Is subcontracting a shadowy or sensible strategy?
Opinion
Stagwell’s ties to Israel may have prompted it to postpone a recent industry gathering, but have they also reignited a long-standing debate about subcontracting for discretion?
As if life wasn’t already tough enough for the major advertising holding companies. Burdened by quarterly reporting, investor activism, shrinking margins, the shift from retained to project work, and the demands of DEI and purpose, they now face another headache — subcontracting, which reignites the old debate about ‘dirty’ work.
Let me explain. At first, it seemed that the last-minute postponement of Stagwell’s recent industry showcase, to be held at its smart South Bank Bluefin campus, might have been down to the lengthy tube strike. Alas, no, with characteristic attention to detail, they had kindly offered all attendees free Uber travel to and from, which I was undoubtedly about to use.
It soon became clear that the real reason was the breaking news that Stagwell was coming under fire after being found working on research to inform a repositioning of Israel in light of its activities in Gaza and elsewhere in the Middle East.
Appointing Stagwell to such a brief came as little surprise. After all, according to Stagwell’s website, its chairman and CEO, Mark Penn, has spent 40 years in market research, advertising, public relations, polling, and consulting. He has advised top world leaders, including presidents, and written two bestselling books.
However, it later emerged that Stagwell was acting as a subcontractor for French-based holdco Havas, whose various acquisitions along its path have some history with Israel.
First, an amusing but relevant aside…
The agency I led in the Eighties was Havas’ UK partner at the time, and one of the accounts referred to us was the then Israeli Tourist Board. It was a modest account on which we felt unlikely to be able to do much work of note, merit or profit; we were nevertheless obliged to pitch for it in the UK.
Considering several concurrent and more significant opportunities ahead, we assigned a ‘B’ team to a lacklustre client group, and the run-up and briefing confirmed a lack of promise.
However, the pitch itself turned into a fiasco when our pitch leader, an ex-media guy turned account man, removed a photograph hanging on the wall of General Moshe Dayan — an Israeli national hero since the 1967 ‘Six Day War’ with a coalition of Arab states — so we could project our charts onto the wall of the dingy room where we were presenting.
It would have gone better if we’d just defecated on the desk and walked out. At least we honoured our obligation to our partner while dodging the bullet of “winning” a millstone piece of business.
Why holdcos subcontract
Returning to the present day, the episode raises and resurfaces some issues, drawing attention because while subcontracting between holding companies is not unheard of, it is unusual. They are, after all, in extremely fierce competition with one another.
Agencies, particularly PR firms, have always been involved in quite problematic businesses. It’s arguably part of what they do.
Anything from promoting tourism to destinations with questionable human rights records to influencing elections. Historically, many industry leaders have charged prominent figures worldwide substantial fees for such work.
Over time, tobacco, certain more extreme lobbying and charity groups, and, more recently, fossil fuel extractors, have also assumed pariah client status. Other categories will likely follow.
Again, it’s mercifully tucked away in the mists of time, but my then-employer once pressured me to work for an anti-abortion charity/lobby group. (“It’ll give us profile and somebody’s got to do it.”) I’m not judging the cause here, merely the client’s behaviour, which was, bluntly, fanatical.
Before tobacco advertising was finally banned, agencies gradually let staff opt out of working on it. Unsurprisingly, most now permit their people to decline some more contentious projects on principle.
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This has only spread with the increase in staff wellbeing and attention to mental health and conscience issues — and frankly, the rise of a workforce with more scruples as well.
And again, despite significant commercial pressures, it’s also become more challenging to buy media for such accounts nowadays. Legacy media have heightened their standards, too, leaving the space to online bottom-feeders.
Yet, Havas’ long and broad relationship with the Israeli Government and its offshoots, like the country’s aforementioned tourism programme, continues, perfectly legitimately.
Undoubtedly, various strategies are being used to carry out client work discreetly. One of these could involve a touch of subcontracting.
Mark Penn’s credentials and connections are strong. Perhaps Havas did not feel it had sufficiently strong skills within its network and therefore recommended subcontracting to Stagwell/Penn to protect a wider relationship.
Or, could this be even more widespread than we realise? The tip of a rather ugly iceberg, perhaps? Now that attention has been drawn, we’ll doubtless find out soon enough.
Bob Wootton spent 40 years working in advertising, first as a media buyer at some of the UK’s leading agencies before joining the trade body Isba in 1996, where he was advertising and media director for 20 years. He is also the founder of Deconstruction, a media and tech consulting business, and presents The Guitar Show on YouTube.