired UK media agency GoodStuff, expanding its media scale globally.  

But aware of the in-housing trend, Stagwell is in the process of creating the Stagwell Marketing Cloud, which will join up various products it has developed, such as influencer marketing platform Koalyfied and AR platform ARound, “in a suite of SaaS services for DIY marketers,” Penn said.

Stagwell’s creative and comms agencies, many of which come from legacy MDC Partners, grew 7% year over year. Strong growth in PR, especially at Allison + Partners and Hunter, as well as at Stagwell’s flagship creative agencies, notably 72andsunny and Anomaly, boosted growth, Penn said. The segment makes up nearly half (47%) of Stagwell’s overall business.

Penn added that creating networks, such as the Anomaly Alliance and Constellation Network, that joined up creative agencies without crushing their internal cultures, has enabled more collaboration.

“Services need to be sold together – strategy, creativity, data mining and audience acquisition – and they need to be really tightly coordinated,” Penn said. “Alliances and networks were a way of doing that without crunching the cultures.”

Penn also noted that while salary inflation and a tight labor market are challenges for Stagwell, the holding company has created a database of 250,000 potential job candidates across the network.

“It’s a great career to get into,” Penn said, “I don't know why people are getting out of this career now.”