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MDC plans global expansion through affiliate program

MDC plans global expansion through affiliate program
Written by publishing team

MDC Partners has great global ambitions.

The holding company on Tuesday announced an affiliate program that will quickly track its presence in emerging markets without immediately risking a takeover.

Through the program, the holding company locates agencies and marketing service companies in fast-growing markets and service lines — think e-commerce, content creation and social media — and enters into a revenue-sharing agreement with them for customer service and promotions globally.

Ultimately, if the partnership goes well, these companies become acquisition targets, said Mark Penn, CEO of MDC Partners.

“We are really well positioned to expand the network in a way that we don’t end up with a massive amount of legacy assets,” he said. “The affiliate program is the first step in the acquisition program.”

To date, MDC has agreements with three agencies: Brand New Galaxy, an e-commerce agency in Europe and the Middle East; Beyond Media Global, a performance marketing agency in North America and East Asia; and OKC.Media, a digital creative agency in Russia.

The program is led by Julia Hammond, president of MDC Global, who joined in June from Deloitte Digital to help the group attract and service larger integrated accounts.

“We have these global networks that huge companies like Google, Diageo, and Uber turn to for ideas and drive big global campaigns,” she said. “Where we can become stronger as a network is if we can find partners who help us resonate and energize locally.”

Affiliates can be accessed as central sources across the MDC network, rather than assigned to a specific agency, so the group can structure teams to fit specific clients’ needs and footprints. But in the end, they become acquisition targets for specific agencies within the network. Revenue sharing agreements are based on a graduated scale and depend on the subsidiary reaching predefined KPIs.

While MDC has a presence in 23 countries, it is looking to gain a foothold in fast-growing markets where global customers increasingly require the service, including Latin and Central America, Africa, Eastern Europe, China and Asia Pacific.

There is no timeline for a takeover, but Ben said he expects to see if the subsidiary is a good cultural fit in a couple of years. The program aims to identify 50 subsidiaries by the end of 2021.

The program is part of MDC’s aggressive growth plan, which has been underway since Penn joined as CEO in 2019 after his marketing services firm, Stagwell Group, invested $100 million in the troubled holding company. MDC and Stagwell are currently awaiting approval for the merger, with the goal of becoming a $3 billion marketing services company by 2025.

The move toward a larger, more integrated business is a shift under Penn’s leadership, and is in response to growing demand from brands for more integrated services from agencies.

“The more complex the marketing organizations become, the more they need an organizing partner to serve their interest,” Hammond said. This is in stark contrast to the isolated mindsets of traditional holding companies. It’s about discovering the real business problem and opportunity, and building a team to serve that.”

The change is a major cultural shift from MDC which prior to Ben’s arrival had agencies including 72andsunny, Anomaly and Crispin Porter + Bugusky that were known for their extreme independence and founding leadership.

“When I came in, frankly, a lot of the teams didn’t really know each other,” Ben said. “That’s pretty much the change in the atmosphere and culture here.”

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