Stagwell CEO Mark Penn on AI investment and the evolution of political advertising

The CEO and chairman of agency network The Stagwell Group has worn many hats in his four-decade career: ad exec, tech strategist, PR pro, consultant, pollster and more. Penn previously served as executive vice-president and chief strategy officer at Microsoft, where he married data analytics with creative strategies to solve for key business issues. He co-founded Penn Schoen Berland, a market research firm that was acquired by WPP in 2001 (and eventually folded into the VML portfolio), and held the top post at PR firm Burson Marsteller, where he drove record profits.

Before his time in PR, tech and marketing, Penn lived a different life in politics. He advised President Bill Clinton as a White House pollster, playing a key role in his 1996 reelection. He also spearheaded strategy for Hillary Clinton’s Senate and 2008 Presidential campaigns.

And in marketing, where both brand- and agency-side leaders often avoid hot-button issues for fear of alienating swaths of their audience, Penn has taken a different approach: leaning into his expertise in politics to support robust media, marketing and communications efforts across party lines.

Stagwell owns a Democratic consultancy, SKDK, as well as a Republican political comms agency, Targeted Victory. Meanwhile, the group’s media buying agency Assembly conducts research on political ad spend levels, and worked on Michael Bloomberg’s 2020 presidential run. The organization also brings together experts from both sides of the aisle to advise clients on navigating tricky social and political issues through its Risk and Reputation Unit, formed in 2022.

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Today, Penn is focused on growing Stagwell’s business in new markets, investing discerningly in emerging tech and infusing political advertising with digitally-driven strategy.

In an exclusive interview with The Drum, Penn opines on these and other topics. Our conversation has been edited for length and clarity.

The Drum: Everyone is talking about AI this year. I get the sense that there’s some maturation happening in the industry, but there seems to be a long way to go. What’s your perspective?

Mark Penn: You have to realize that AI is not a fad — that it is really a major … improvement in the way that people and technology will interface. That is going to mean every website gets changed, every process that we do in the corporation is going to be re-looked at, every product we make [will come into consideration]. This is not going to be here for just one Cannes [Lions season] — it is going to be here with us for at least a decade.

TD: And how is Stagwell assessing opportunities for AI investment? What’s your philosophy?

MP: We’re working with AI on three or four different levels – first and foremost on client applications.

So [for example, maybe] an office supply company wants their website – when you say ‘Hey, we’re having a meeting for 10 people’ – to then produce all the supplies that [the user] needs for the meeting, or for the party … so there are more sophisticated kinds of shopping bots, far beyond anything that happened before. [So we’re] building websites that are responsive to what people want and who they are.

Internally, we have hundreds of people working on how to streamline processes, how to create a storyboard, how to make content, how to make marketing less expensive for the client.

And third, we have a series of self-service tech products [across] research, communications and advertising, all of which are infused with AI.

TD: What other key challenges do you see the industry facing right now?

MP: What I tried to explain to the industry … is that, really, technology needs marketing more than marketing needs technology. There’s always this fear that all the marketing companies are going out of business – it’s usually the tech companies that go out of business. And marketing is so infused into what tech companies really need to do. They have no business model without marketing.

If anything, we’re reaching the danger of oversaturation in people’s lives with advertising. You probably are hit with 2,000 ads today, in one form or another – but only some of them are really effective. So the industry is grappling with, ‘How do you, in a digital environment, make your marketing and advertising as effective as possible?’

TD: What, in your mind, makes an ad effective?

MP: You have to be differentiating. You have to be informative, in my view. And you have to get people’s attention. And I shouldn’t say get everybody’s attention, but get the right people’s attention – the people who are going to be interested or be potential [buyers].

We always joke that many of the people in companies are the least likely people to use the products [they’re producing]. So I always used to say, particularly at political briefings, ‘If anybody likes this ad, there’s something wrong with it.’

TD: Ad spend in the upcoming US general election is set to hit historic highs, as it did in the midterms in 2022. How do you see the role of advertising evolving in the context of this upcoming election cycle?

MP: In politics, just like everywhere else, they’re grappling with how to go with something which was almost 100% TV into a mixed digital and TV environment. And if you’re in any of the swing states, all the TV [inventory has already] been bought – you won’t be able to get anywhere near it. So, ‘How do you reach the voters with an effective message outside of television?’ is an important process.

TD: As you say, a lot of political advertising is going into digital spaces rather than TV today. How are you thinking about content moderation – especially as it concerns political messages – on those platforms ahead of the US presidential election?

MP: Look, people have to be careful about going overboard on restrictions. You want a society in which there’s political advertising – you want a society, which there’s political debate. So I don’t really get this whole thing where the social platforms close that down.

TV regulated [political advertising] very effectively, and very lightly, for a very long period of time. You submitted a political ad … with a verification package, the verification package would be approved or not – or you had to supply supplemental documentation – and you ran your ad. And that was that. I think social media platforms have made a little bit of a mess of it.

TD: There is so much disruption happening in the industry, across social, political and technological spheres. What advice would you offer to marketers and advertisers trying to navigate the chaos?

MP: It’s about understanding technology and how it changes things. When you look at the history of marketing, it goes back to the first coin in Mesopotamia with a branding [designed to inform people that] it was safe. And [marketing] evolved with radio, through television, through the internet – and now through the AI world.

Each new technological development brings with it new classes of marketing – that it’s incumbent upon marketers to learn and adapt to. That’s the process that’s going on … in every single boardroom.

TD: Tell us about Stagwell’s strategic priorities this year.

MP: We continue to be the challenger network and to expand. We’re about $2.5bn in revenue. We’re about 12,000 employees now; we started eight years ago. We’re getting to the scale where we increasingly challenge the majors [the top advertising holding companies] for contracts and assignments. Our priority is to continue to be on the frontiers of marketing development, and also to grow our global footprint – [we’d like] to grow from the current 34 countries [we’re in] into, like, 50 or 55.

TD: Share one prediction about the direction of the advertising industry within the next five years or so.

MP: What I always say is: the best digital ad has yet to be created. We are waiting to see real digital ads that are as good as the kind of ads that we do for the Superbowl. That’s what I want to see in the next couple of years – incredible, immersive, digital experiences that are unlike anything before.

Watch the full interview on The Drum TV.

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