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FEATURING

Record first quarter financial results driven by high-growth digital transformation, consumer insights & strategy, and large client wins in media

  • GAAP Revenue grew 254.7% in 1Q and 31.5% on a Pro Forma basis

  • Pro-Forma Organic Net Revenue grew 23.6% in 1Q

  • Net Income of $33.6M in 1Q or Diluted EPS of $0.10 per share

  • Net Income attributable to Stagwell of $12.7M in 1Q

  • Adjusted EBITDA of $101.4M in 1Q representing a 19.3% margin on Net Revenue

  • Record first quarter Net New Business of $54M

  • 56% of 1Q Net Revenue came from high-growth digital services

  • Reaffirms 2022 full-year outlook

New York, NY, May 6, 2022 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three months ended March 31, 2022.

FIRST QUARTER HIGHLIGHTS:

  • Revenue of $642.9 million, an increase of 254.7% versus the prior year period.
  • Pro Forma GAAP revenue growth of 31.5% versus the prior year period and 30.2% ex-Advocacy.
  • First quarter net revenue of $526.6 million, an increase of 233.2% versus the prior period.
  • Pro Forma net revenue growth of 22.8% versus the prior year period and 22.3% ex-Advocacy.
  • Pro Forma organic net revenue growth of 23.6% versus the prior year period and 23.2% ex-Advocacy.
  • First quarter net income of $33.6 million versus $4.6 million in the prior year period.
  • First quarter net income attributable to Stagwell Inc. common shareholders of $12.7 million versus $4.4 million in the prior year period.
  • First quarter adjusted EBITDA of $101.4 million, an increase of 325.4% versus the prior year period.
  • Pro Forma adjusted EBITDA growth of 33.8% versus the prior period and 32.4% ex-Advocacy.
  • First quarter Adjusted EBITDA Margin of 19.3% of net revenue.
  • Net New Business wins totaled $54 million in the quarter.

“While the GDP may be contracting, Stagwell is growing strongly. The merger has spurred revenue synergies immediately apparent in the big wins, significant industry awards, and integration of talent and technology across our network,” said Mark Penn, Chairman and Chief Executive Officer of Stagwell. “We grew first quarter net revenue 24% versus the prior year, more than double the pace of legacy holding companies, and grew Adjusted EBITDA at an even faster rate of 34% year-over-year. We also made a key e-commerce acquisition in April with Brand New Galaxy, which connects to our media and digital transformation offerings and provides increased scale in Europe. Our record quarter continues to build on our post-combination track record of delivering growth, free-cash-flow, and growing profitability.”

Frank Lanuto, Chief Financial Officer, commented: “The Company reported strong first quarter results with GAAP revenue of $643 million, net revenue of $527 million and Adjusted EBITDA of $101 million. Organic pro forma net revenue increased 24% over the prior period quarter and also increased sequentially in a typically smaller seasonal quarter. Adjusted EBITDA margin expanded 160 bps year-over-year on a Pro Forma basis to 19.3% of net revenue as the Company began to see the benefits of expected cost synergies.”

Financial Outlook

2022 financial guidance is as follows:

  • Pro Forma Organic Net Revenue growth of 18% – 22%
  • Pro Forma Organic Net Revenue growth ex-Advocacy of 13% – 17%
  • Adjusted EBITDA of $450 million – $480 million, excluding the contribution from 2022 acquisitions
  • Pro Forma Free Cash Flow growth of approximately 30%
  • Guidance assumes no impact from foreign exchange, acquisitions or dispositions.
* The Company has excluded a quantitative reconciliation with respect to the Company’s 2022 guidance under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K. See “Non-GAAP Financial Measures” below for additional information.

 

Conference Call

Management will host a video webcast and conference call on Friday, May 6, 2022, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three months ended March 31, 2022.  The video webcast will be accessible at https://stagwellq12022earnings.open-exchange.net/. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.

A recording of the conference call will be accessible one hour after the call and available for ninety days at www.stagwellglobal.com.

Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing.  Led by entrepreneurs, our 10,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.

Basis of Presentation

The acquisition of MDC Partners (MDC) by Stagwell Marketing Group (SMG) was completed on August 2, 2021. The results of MDC are included within the Statements of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entirety of all periods presented.

Non-GAAP Financial Measures

In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) defines as “non-GAAP Financial Measures.”  Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company’s results. Such non-GAAP financial measures include the following:

Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K.

(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.

(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.

(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.

(4) Free Cash Flow:  defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments.

(5) Financial Guidance:  The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results.

Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.

This press release contains forward-looking statements. Statements in this press release that are not historical facts, including without limitation the information under the heading “Financial Outlook” and statements about the Company’s beliefs and expectations, earnings (loss) guidance, recent business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Words such as “estimates”, “expects”, “contemplates”, “will”, “anticipates”, “projects”, “plans”, “intends”, “believes”, “forecasts”, “may”, “should”, and variations of such words or similar expressions are intended to identify forward-looking statements. These statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section.  Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows include, but are not limited to, the following:

  • risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
  • the effects of the coronavirus pandemic (“COVID-19”), and the impact on the economy and demand for the Company’s services, which may precipitate or exacerbate other risks and uncertainties;
  • an inability to realize expected benefits of the combination of the Company’s business with the business of MDC (the “Business Combination” and, together with the related transactions, the “Transactions”);
  • adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
  • the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
  • the Company’s ability to attract new clients and retain existing clients;
  • the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
  • financial failure of the Company’s clients;
  • the Company’s ability to retain and attract key employees;
  • the Company’s ability to compete in the markets in which it operates;
  • the Company’s ability to achieve its cost saving initiatives;
  • the Company’s implementation of strategic initiatives;
  • the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
  • the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions which complement and expand the Company’s business capabilities;
  • the Company’s material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting;
  • the Company’s ability to protect client data from security incidents or cyberattacks;
  • economic disruptions resulting from war and other geopolitical tensions (such as the ongoing military conflict between Russia and Ukraine), terrorist activities and natural disasters;
  • stock price volatility; and
  • foreign currency fluctuations.

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2021 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.

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Stagwell Insights

 

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Today’s businesses have more reputational capital than ever before. When reputation is managed, it has the potential to add business value and mitigate risks. Stagwell annually produces the Reputation Quotient, the industry’s leading barometer of American corporate reputation, in partnership with Axios and The Harris Poll to uncover insights which brands are gaining or losing reputational capital – and the expectations of a new generation of reputation-minded consumers.  

The Axios Harris Poll 100 is a trusted ranking of the reputations of the companies most on the minds of Americans using a framework Harris has used since 1999. Download the 22nd Annual Reputation Quotient Study report to view the full rankings and gain additional insights about performance year over year. 

Register to receive our 2022 research – set to release in late May – using this form. Reach out to hello@stagwellglobal.com if you have questions. 

Methodology:  

The Axios Harris Poll 100 is based on a survey of 42,935 Americans in a nationally representative sample. The two-step process starts fresh each year by surveying the public’s top-of-mind awareness of companies that either excel or falter in society. These 100 “most visible companies” are then rated by a second group of Americans across the seven key dimensions of reputation to determine the ranking. If a company is not on the list, it did not reach a critical level of visibility to be measured. 

 

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Ray Day
Stagwell Vice-Chair 

 

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“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffet 

Today, corporate reputation means more than mastery of the marketplace. Reputation is a measure of what all stakeholders – including consumers, employees, shareholders, and more – think about a company.  

Contrary to “brand” – which measures a company’s products & services, typically among specific consumer segments, a reputation is earned not created.  

Reputation is comprised of your company’s performance + its behavior in the marketplace, reflected through its internal and external marketing communications. When reputation is curated, it has the potential to build business value and can help mitigate risks. Companies with excellent reputations are more likely to garner positive outcomes, such as advocacy, community expansion and purchase intent.

Today’s corporations and CEOs have greater permission from the public to address complex social issues – within bounds. Reputation today is evolving today to reflect more than just a product or service set, but a businesses’ commitment to serve society.  

In recent years, geopolitical, economic, and social developments have created a society in transition and turmoil. Consumers have more expectations of corporations in this environment – not least because of declining trust and expectations in institutional actors such as governments and municipalities. As measured by Stagwell’s 2021 Reputation Quotient, brands across nearly every business sector experienced a reputational boost during the height of the pandemic as consumers looked to the private sector for solutions where public officials were failing to create them:  

CEOs, and in a limited capacity other star of the C-Suite such as CMOs, are rapidly gaining reputational capital within the market and with consumers. They influence sales, perceived product/service quality, and signal the strength of an organization’s culture. As CEO reputation extends outward, when to exert influence in society becomes more calculated and more important. Americans say CEOs most affect reputation, ethics, and financial success for today’s organizations. CEOs also have a growing public awareness and influence on consumer sales; half of Americans report changing buying habits due to the actions of a CEO. 

More traditional C-suite players like Jamie Dimon at Goldman Sachs leverage influence in quieter, more sustained ways – Dimon’s annual letter is a bellwether for the future of global financial markets, with wide-ranging through leadership implications for businesses within and beyond the financial services category.  

With that reputational capital comes the burden of leadership: the public believes CEOs should stand on issues where they have credibility, not where they don’t have a voice or authority. Ultimately, core values should be the navigator of social issues. Alienation is a risk in a highly polarized society, but so too is the risk of stakeholders who perceive CEOs as indifferent or in conflict with the company’s principles. This is especially true among younger and Black Americans. While standing down is expedient, a generational and cultural divide is growing that will make decisions more difficult and polarizing.  

Corporate and CEO reputation is changing quickly. Stagwell is a leader in global reputation tracking and management; learn more about the Reputation Quotient, an annual collaboration between Stagwell, Axios, and The Harris Poll tracking the most visible companies in America. Register to receive our 2022 research when it releases in May.

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Mark Penn

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Welcome to the second edition of Hitting the Mark – a monthly analysis of developments at the intersection of business, marketing, and politics meant for the modern C-Suite. This month’s topic? Inflation. 

Inflation is in many ways the most pernicious of economic problems because it affects so many people at the same time. Inflation is at its highest rate since the early 1980s, and, as I wrote recently in the New York Times, “Many Americans under 60 have relatively little experience with anything but comparatively low fuel costs, negligible interest rates, and stable prices. Virtually overnight these assumptions have been shaken.” Consumers are already changing their behavior, becoming more cautious and pessimistic about the state of the economy. All of those COVID savings are being eaten up through the mystery of runaway higher prices.

Most marketers have some real choices in how to respond to inflation and the goal is to be on the side of the consumer during these more difficult economic times.

Of course, the easiest solution is simply to raise prices. It’s no longer 10 cents for a pack of gum; one bellwether of higher prices is the cost of treats like chocolate and spearmint. In 1974 a pack of 7 sticks of gum cost 15 cents. That probably does not even cover the sales tax on a package of gum today. Chocolate is a luxury and luxuries have the most elastic pricing, so they generally have the most room to simply pass on cost increases, so don’t expect to pay the same at the Godiva store.

Other companies have tried hard to conceal price increases by simply reducing the quantity. Cereal companies are famous during inflationary times for simply taking an ounce or two out of those cereal boxes. Consumers can easily miss this shrinkage but go too far and expect a backlash.

Perhaps the best way to get on the side of consumers during this time is to offer bigger units at lower prices. This is why Sam’s Club and Costco generally do better during these times, as their business model is all about delivering more value for less.

Inflation is of course great for products that are perceived as keeping pace with inflation. No product is known for holding its value more than gold – expect the airwaves to be filled with ads that sell gold as the one true hedge against rising prices.

Fast food prices and their consumers are super sensitive to inflation. As the McDonald’s dollar menu inches up from $1, to $2, to $2, its competitors have done a great job advertising $5 fill-up boxes that are brimming with food. These “inflation busters” become the perfect partners to penny-pinched consumers. While prices for organic groceries soar, families know they can rely on these restaurants to remain affordable.

 

What does this mean for marketing? 

Growth slows during inflationary times, so marketing will also be more about fighting for market share than selling new products to first-time consumers. This means that effective competitive marketing will be a lot more useful for brands. Especially when consumers are motivated by cost-saving, nothing can be quite as powerful as reminding them of the superior value of your business versus competitors.

It’s important to remember that value is not always the same as cost. I once ran advertising on behalf of Microsoft against Linux. Linux was difficult to compete against because the company was giving away some of its software for free. We created the concept of the “total cost of ownership” and showed that the free offering, over time, would be more costly than paying Microsoft. This campaign labeled “Get the Facts” was a huge success.

Focus is important during inflationary times. The consumer is once again king, and behaving somewhat like a taxpayer, skeptical of companies who are focused on giving their money away for causes because they feel like they are being called upon to finance these programs out of pocket when they buy goods and services. Companies with a heavy focus on social programs should evaluate whether they will now be seen as out of step with the needs of consumers. While helping soup kitchens might still be a popular idea during inflationary times, funding the opera might raise eyebrows, and throwing a huge fashion show might alienate consumers at this time.

Now is the time to stop simply watching inflation worsen and pick the right strategy for your company, whether it is reducing package sizes, creating affordable bundles, raising costs, or digging into competitive advertising to fight for market share. As for me? I have to go load some gold bars into my car…

Up next in our Hitting the Mark column? The pandemic, inflation, the Russia-Ukraine conflict, political crises – all these issues raise the importance (and trickiness) of “brand leadership” in our modern era. As we noted in Stagwell’s 2021 research on brand reputation, those perceived as delivering solutions to the pandemic received a major reputational boost over the past few years. Today, a majority of voters are not confident in either the Biden administration (55%) or the Federal Reserve’s (56%) ability to fight inflation. Brands won’t deliver the silver bullet to America’s inflation woes but adapting strategy to give consumers a lifeline amid economic stress can go a long way towards building reputational capital.

Stagwell’s 2022 Reputation Quotient, our annual ranking of the 100 most visible companies in America, is set to release in late May. I look forward to sharing an updated picture of the state of corporate reputation and brand leadership then.

Mark Penn 

 

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Beth Sidhu
pr@stagwellglobal.com
202-423-4414

NEW YORK – May 3, 2022 – Stagwell (NASDAQ: STGW), the challenger network built to transform marketing, today released its 2021 Annual Report, highlighting substantial growth propelled by a uniquely high concentration of digital capabilities; strategic investments and acquisitions supporting digital and global growth; and a collaborative organizational model designed to meet the demands of larger clients in need of true integrated marketing services. Download the report here.

“In a digital economy, every screen is a canvas, every experience a data collection point, and every platform a new place for brand interaction. Brands deserve a digital-first alternative marketing network that drives business growth by connecting culture-moving creativity with leading-edge technology,” said Stagwell Chairman and CEO Mark Penn. “We strongly believe the steps we have taken to align Stagwell’s operations to support this transformation created a lasting platform for growth and shareholder value.”

Stagwell has had breakthrough performance since the combination with MDC Partners Inc., forming Stagwell Inc. in August 2021.  This includes $2 billion in combined pro forma revenue for 2021. Penn’s annual CEO letter discusses Stagwell’s 2021 financial performance in the context of five transformative approaches to global marketing services delivery:

  • Digital transformation and innovation, helping clients reposition their enterprises for growth in the new digital economy. Innovation shops Code and Theory, GALE, Instrument, and YML spotlight path-breaking work for Amazon Ads, MilkPEP, Google TV, Polestar and more within the report.
  • Scaling creative performance for modern brands, bringing world-class creativity and modern media together to drive powerful campaign results. Work from 72andSunny for Tinder/Match Group; Anomaly for Expedia; Assembly for Nike; Doner for CUE Health; Forsman & Bodenfors for Polestar; and more illustrate ways Stagwell unleashes creative effectiveness for the modern marketer.
  • Building integrated marketing solutions that align the right mix of core marketing capabilities and specialist expertise for ever-more-complex clients, exemplified in Sloane & Co., KWT Global, TEAM Enterprises, and GALE’s collaborative marketing efforts supporting Hertz’s vision for the future of electric vehicles.
  • Agile global expansion, fueled by Stagwell’s Affiliate Program spanning 50+ partners across Latin America, the Middle East, Africa, Asia-Pacific, and Eastern Europe, and investments in market leaders Instrument and Goodstuff.
  • Product innovation through the Stagwell Marketing Cloud, a proprietary product suite of SaaS and DaaS solutions that leverage artificial intelligence, machine learning, and mixed-reality business transformation for in-house marketers. SMC’s services span audience segmentation, influencer marketing, public relations, immersive experiences, and brand insights. The newest platform in the Cloud, ARound, helps brands create, manage, and scale augmented reality experiences for live events and retail.

To read the full report, please visit Stagwell’s website. Viewers can use QR codes throughout the document to explore referenced case studies.

About Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing.  Led by entrepreneurs, our 10,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.

 

PR Contact:
Beth Sidhu
pr@stagwellglobal.com
+1. 202.423.4414

IR Contact:
Michaela Pewarski
ir@stagwellglobal.com
646-429-1812

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This piece is part of Stagwell’s Marketing Frontiers series on the Creator Economy, Influencer Marketing, and Social Commerce. 

From new monetization channels for Creators to content formats to experiment with, Web3 will unlock a new chapter for the Creator Economy. Just as fast as influencer marketing hit its stride, this next era of the internet is forcing the players of the modern Creator Economy to rethink how influence can drive results. Authenticity, deep consumer-to-creator connections, and compelling content will still be the bread and butter of good influencer strategy. But how will Web3’s focus on a decentralized internet impact the ways creators, agencies, and brands interact? How can Creators help brands explore meaningfully in the budding Metaverse – and bring consumers along for the journey? Explore POVs from Stagwell’s marketing leaders on where the Creator Economy is headed in the Metaverse.

A New Class of Creators

John Doyle, Colle McVoy  

It’s difficult to imagine how the Metaverse will transform human existence writ large, much less how it will impact creators. To anchor speculation in something solid, it’s helpful to focus on three current aspects of the creator economy that may change the most when we turn on headsets, join in the Metaverse, and drop out of our IRL lives: expression, intimacy, and ownership.

Expression — Today, we may not think of event planners, architects, industrial engineers or sound designers as creators because our current social media access points don’t reward this type of talent. But in the Metaverse, it’s easy to imagine a new class of creators who at once will be able to plan an event, design an environment in which to hold the event (including lights and sound), and sell proprietary virtual products.

Intimacy — Following creators on social can feel like keeping up with a friend. As we interact in immersive, live experiences where creators exist in front of our goggled eyes, an already intimate experience will likely become even more so.

Ownership — The Metaverse will likely rewire the economics of how creators get paid. In a business with so many competing players — including tech platforms, talent agencies, and brands — creators have been subject to unfair business practices. They have formed non-profits to help restore balance in a still-forming industry. Like reinvented Bowie bonds, creators and their fans may co-own a creator’s work and the value it creates — in the spirit of Irene Zhao, an Instagram Influencer who explains why she created a DAO token to offer her fans.

Web3: Enter the Age of Virtual Avatars

Donetta Allen, HUNTER 

One of the issues that most creators face today is the indirect way that they earn compensation for work – they work tirelessly to excel in the industry and in turn increase the ad revenue and stock prices for the social platforms that can flip the switch on an algorithm at any time, significantly impacting the potential income of creators. Web3 and its central premise of creating a decentralized internet will provide a more direct link between creators and their fans. Expect this to increase the influence of creators who take steps to establish their footholds in this space now. These technologies, including virtual and augmented reality, machine learning, artificial intelligence, blockchains, smart contracts, and cryptocurrencies, provide the tools to be fairly compensated for their work and allow creators and their communities to curate and claim ownership of their creations.

Ultimately, new business models centered in Web3 will lead to a more immersive, decentralized metaverse. As digital worlds evolve beyond simple games and marketing campaigns into fleshed-out worlds with avatars, digital goods, and experiences, the curious will seek guides to make the most of the experience, just as consumers currently look at Pinterest to plan a trip, or purchase items based on trending TikTok videos. Smart creators will adapt and prepare to meet – or lead – us in these digital spaces, pushing the boundaries of their current content and tapping emerging technology with the mindset to sell (or gift) it directly to their fans. Can you imagine a personalized birdwatching tour with a creator in a yet-to-be-created digital world or the opportunity to own the copyright of the first-ever video your favorite creator edited in the Metaverse? These unbelievable experiences are here, and creators and collaborative brands will lead the way in making these attainable to those who are currently only passively curious or dismissive of the vast opportunities – and income – available in future digital worlds.

 

Web3 and the Power of Nano-Influence

Sophia Fraioli, KWT Global 

The future and the way we connect is changing rapidly. The terms Web3, NFTs, and cryptocurrency inherently bring up many questions surrounding money and how we will “pay to play” in the digital future. To adequately talk about Web3, we first need to understand Web1 and Web2. While Web1 focused on the consumption of information, Web2 concentrated on creating and sharing information under a 3rd party-controlled system. Web3 has set to disrupt this system, bringing power back to creators and individuals by decentralizing the internet.

What does that mean for the creators and influencers that dominate the spaces Web2 has created? Estimates suggest U.S. influencer marketing will surpass $4 billion in 2022, leaving some to wonder if the practices and apps of Web2 will fall by the wayside once the “switch” to Web3 has become a reality.

However, the switch for these influencers from Web2 to Web3 may not be as complicated as it seems. With the decentralization of the internet that Web3 promises to bring, there are new opportunities for creators to make a name for themselves outside of the platforms that made them famous. DAOs (Decentralized Autonomous Organizations) will allow creators to make money directly from their fan base without the middleman profiting off their efforts. NFTs, tokens, and cryptocurrency will enable fans to fund creators and potentially upend the existing relationship between creators and brands.

Trustworthiness is increasingly one of the most critical aspects of an influencer’s success, and with that in mind, it’s the nano-influencers who may gain the most under this shift. Authenticity is at the core of what Web3 promises. It will potentially be a place away from the control and persuasion of big business and those who find success in this new digital world will be those who are trusted most by their audiences.

Many say that those who profit most under Web2 will likely profit the least under Web3, but as Web3 unfolds, it’s up to agencies to pay close attention to this shift and see where we can fit into this new space. The best practices we have lived by for all brands in Web2 may be far more complicated in the Web3 space. NFTs will become a huge revenue source for some brands, while others may want to focus instead on activating their presence and engaging in the Metaverse. The change to Web3 won’t be a “light-switch” moment, but now is the time to start discussing and advising clients to be ready and stay close to their agencies as we look to succeed in this new digital universe.

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Jen Wood
SVP, Integrated Marketing
Allison+Partners

 

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When NIL legislation became law in July 2021, it opened the floodgates for college athletes to partner with companies and monetize their success. Historically, NIL opportunities were talked about in terms of appearances and autographs. But unsurprisingly, the bulk of all NIL deals to date have leaned on the success of digital solutions from social media posts and content to NFT creation.

The first nine months of this marketplace have seen a flurry of activity, but have also exposed a few opportunity areas:

  • Despite NIL legislation being touted as benefitting all college athletes, recent data from the platform Opendorse shows 51.1% of all NIL compensation has gone to college football players and 72.6% of all compensation has gone to male athletes.
  • Many experts say this imbalance is a result of systemic inequities that exist in sports. Brands could help correct this imbalance by purposefully crafting NIL programs that highlight a diverse representation of athletes across both men’s and women’s sports.
  • Even though there’s a desire from all stakeholders to have uniform NIL standards, there’s currently no governing body overseeing this. Depending on your industry, it’s still a bit of the Wild West in terms of who you can partner with. Rules differ by college and conference, leading some conferences to allow NIL partnerships with alcohol and sports betting companies, for instance, while other conferences and schools do not.
  • Brands must do their due diligence before approaching an athlete and hire an agency, especially if they’re in a highly regulated industry, to help navigate the constantly changing landscape and make recommendations around the athletes who can help achieve their goals.
  • There is great variability in the savviness and experience of those negotiating these deals, with some athletes represented by traditional agents and other athletes left to negotiate on their own. Some universities, such as Ohio State’s NIL Edge Team, have formed expressly to help athletes navigate this void. This creates inconsistencies in how services are priced and opens the door for certain athletes to be taken advantage of.

Partnering with a college athlete, as with any influencer, comes with risk. Not only are proper vetting and contract structure essential to a successful partnership, but athlete deals have more visibility than traditional influencer relationships. This heightens the opportunity for brands to be called out for unfair practices. Using tools, such as A+P’s Influencer Impact Score, helps provide consistent vetting and pricing guidance to ensure each deal is approached equitably.

One thing is for certain  the NIL marketplace’s size and influence will continue to grow. And athlete brand-building efforts will continue to be a huge focus, taking an even larger role in recruitment efforts. Not only will colleges seek to recruit college athletes who are already influencers and can bring that follower base to their school, but they’ll also look to market their institutions’ ability to help athletes build their personal brand by playing at the university. Expect athletes across all college sports to become savvier about their marketing potential and create an exponentially larger industry marketplace.

Jen Wood is senior vice president of Integrated Marketing at Allison+Partners. She’s spent the past 10-plus years of her career in Sports Marketing and Sponsorships overseeing all aspects of her clients sports marketing efforts – from sponsorship strategy development and partner identification, to negotiating multi-million-dollar sponsorship deals with collegiate and professional sports organizations and athletes, partnership activation, and ultimately measuring asset utilization and performance. She’s passionate about the opportunities sports marketing provides and is always ready to chat with an interested brand.

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Beth Sidhu
pr@stagwellglobal.com
202-423-4414

Global Affiliate Brand New Galaxy joins the challenger marketing group to accelerate connected commerce and digital transformation for global brands; will operate as part of Stagwell Media Network

New York, NY & Warsaw, PL – April 21, 2022 (NASDAQ: STGW) – Stagwell, the challenger network built to transform marketing, today announced the acquisition of Brand New Galaxy (BNG), a leading provider of scaled commerce and marketplace solutions for 150+ global brands and 500+ e-retailers worldwide. With 600 experts across Europe, MENA, and the United States, BNG adds deep, digital-first specialization in connected commerce solutions, scaling Stagwell’s broad e-commerce capabilities to service more complex global clients. BNG has served as a partner of Stagwell via its Global Affiliate Program since 2021 and is the first acquisition Stagwell has made of one of its affiliates.

“We are pleased to welcome Brand New Galaxy to the Stagwell platform, expanding the reach of our global e-commerce offerings. Their state-of-the-art e-commerce and digital transformation technology is another reason clients are choosing Stagwell over traditional holding companies,” said Mark Penn, Chairman and CEO, Stagwell.

BNG will join the Stagwell Media Network, a global community of leading omnichannel agencies that collaborate to deliver future-facing solutions driven by digital, data, technology, and media expertise. In addition to complementing Stagwell’s data-led digital transformation capabilities, BNG offers a range of tailored solutions for accelerating end-to-end multimarket commerce, based on international insights that translate into local market opportunities.

“It is incredibly exciting to welcome Brand New Galaxy and their leadership teams to Stagwell Media Network,” said James Townsend, Global Chief Executive Officer of Stagwell Media Network and its global media agency, Assembly. “Their deep and extensive expertise in all things connected commerce sits in perfect complement to our growing portfolio of omnichannel media agencies. The addition of BNG is the natural and front-footed next step for our network to further empower the modern marketeer with more cohesive and integrated solutions across the marketing services spectrum.”

As part of Stagwell Media Network, Brand New Galaxy will continue to go to market under the BNG brand as well as collaborate with other members of the Stagwell Media Network.

Piotr Morkowski, CEO of Brand New Galaxy Holding said, “BNG was born as an ecommerce-native business and over the last five years of incredible growth, we have built a set of unique, world-class capabilities to support our global clients across the entire path to purchase. Building a global business of 600 experts in less than five years is no small achievement, but we are hungry to do much more. Joining forces with Stagwell Media Network at this stage in our journey as part of an integrated go-to-market approach is the best way for us to grow even faster and deliver on our ambitions.”

Stagwell Media Network is now home to more than 3,500 experts distributed globally across more than 20 countries and 40 offices, managing close to $5 billion in media. The Network offers omnichannel media, led by data and digital expertise that challenges the antiquated media models of legacy advertising giants. The BNG acquisition follows the January 2022  acquisition of Goodstuff Communications, one of the United Kingdom’s leading independent media agencies, supporting Stagwell’s scale and global footprint with local activation.

The terms of the deal were not disclosed.

###

About Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing. Led by entrepreneurs, our 10,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.

About Stagwell Media Network

Stagwell’s Media Network is a group of leading omnichannel agencies home to more than 3,500 experts with an expansive global footprint across 40+ offices in 20 countries, managing close to $5 billion in media. Agencies include AssemblyBrand New Galaxy, MMI Agency, Goodstuff and Grason, creative consultancy GALE, B2B specialist Multiview, multi-lingual content agency Locaria, and travel and media experts Ink. The network offers marketers a more dynamic partner for global B2B and B2C solutions spanning data, technology, media, and creativity aimed at accelerating business growth for brands worldwide.

About Brand New Galaxy

Brand New Galaxy is a fast-growing leading provider of marketing and technology solutions built to drive commerce and digital transformation for brands. Founded in Warsaw, Poland, in 2017, BNG has grown to 600+ employees with offices in Europe, North America, and the Middle East. BNG has been named “Debut of the Year 2018”, “Success of the Year 2019 & 2020,” and “Growth of the Year 2021” by PRESS magazine’s prestigious agency ranking, proving its position as a dynamic global agency. BNG’s data-driven approach makes brands better connected with consumers in complex marketing and technology ecosystems. This gives more than 150 brands and Fortune 500 clients a true strategic partner, both on a global and local level.

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CONTACTS

PR Contact
Beth Sidhu
pr@stagwellglobal.com
202-423-4414

 

IR Contact

Michaela Pewarski

NEW YORK, NEW YORK, APRIL 20, 2022 – Stagwell (NASDAQ: STGW) announced today the Company will report financial results for the three months ended March 31, 2022 on Friday, May 6, 2022, before the market open.

Stagwell will host a video webcast to review those results the same day at 8:30 AM (ET). To register and view the webcast, visit this link.

A replay of the webcast will be available following the event at Stagwell’s website, https://www.stagwellglobal.com/investors/.

About Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing.  Led by entrepreneurs, our 10,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.

IR Contact: 
Michaela Pewarski
ir@stagwellglobal.com
646-429-1812

PR Contact: 
Beth Sidhu
pr@stagwellglobal.com
202-423-4414

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This piece is part of Stagwell’s Marketing Frontiers series on the Creator Economy, Influencer Marketing, and Social Commerce. To view other content in the series, visit our Creator Economy page here. 

 As brands explore the Metaverse, expert investment and experimentation with digitally rendered brand ambassadors to follow. When should brands leverage virtual influencers over IRL creators? How can they navigate anxieties around virtual perfectionism, unrealistic beauty standards, and representation as they play in this space? What opportunities do virtual influencers afford that real-life creators may not? We asked influencer and social experts from around Stagwell to share their POVs:

Web3: Enter the Age of Virtual Avatars

Donetta Allen, HUNTER 

First, let’s answer the question of “what is a virtual influencer?” A virtual influencer is a fictional, computer-generated personality that acts, speaks, and posts on social media or appears in the Metaverse – like a human, but in a much more controlled way. The tech-savvy, faceless creators and brands behind virtual influencers decide how their avatar will act, dress, who they date, and what drama will – or won’t – appear on the timeline. The ability to work with a fictional character whose every move is controlled by a creator has an appeal for brands in a world full of opinions and photo re-shoots, even in a world where “authentic connection” is often a top reason for marketers to work with influencers.

That said, brands should begin exploring virtual influencers ASAP. Digital avatars are becoming increasingly common as brand partners, with companies like Adidas, Samsung, and Fortnite engaging virtual influencers for recent campaigns. It is expected that the prominence of marketers tapping into the virtual influencer marketplace will increase as the metaverse continues to advance.

Virtual influencers’ carefully curated images allow for greater messaging control, alignment with brand values, and less risk of controversy throughout the duration of the partnership. Like real creators, virtual influencers are diverse – from their ethnicity, gender, size, to interests – and brands should prioritize diversity as they do with real creators. While costly to develop, virtual influencers may be less expensive than traditional influencers to engage for brand campaigns. They are also reported to have 3x the engagement rate of traditional influencers, adding yet another compelling reason to consider virtual influencers for your next campaign. As more brands seek to work with these stylized, fictional characters and new opportunities emerge, we’ll start to see the diversification and expansion of the virtual influencer landscape so that it more closely reflects the human experience.

Virtual Influencers & Transmedia Brand Campaigns 

Natalie Goenaga, KWT Global

Digitally-rendered influencers have made a splash on our screens since 2016 when the world was introduced to Lil Miquela. Seemingly appearing out of thin air, Lil Miquela was a thoughtfully curated personification of Instagram and Instagram culture created by a startup in Los Angeles made to “question the social norms of online platforms”- while making the mysterious company millions of dollars in sponsorships. Over the last 6 years, Lil Miquela has amassed a following of over 3 million, participated in campaigns with the likes of Bella Hadid for Calvin Klein, walked with Prada for Milan Fashion Week, modeled for Chanel, Coach, Balenciaga, and named by TIME as one of “The 25 Most Influential people on the Internet.” Did I mention she has a budding career as a pop star with over 198,000 monthly listeners on Spotify? 

As the Metaverse, CGI, and AI continue to creep onto center stage, the rise of these digital influencers is sure to follow. But in a cancel-culture world that holds a magnifying glass to transparency and authenticity from creators and brands how will these perfectly engineered creators navigate the delicate landscape and how can brands appease the masses? In the example of Lil Miquela – it is worth noting that the CGI Brazilian-American 19-year-old has serious activism chops. A vocal ally, she actively supports Black Lives Matter, the Innocence Project, LGBTQ+ Life Center, the Downtown Women’s Center, and Justice for Youth. But is that enough? The digital influencer world is certainly conforming to these changes with perfectly imperfect characters that challenge the beauty industry and their inspiring backstories and diversity to conform to the new mold. And while all creators carefully tread this sensitive landscape, with virtual influencers there is a sense of more control and brand safety and stability as their presence is meticulously and carefully crafted. 

As the most active consumers of influencer content, Millennials and Gen-Z want influencers and brands to do one thing well – and that’s to keep it real. With virtual influencers, that’s admittedly a bit harder to do. Balancing the line of when to activate real influencers and those in the digital space is a new tension brands will have to navigate but provides plenty of creative and unique opportunities. Activating virtual influencers for campaigns in an overly saturated influencer market creates thumb-stopping content for those “big splash” moments – like the recent Adidas collaboration with virtual influencer RUBY9100M who designed a custom sneaker for the brand and released her debut single alongside the launch. 

Another powerful tool that can be leveraged by digital influencers? Transmedia. This newer storytelling technique can tell a single story or story experience across multiple platforms and formats using today’s current technology. Much like a traditional 360 campaign, transmedia campaigns allow digital influencers to tell your brand’s story and transition it across multiple virtual environments with ease. A virtual influencer will remain recognizable anywhere, so brands can leverage them in a TikTok video, Instagram post, or in a video game. And when it comes to costs, brands are able to activate virtual influencers for larger-than-life ideas that may not be possible with IRL creators without breaking the bank. Want to “fly” your digital creator around the world? Want to launch a campaign with them in space? Virtually anything can become possible.

Virtual or Real, the Strategy is the Same
Kelli Goss Johnson, Allison+Partners  

Brands should approach virtual influencers as they would an IRL creator: for authentic brand partnerships, campaigns, awareness and messaging, while ensuring that the brand’s consumers and social audience fully understands that the virtual influencer is exactly that (and not a real human or animal).  Virtual influencers can be utilized over IRL creators when the brand wants more control over the content and its many aspects, in addition to creative freedom of the content developed.

Real or not, these influencers should also be ‘on-brand’ and have the same value properties as the brand, while offering loyalty, exclusivity and brand affinity to the partnership or campaign. They are also brand safe (you won’t catch them in an unflattering paparazzi moment or posting something uncomplimentary on social media) and can be activated when, where and how a brand wants them to. And while virtual influencers have been criticized for their perfectionism, so have IRL creators, leaving the door open for virtual influencers to socially share some of their more imperfect moments and make them more relatable or ‘real.’ There is also opportunity to cross both an IRL influencer into the Metaverse with a virtual influencer, supporting the authenticity of the virtual influencer while introducing the IRL influencer into a fully digital ecosystem.

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