Stagwell’s Mark Penn on AI, creativity and saving news

Mark Penn’s 44 years of experience as a CEO, including the last six at Stagwell, have taken him from the pre-PC era to the dawn of AI.

The Current Editor-in-Chief Stephanie Paterik sat down with Penn to discuss why creativity is at a premium in the age of AI, how blocking news has created a de facto censorship regime and how challenger agencies can thrive in a world dominated by giants.

You’re a challenger holding company at a time when the big holding companies are getting bigger through mergers and acquisitions. How do you gain share in this marketplace?

I think this is a great opportunity for us to gain share. The behemoths are becoming even bigger. They’re having lots of conflicts that cause them to exit clients. They’re having leadership challenges.

This has actually proven to be a great time to be a challenger in a market that really hadn’t been penetrated for 40 or 50 years. Last quarter, we had $130 million of net new business, which was a record by far.

A big question among creatives right now is whether the advertising industry will be able to preserve human creativity going forward as AI and other factors rise. What’s your outlook?

I think, in general, human creativity will rise to its next level. I expect AI will do what technology always does: It takes the most routinized jobs out and preserves the best and most interesting jobs — particularly those high-level creative jobs. In fact, it makes them even more important.

It’s like when they invented talkies — they didn’t go back and say, “Oh, wow, we can make great silent films now.” They kept moving, and then they got to color. And then Star Wars and Pixar.

Creativity is going to edge up here. Creatives are going to have unprecedented tools and flexibility in the images they can create at a low cost. That doesn’t mean creativity will be gone. In fact, I think there’ll be a premium for creativity. That’s why we’ve continued to invest in creativity at Stagwell.

With agencies on a billable model, there might be some things that used to take a long time and won’t take as much time anymore. Are agencies feeling pressure to go above and beyond to add value in new ways?

That’s right. We also have to look at new business models. How do we charge for the combination of technology and creativity that we’re bringing?

How do we value-price what we’re going to do? After all, we can’t have an auction model like Google and Facebook can have.

So we’re going to have to look at how we charge and how to incorporate the bundle of services appropriately. And production done by AI still has a cost. It may be a reduced cost, but it’s still got to be in the bill.

Something I’ve been so impressed with is how Stagwell has really taken a stand for journalism. I know you’re standing up a news network. As an agency leader, why do you care about this?

Well, it really comes back from my history and experience all the way back to college newspapers and a soft spot for journalism and political campaigns.

I discovered, lo and behold, most marketers don’t advertise on the news. And why do they do that? Because someone told them not to. There was some brand safety concerns that their ad might appear in the wrong place.

I’m sure Boeing wouldn’t want an ad next to a plane crash story. Outside of those very limited cases, this had grown into almost a news-censorship regime.

I realized that was wrong and we could do our part to break that down and provide good opportunities for clients to extend their advertising. I know with The Trade Desk, we have a newspaper PMP [private marketplace] where we bundle news media, so that we’re making it even easier for clients to go into news.

That’s right. With the News Navigator, people can basically turn on the news rather than blocking it.

Exactly.

Are CEOs and CMOs listening? Since you came out with research about a year ago showing news environments are brand-safe, even what we’d call bad news or negative news, is still brand-safe. Has that information moved the needle with decision-makers?

I think it’s beginning to move the needle. I think we just got the information out there. We’re getting broader receptivity. We’re internally trying to tell our clients to spend a minimum of 3% on news.

When you think back to the day of newspaper, did anyone ever say that our ad shouldn’t appear in The New York Times? Did anyone ever say, oh, my God, our grocery ad can’t appear on the Wednesday supplement because they have stories about the Ukrainian war on the front page. That’s ludicrous.

What is your most unpopular opinion about advertising?

My most unpopular opinion is that most ads are terrible. [Laughs.]

Particularly online ads. Today, you’re going to see maybe 2,000 ads. How many of them are you to actually click on and actually remember? Not enough.