Backlash over Stagwell’s Israel work puts PR ethics in the spotlight

Stagwell, the US-based holding group that owns agencies including agencies Assembly, 72andSunny, Allison+Partners and Anomaly has come under scrutiny following reports of a major research and messaging program conducted for the Israeli government.

According to leaked documents first reported by Drop Site news website, the project involved research across more than 13,000 people and tested campaign messages designed to improve perceptions of Israel internationally. The recommendations included emotional storytelling, messaging around terrorism, and connecting Islamic radicalism to the conflict.

The presentation also recommended the “notion of radical Jihadism" being “universally effective” for conservative audiences. It said connecting radical Jihadism to a desire to dominate other religions was effective as communications means. The report also said that Mark Penn, chairman and chief executive of Stagwell, has long-standing links to Israel.

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In a statement to MARKETING-INTERACTIVE, the holding group confirmed a small team had worked on the project, but stressed that each agency in the network operates with autonomy and that its portfolio spans clients “across the political and issue spectrum.” Still, the revelations have prompted strong reaction across the PR and advertising industry.

Strategy consultant Zoe Scaman called on talent within Stagwell-owned agencies to “walk away,” with her LinkedIn post attracting almost 1,000 likes and more than 140 reposts. A follow up post also read:

This industry has a problem with selective blindness.

"We’re brilliant at seeing every nuance of consumer behaviour, every shift in cultural sentiment, every emerging trend. But somehow we develop convenient myopia when it comes to examining our own moral architecture.”

Other agency leaders also voiced criticism, highlighting growing concerns about the role of communications firms in politically charged work.

A recurring industry dilemma

The controversy is not unique. Perhaps the most infamous case was Bell Pottinger. The UK firm was expelled from the PRCA trade body in 2017 after an investigation found it had run a covert campaign to stir up racial tensions in South Africa, a scandal that ultimately led to the agency’s collapse.

Its reputation imploded after it was exposed for running a racially charged campaign on behalf of the Gupta-owned Oakbay Investments in South Africa, framing opponents of President Jacob Zuma as agents of “white monopoly capital.” The scandal drew global condemnation, leading to the firm’s expulsion from the Public Relations and Communications Association and a damning independent review. The PRCA described it as the worst breach of ethics in the industry’s history.

The fallout eventually even saw Bell Pottinger to collapse, with its Asian arm rebranding as Klareco Communications to distance itself from the ethical and reputational collapse.

In 2015, Edelman also faced scrutiny for representing fossil fuel giants such as ExxonMobil and Shell while publicly promoting sustainability. Critics argued that the firm’s work for companies that deny climate change and obstruct climate action contradicted its stated environmental commitments, effectively contributing to emissions and undermining climate justice.

The revelations sparked accusations of “greenwashing,” with environmental advocates condemning Edelman for promoting business models that perpetuate ecosystem destruction and human harm, despite its public support for the Paris Agreement and sustainability initiatives.

Closer to home, in 2020, Hong Kong’s government awarded London PR firm Consulum (also a Stagwell agency) a contract to help improve its reputation the same day China imposed a sweeping national security law on the city. Consulum has also represented Saudi Crown Prince Mohammed bin Salman.

Where's the line?

These examples underline the reputational risks agencies face when taking on politically charged or controversial briefs. Beyond public backlash, such decisions can destabilise agencies internally as staff question whether their work aligns with personal values.

For holding groups, the tension is stark: how do you balance doing the right thing with running a global commercial operation? Controversial government and corporate clients can deliver significant revenue and access. However, the reputational cost — across clients, employees, and potential growth markets — can be harder to measure but just as real. The rise of social platforms has amplified these debates, turning internal discomfort into public protest in a matter of hours.

For clients, the reputational risk of being associated with an agency under fire adds another layer of complexity.

“There will always be clients that are controversial in nature,” Andy See, founder of Perspective Strategies, former president of PRCA Malaysia and PRGN, said. For example, if a company works for an industrial organisation and there is an environmental disaster, NGOs will come into the picture to criticise the agency involved. But at the same time, as PR professionals you need to know that it is your job to help them communicate their perspective.

However, See added that companies must be accountable for their own actions and comply with legal and ethical standards. “Deciding to help a company which uses child labour or works with corrupt organisations to do business would have crossed a clear red line,” he said.

There are some very clear-cut lines and if you are caught doing it, you know the risk. Should you still go ahead, then of course you have to pay the full price.

Lars Voedisch, founder and CEO of PRecious Communications added that if one sees public relations as a battle in the court of public opinion, then everybody has the right to an “attorney” in that court. But like attorneys, there’s also a right to decline a mandate.

“It’s really about where you see the role of communications and the value set your organization wants to stand for. Those are the two key things: balancing things out versus standing by your North Star,” he said.

In tricky situations, your North Star should guide your organisation - independent of PR or anything else. When asked where to draw the line, he said, “There is never an absolute line.”

Rather, it always in the context of the organisation’s values. At the end of the day, companies must remember that decisions about clients aren’t just about the brand - they affect who is employed, the type of talent attracted, and relationships with other clients, and the entire ecosystem.

Mohd Said Bani, current president of PRCA Malaysia, shared that the industry should be working on clear principles, moral values and ethics.

“Anything that borders on illegality, or even shows signs of potential illegalities, is a firm no,” Said explained. “Although ethics can differ across countries, there are some practices which one can identify, which acts as a marker to not take on a job.”

For instance, Said shared that he once had a client who was involved in a major scandal, but had dropped them once he noticed practices that didn’t sit well with him. “I questioned the management and insisted that any communications put out must be accurate and truthful,” he added.

When time comes to pull the plug, agencies must also stand firm. He added:

Our responsibility is to advise, give them the full picture, and make our recommendations clear. If they choose to ignore advice and cross an ethical line, and we have done our job, then it is just appropriate to step away.

Why it matters in APAC

With Stagwell reporting US$598 million in Q2 net revenue, up 8% year-on-year, the immediate financial impact of the episode remains to be seen. But with ambitions to expand across APAC, including Australia, the controversy lands at a time when the region’s talent market is already competitive and values driven.

In 2022, Stagwell also expanded its presence in Asia Pacific with the opening of its Malaysia office, a year after starting up its Singapore headquarters. Just last year, it added Leverate Group, an integrated and independent full-service agency based in Indonesia, to its expanding Global Affiliate Network.

The company said the move was in tandem with the network’s accelerating commitment to growth across Asia, anchored by its regional offices in Singapore and Malaysia, and over 25 affiliate partners in Asia to date.

For marketers and agencies, the lesson is clear: ethics is no longer a backroom discussion. It is a front-line issue that can shape an agency’s ability to hire, retain, and win business as much as creativity or effectiveness.

Additional reporting by A'bidah Zaid Shirbeeni, Matthew Eaton, and Rezwana Manjur.

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