Why most ads are terrible: Former Microsoft CSO

SPEAKER_1 (0:01)

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Mark Penn (0:26)

People always make the mistake of thinking that new technology is about simplifying stuff we used to do. New technology is about doing things we always wished we could do but couldn't do in the past. Our business today is about 13,500 people, close to $3 billion of revenue, free cash flow.

Brian Sozzi (0:43)

All from you. Ten years ago, you started this company, one person, two people?

Mark Penn (0:49)

I had an idea. What you really have to have, you have to have a good strategy, really good creative, a good data set, and then you have to have good implementation of it.

Brian Sozzi (1:03)

Welcome to a new episode of Power Players. Really excited to welcome in my next guest. I haven't seen it a while, but I have him here in the flesh. That is Mark Penn, Stagwell CEO. Good to see you. It's been a while.

I think the last time I talked to you was during the pandemic. We did an interview with, I was at my kitchen table, which was totally weird time.

Mark Penn (1:21)

Well, that was a long time ago.

Brian Sozzi (1:22)

That was a long time ago. For those not familiar with Stagwell, what do you do?

Mark Penn (1:28)

Well, Stagwell is a marketing company. We were set up as the Challenger Marketing Company.

I really started this 10 years ago with a single person. Then in 2021, we merged in with a company that was on the market, and that's that reverse merger put us on the market. But we are the Challenger Company in Marketing Services, differentiated from the other companies, which frankly, no one had come along for 40 or 50 years or more into this industry and made it to be a real competitor to these three or four big companies. We today are a real competitor and in that space.

Brian Sozzi (2:09)

What did you see 10 years ago when you started this company? Why weren't there more Challenger brands being founded?

Mark Penn (2:16)

Well, a lot of them would start out with the idea that I had, but they didn't make it.

But the idea was, look, you looked at the companies and they were clearly behind technologically. Marketing was transforming. It was going from great sports tickets by the people that gave you media, one or two ads and placement into a really complex, scientifically-oriented, online performance marketing system. And that was something that I was really prepared to understand and implement. And then I just saw the whole business practices that internally, the holding companies have gotten too big, too bureaucratic, and too internally competitive to really, I think, hit the mark for clients.

Brian Sozzi (3:03)

Where is the business today?

Mark Penn (3:05)

Our business today is about 13,500 people, close to $3 billion of revenue. You know, we're projected to about 500 million of EBITDA. We have free cash flow and the-

Brian Sozzi (3:17)

All from you. Like, well, you started, 10 years ago, you started this company, one person, two people? I have 13,000 people?

Mark Penn (3:26)

I had an idea, and you know, it's great to have an idea, but you gotta implement them, and you gotta make them happen. And I had a great team that I assembled. From many of the people with me, they've been with me 20, 30 years across all the marketing services. And I think we had really deep expertise, both in marketing and in kind of the emerging digital infrastructure that you really need that underpins marketing and consumer interaction. It's just not, it's not marketing. Even what we're doing here today is so radically different from how you would have communicated, you know, 10 or 20 years ago, that you really need to have companies that understand modern marketing for the modern CMO.

Brian Sozzi (4:07)

How is marketing different today? Of course, we have AI out there doing its thing. How is it different today compared to when you started the company?

Mark Penn (4:18)

Well, I was, I was at Microsoft before I started the company.

Brian Sozzi (4:20)

Chief strategy officer.

Mark Penn (4:21)

I was chief strategy officer. And before that, I had a $2 billion budget and all the advertising. And I used to, used to joke, 70% of what we did then went on television. And then the digital ads consisted of something like Get Office 365