As Stagwell posts 2025 growth, Mark Penn says its ‘Goldilocks size’ rounds out new big 4

The upshot: a bullish Stagwell and a assured Penn, telling an earnings name that “Q1 2026 internet new enterprise is shaping as much as be the strongest within the historical past of the agency”, because it predicts 10% income progress this 12 months.

Behind these progress figures, there are lowered takings from the agency’s communications divisions, and comparatively flat outcomes for advertising companies and media – although greater than offset by elevated takings from its digital transformation division and rising revenues round Stagwell’s AI providing because it pivots to what Penn calls “massive scale merchandise”. These embrace the ‘Advertising and marketing Operations Working System’ (MOOS) introduced at CES this January, which acts as a centralized hub for advertising tech stacks (a “Home windows, just for advertising,” per Penn), and its ‘agentic focusing on system’, developed with Palantir. Altogether, this Palantir-partnered providing is understood in Stagwell as ‘The Machine’. Penn calls it “the Holy Grail of selling.”

Stagwell is after all not alone in promising this Holy Grail – WPP has Open; Omnicom has Omni; Publicis has CoreAI – but it surely’s precisely that comparability that makes him really feel most bullish of all: as AI offers the business its greatest shake-up in many years, most of these opponents are in main pivot mode, seeking to cut back prices and consolidate choices. However Penn hails his agency’s “Goldilocks dimension” as its “nice benefit”: “we’re large enough for scale shoppers, whereas being nimble sufficient to deploy know-how shortly and practice individuals learn how to use it.”

And with a side-eye to the “managed chaos” of opponents going by means of main restructures (WPP reseting; Omnicom figuring out its post-IPG-takeover shape amid billions in cost-savings; only Publicis in progress), Penn advised The Drum as we speak that he’s able to declare a brand new period dominated by a brand new big-four promoting networks, with Stagwell sustaining its challenger standing however difficult for all the identical work as its still-bigger opponents.

“We’ve gotten to the dimensions now that there are simply 4 opponents. And now we’re going into the political tremendous cycle, now that our inventive corporations are punching means above their weight, and now that we’ve developed these actually cool AI merchandise – all of these issues collectively scream ‘undervalued,’” Penn mentioned.

‘Undervalued’ can be Penn’s pitch to the general public markets, which he argues are lowballing the agency’s inventory worth to the tune of collective billions. Having fuelled an excellent a part of its progress by buying businesses lately, although, Penn now says that “we’ve accomplished considerably of a pivot from M&A to AI”, with progress coming from increasing tech choices, quite than rising headcount. In the meantime, across-the-board value financial savings and – introduced as we speak – an elevated share buy-back scheme look to shore up financials.

With opponents looking to divest themselves of agencies, some big-name outlets could quickly discover themselves in the marketplace. Is Stagwell going to be on the desk for these offers? “We’ll get again to it,” says Penn. “I don’t suppose M&A is off the desk. And we’re at all times on the lookout for large offers”.

And as Stagwell sees elevated revenues from AI and digital transformation offsetting much less salutary efficiency from its communications and media companies, does Penn see the enterprise pivoting wholesale away from these conventional income sources in the long term? No, he advised as we speak’s earnings name: “premium inventive, versus inventive by the pound, is alive and nicely and in very vital demand. That’s as a result of, I feel, when all people has the identical information methods and the identical boring advertisements, the highest stage of creativity, which is represented by lots of our businesses, appears to be in very sturdy demand.”

Elaborating, Penn advised The Drum as we speak that “I at all times imagine that you’ve the precise mixture of know-how and managed companies, and individuals who will help implement the know-how… Inventive and digital transformation have been rising properly. Media will return to progress strongly this 12 months, and communications could have advocacy. We’re assured about this being a really sturdy 12 months for us.”

As for that the suggestion that the enterprise is undervalued by public markets, does Penn suppose the advertising world places the precise worth on Stagwell?

“We’ll see what occurs. We’ve laid down the gauntlet. We’ve mentioned we’re placing in a powerful buyback. We expect in the event you do any form of evaluation of the sum of the components, we’re grossly undervalued. Among the different advertising corporations might make a powerful argument as nicely. This section has been despatched to purgatory – someway that occurred in the course of the pandemic. After which the very first thing all people thinks with AI is, ‘oh, advertising’s useless, you may’t spend money on that’. It’s simply not the case. 

“Advertising and marketing corporations reimagine themselves, reformulate and adapt to the brand new ways in which individuals spend their time and the place and the place merchandise and the place and the way merchandise may be offered. There was radio after which radio advertisements. TV, after which TV advertisements. The web and web advertisements. Now AI and AI advertisements, and robots and robotic advertisements. For us, in a means, we’ve simply been in a foul neighborhood. What I’m doing is inviting individuals to look underneath the hood extra.”