Stagwell Inc., the challenger holding company started nine years ago by chairman and CEO Mark Penn, has eyes on AI-focused digital transformation and politics as areas of growth.
On its Q3 earnings call on Thursday, Stagwell reported year-over-year revenue growth of 15% to $711 million. Performance was led by 25% growth digital transformation, thanks to the Stagwell Marketing Cloud, seven new acquisitions, and the use of AI, as well as the rise of AI-related projects.
“AI has required companies to rethink the ways they engage with consumers,” said Penn.
Stagwell also surpassed $100 million in net new business in the quarter, thanks to big wins like Adobe and GM, bringing its year-on-year net new business wins to a record $345 million for the year. The holding company also expanded its relationship with clients including United and Microsoft.
Penn, who caught up with ADWEEK after the earnings call, was optimistic that Stagwell would deliver double-digit growth in the fourth quarter and reaffirmed guidance of 5% to 7% organic revenue growth for the year.
Growth through AI and politics
Penn sees opportunity for Stagwell to help companies transform their businesses around AI. He pointed to Stagwell’s Code and Theory network, a collection of digital transformation agencies, as the holding company’s core asset on this front.
“One cannot underestimate the workflow that will be required to make AI usable by consumers,” he said.
Stagwell is also working with Adobe to build what it calls “The Machine,” an integrated, AI-powered content development platform. Penn said it will be ready in the next six months and will give the company an advantage in producing personalized content.
Politics is another area of growth for Stagwell, which reported earnings the day after Donald Trump was declared the winner of the 2024 Presidential election. Stagwell saw a sharp rise in advocacy dollars during this election cycle, which may bleed into public affairs and issue advocacy campaigns that will surge in 2025 given legislative opportunities, Penn said.
He added that political marketing should continue to grow, as 2028 will likely be the biggest election in history, given the need for primaries on both sides.
AI and politics collide
These two growth areas — AI and politics — are colliding for Stagwell in interesting ways. Code & Theory Network powered the magic walls used on election night at both CNN and NBC using AI, and Wonder Cave, Stagwell’s AI-powered text messaging platform, was leveraged by more than 500 political and advocacy organizations throughout the election cycle.
Penn said he believes Stagwell can start winning government contracts with this kind of digital transformation work.
“The political marketplace in America is, overall, not just a cyclical thing, but a growth market over time,” said Penn.
