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Besides announcing solid third-quarter earnings last week (revenue is up, costs are down, new business has been steady), Stagwell and its chairman and CEO Mark Penn spelled out a growth strategy that feels both familiar to the holding company model — and yet altogether different.

It’s a familiar move for a holdco to build out an AI-driven audience data platform — everyone’s got one, right? But it’s wholly unusual for the tech partner to be Palantir, the software firm arguably best known for controversial defense and surveillance tech.

Other holdcos have pursued principal media strategies — it’s a higher-margin business that’s helped Publicis become the top of the holding company heap. But Stagwell is choosing to go at principal media through owned-and-operated properties. Even more unusual, it’s investing in O&Os in news and information — not exactly the hottest or safest choice for brands.

Like all holding companies, it’s seeking to up-level the size and revenue potential of its clients. But in Stagwell’s case, it’s choosing to focus on winning government contracts. While not unusual, in the next breath, Penn acknowledged he’s comfortable with losing smaller clients, as in those that generate less than $500,000 in revenue for the holdco.

“In today’s holding company environment, the holding companies need to use all their strengths and their advantages in their favor. And that’s, I think, what Stagwell’s doing here,” said Jay Pattisall, vp and senior agency analyst at Forrester.

Digiday spoke with Penn, who explained these steps have all been part of his master plan. The following conversation has been edited for space and clarity — and includes perspective from Steve Boehler, co-founder of Mercer Island Group agency consultancy, as well as from Pattisall.

It feels like you’re making a conscious decision to move what has historically been a holding company into being an AI-enabled tech company.

I’ve always said that the goal of Stagwell was to grow into global full service all the way down to platform self service. We focused on services first, because I thought that was the best way to create the client relationships that you would really need later on, and also the experience that you would need to move more into the platform self service. The pivot that I announced is more a realization of the vision that I’ve always articulated.

Working with a company like Palantir is something altogether different. It’s like hiring the drill sergeant from Full Metal Jacket to coach your kids soccer team.

[Laughs] This grew out of conversations I had directly with [Palantir CEO Alex] Karp, on how we could bring the right combination together. Also, I think people don’t appreciate that every scaled corporation now really needs to have this kind of marketing intelligence machine, one that can really extend the kinds of marketing things that it does. So much time is spent on how AI is going to substitute for things we did in the past, while so little time is spent on how it opens up new things that were never done in the in the future. Because you couldn’t afford to do them, because you couldn’t plan to do them, because you couldn’t actually utilize the data to do them. Working with our team, [Palantir] did things in days and weeks that would have taken us months and months.

Boehler observed: It makes complete sense for Stagwell to have chosen a partner to help with this. The holdcos as a group want to believe they are technology companies, but they’re not really technology innovators so much as they’re technology appliers. There’s a risk to big American brands who are already predisposed to spending too much of their budget on performance marketing to hear the siren song of yet another holdco that has some newfangled approach to dive even deeper into data, and away from brand and awareness and reputation in their marketing efforts.

You said in the earnings call that some clients have seen a demo of the platform built with Palantir. Was there any hesitation from any of them about their data being in Palantir’s hands?

Privacy is one of the key elements that we’re going to build in into the system, whether with Palantir or any other partner. Clients really want to make sure that they have a firewall around their own data, and that is a critical component of the development of this system.

You also announced an intent to go after more government contracts to embellish your client base. Is that because this administration aligns more with your political beliefs (and with your media investments such as RealClear Politics, which is considered a conservative outlet)?

They’re unrelated. When you get to a certain scale, you qualify for government contracts of all different types. For example, [Stagwell’s marketing and PR agency] Allison has won several several contracts in California. Once we became an effective, nearly $3 billion holding company, we could qualify for for contracts.And these contracts are both on the digital transformation side, because the government needs amazing amounts of digital transformation work, and on the marketing side, particularly for public information about programs.

We also needed to bring in specialized expertise that understood the accounting in order to win them, and we did that about a year ago, and it’s beginning to bear fruit. There’s probably six or seven big contracts up for grabs next year, and those have been the exclusive province of our holding company competitors, and we’re going to play in that field. They are good margin [clients], but they also have a level of usually multi-year stability that is quite good, and they usually have a measure of scope and size that’s also good.

Pattisall observed: I don’t know that it’s any more unusual than the other holding companies. It makes sense that companies would be looking for growth opportunities in sectors that they don’t have a fair share in.

With principal media, Stagwell is pursuing an owned-and-operated strategy, between RealClear Politics and the ReachTV airport network, besides securing better rates through scale. Can you explain why you’re going that way?

A, I believe that news and information is undervalued. B, we have unique connections and combinations to feature news in order to realize a vision here. And C, rather than play scale to scale, we are playing more technology and owned media as our responses to what we see as the key ways to grow in this marketplace.

Boehler observed: The strategy is interesting because it gives them a point of difference. I think it also has two edges to that. For one, it is a unique proposition for the most part today. The flip side is, with many brands it’ll raise the question of, how do I feel when my agent becomes the media. Like principal buying, it will be generally accepted by many and rejected by others.

Color by numbers

With the holidays upon us, here are some fresh stats about consumer spending between now and the end of the year. The National Retail Federation predicts that holiday sales in the U.S. will surpass $1 trillion based on growth projections of between 3.7-4.2% over 2024. And when it comes specifically to Black Friday and Cyber Monday — two of the biggest shopping days of the year — Optimove’s analysis of 2024 data looking at the purchases of 2.4 million shoppers shows that indicates that holiday growth is coming from loyal customers, not acquisition. To wit, while new customers, existing customers and VIP customers all saw increased spending last year, existing customers’ average order amounts surged by 173% on Black Friday and 114% on Cyber Monday. New customers’ average order amounts grew by 11% on Black Friday and only 2% on Cyber Monday. VIP customers maintained the highest order value overall, but their growth was more moderate, up 27% on Black Friday and slightly down 6% on Cyber Monday.

Takeoff & landing

• Havas purchased a majority stake in Gauly Advisors, a German-based corporate and financial communications firm with expertise across Germany, Austria and Switzerland. It will be folded into H/Advisors, Havas’s global strategic communications consultancy.
• PMG launched a public-facing intelligence platform covering the holiday shopping season called Insights, Unwrapped. It taps into consumer, performance data, and trend analysis from its Alli operating system.
• Alan Cohen, a longtime media and marketing executive who co-founded independent media agency Giant Spoon, passed away last week at the age of 69 after a long illness. Cohen’s family requests that donations be made to Cure PSP (Progressive Supranuclear Palsy) in his memory.
• Account moves: Publicis won global media AOR duties for Unilever’s about-to-be spun-off ice cream unit, which consists of Ben & Jerry’s, Magnum and Cornetto brands. The win includes planning and buying for digital, video and OOH … WPP landed media planning and buying duties for health firm Reckitt across 21 markets in Europe, for brands such as Durex, Gaviscon, and Finish as well as others … Independent Acadia won media and analytics duties for Mission Pet Health, replacing incumbent Cardinal based in Atlanta … Exverus by Brainlabs won media planning and buying duties for a Club Pilates campaign produced by Zambezi agency … Independent Craft & Commerce landed media AOR duties for three packaged goods clients: dog-food brand Nom Nom; refrigerated dough brand Jus-Rol; and frozen meats firm Real Good Foods … Media agency Medialab landed U.K. media planning and buying duties for environmental charity WWF, charged with driving acquisition ROI, brand work, innovation, and cross-team integration.
• Personnel moves: Hakkuhodo agency Kepler promoted Remy Stiles from North American CEO to global CEO, while also promoting Mallory Simmonds to CEO, EMEA & APAC from president of EMEA … Brainlabs hired two new managing directors: Liz DeAngelis who handles programmatic and media, and comes from Monks where she was svp of digital media, and Michelle Wiltz who handles paid social, and joins from Stella Rising where she was director of social commerce … Media platform Glassview hired its first-ever chief revenue office in James Moore, who comes over from the same role at Simpli.fi.

Direct quote

“if you are going to be a valued agency partner, business is first and foremost. Marketing is a tool for business growth, and I think that’s where a lot of agencies miss the mark.”

— Jean Freeman, CEO of Zambezi, on the launch of the agency’s Brand Performance Gap tool.

Speed reading

• Sam Bradley offered a take on the further impact of zero click search, explaining that advertisers may very well respond to it by cutting their display investments with publishers on the open web by 30% in favor of CTV and paid social.
• Bradley also looked into media agencies’ increased use of generative AI to reduce the lift associated with inclusion lists when it comes to programmatic investments.
• I looked at how Omnicom’s GSD&M agency is gamifying the way it upskills its employees across the board on learning how to use generative AI.