CES Briefing: A Q&A with Stagwell’s Mark Penn & the streaming ad data disconnect

AI is one backdrop for this year’s Consumer Electronics Show. But the Omnicom-Interpublic Group merger is another, particularly for the advertisers and agencies in attendance, such as Stagwell, which has been billing itself as a challenger to the incumbent agency holding companies. 

On Tuesday, Digiday sat down with Stagwell CEO and chairman Mark Penn to hear how the Omnicom-IPG merger is coloring his company’s conversations with clients, what Stagwell is up to with its own recent M&A activity and what the potential TikTok ban and agentic AI era mean for advertisers.

The transcript has been edited for length and clarity.

Omnicom-IPG, I imagine clients are bringing that up in meetings you’re having during CES, in terms of them asking, “What is up with Stagwell?”

Well, look, I think to the extent that you’re looking at the contrast between the challenger network that we built here at Stagwell and networks that got almost too big and are going to get even bigger, we look at the contrast between the behemoths — which may be appropriate for some clients — and the more nimble, digital-first network that we’re building. And we’re continuing to grow and expand. So I think that the merger generally is making clients of theirs somewhat uneasy. And I think for us is probably going to be beneficial. It also means that ultimately in a lot of pitches, there used to be two slots; now there’s one.

Are you already having any of their clients reach out?

It’s a little early. People just started to get back to work. I think we’ve seen more WPP vulnerability over the last few months. And so we’ve seen more clients coming to us from them all the time there. But I don’t know what’s going to happen with them.

Again, people are looking at the behemoths, and they’re not sure they can get them as modern and personalized and nimble a service. Meaning the behemoth was a plus up to a certain level in this industry. Then beyond a certain level, I think it becomes a weakness.

It seems like one of the most advantageous parts to being a behemoth is you have these massive media budgets to work with, especially with principle-based buying and agency-level upfront deals. So is that something where you have to react on that front?

We’re a little bit performance-oriented. There tends to be more media on the spot as opposed to the media that the largest ones might be buying. But we continue to scale up our media operation.

You’ve also been scaling up in general. You’ve done a number of acquisitions just over the last few months. Smaller acquisitions on the whole, but there’s been a whole number of them. What are you assembling here?

We’re really assembling the challenger network. We’re spreading our geographic wings, and we’re bolstering our digital-first capabilities. You look at some of the more recent acquisitions; Create was the latest. So we’ve expanded significantly into the Middle East and acquired Consulum and Create. So we acquired a combination of government services and digital transformation services.

What’s the significance of the Middle East and North Africa to Stagwell?

It’s a huge growth market. We need to finish the global network so that larger clients can give us not just the U.S. or Europe but the entire world.

I was talking with a sales executive at a major media company who was saying a lot of the meetings they’re having with agency holding companies during CES are talking about data, agency holding companies trying to understand how they need to evolve their data operations. GroupM had the announcement today about wanting to move from focusing a single, owned-and-operated dataset to more of a federated model. Are you making any changes to the approach to data at Stagwell?

We have a lot of data that we’ve been generating that we haven’t been utilizing. We’re building an ID graph first in the U.S. and then that ID graph is supplemented by the data that we have, location data we have from The People Platform and from our survey companies that generate massive amounts of data. We’re doing over 50,000 interviews in 15 coutries a week now across entertainment, media and other habits.

So that would be your own identifier, your own ID spine?

Well, the spine underneath that will be one of the credit [reporting] companies.

TikTok. We have to talk about it. What’s the conversation you’re having with clients this week regarding TikTok?

We’re just thinking business as usual.

Al. Where are you all at in terms of your experimentation with various large language models and applying those to your practices?

We’re heavily invested, particularly in what we call agentic AI, which is what are the agents or representatives for brands and how are they going to communicate with their customers. Generative aI is embedded in our Prophet products, which is our communication products. And then there are other forms of AI that we’re utilizing to simplify, say, the processing of databases, the creation of test videos, the analysis of focus groups.

I feel like everyone I’ve talked to when I’ve asked about what do these AI agents mean for advertisers, the response is it’s still so early and too new to know. But it seems like you’re a bit further along?

You look at our Code and Theory network, you look at Left Field Labs. Code and Theory has been at the forefront of particularly creating information content management sites and precisely this are of communicating with consumers. And Left Field Labs really has got a very deep AI technology. So I think we’re more positioned because about a third of the company’s digital transformation. 

Un-connected TV

My New Year’s resolution is to never write about streaming advertising’s frequency management issue again. 

I’m joking, though only because it seems like the issue of the same ad being shown to someone ad nauseam may never go away. But it could. And the solution is deceptively simple.

“It’s connecting the data,” said Lisa Giacosa, chief investment officer at Publicis Groupe’s Spark Foundry, in a session I moderated on Tuesday as part of OpenAP’s Audience Summit.

Connecting the data isn’t only a way to solve the frequency management issue but also incrementality measurement, which has become a big emphasis among advertisers in the past year. 

Great. So what’s the hold up? Well, not all streaming ad sellers are allowing their data to be connected. The thinking being that this audience data is a vital point of differentation and making it available runs the risk of disintermediating audience data from the publishers that provide it, enabling advertisers to find one publisher’s prized audience members on cheaper properties.

Streaming services attaching content-related signals to ad impressions, for example, have been a sticking point. But passing those signals can help ad buyers to appreciate the source of an impression rather than disregarding the corresponding content in the name of cheap reach.

“Cheap inventory is not always the answer. That’s the race to the bottom, because that type of engagement doesn’t deliver on a lot of our objectives,” said Giacosa. 

Fox is one streaming ad seller that is looking to pass more contextual signals to the buy side, according to Jeff Collins, president of advertising sales, marketing and brand partnerships at Fox, who joined Giacosa on stage. 

“We are actually in the process now of working with a number of third parties to do just that, to be able to make our contextual signals a lot more transparent to our partners out there. That’s a priority for us,” Collins said.

Another complicating factor is that companies may use different tech providers and measurement firms, which complicates connecting the dots.

“Over-frequency does happen, especially if you’re combining different partners that aren’t using the same data,” Giacosa said.

“As a publisher, we need to be pretty agnostic and be able to work across multiple agencies, across multiple metrics, across multiple tech partners. It’s a lot of work. But at the end of the day, it’s worth it,” Collins said.