This interview is edited for clarity and length.
What does it mean for the agencies that are now part of the media network? Will the agencies be changing or consolidating?
We won’t be consolidating or changing cultures because we create groups, but we keep the culture separate. We’ll be renaming the media group to something kind of broader, named to be revealed soon.
What it means is that they will be in a much better position to meet the emerging trend, particularly in online advertising, of coordinating media and creativity into a single contract and single account.
Unlike television media, which became doing the TV spot and handing it over to people for media, doing online media really requires understanding data and the funnel and a target audience, and then doing creativity that really fits those mediums [where the target audience is].
And because I think a lot of the companies haven’t really adapted to that change, we’re bringing back together media and creativity so that we can really hit those online trends and do even better, tighter online marketing, which also can open it up to more performance pricing because we’re doing both the creative and the data work.
During today’s earning call you also mentioned Stagwell Media Studio. Can you explain exactly what that is and who will be involved?
That’s an offering so that for those creative agencies that have their own networks like Anomaly, Alliance or Constellation, they will also have within them now a media capability that they will be able to staff and operate so that they can also bring media closer to creativity whenever that makes sense.
The individual networks will staff the technology suite and [have] access that they’ll be given so that they can go ahead and buy media. So they will hire some planners and other folks to staff that individually and make that their brand media.
How do you think your competitors are doing? They seemed to all increase their projections in terms of revenue.
Well, look, I think that we came out with kind of very bold projection of 18% to 22% growth. And I think that remains a bold projection. So I don’t ever really see, you know, any need or appropriateness given the marketplace to change that. I think a lot of them had and still have projections that are just far lower than our 20% growth. So I think they’re looking at mostly 6, 7 or 8% growth. And we’re looking at 18% to 22% growth. So, they may be increasing that, but they’re not coming anywhere close to our projections.
How do you think Stagwell is doing compared to the other holding companies right now and is there a big point of difference?
Well, I think our digital-first nature and its advantages are really becoming clearer and clearer. I think everybody had strong growth rates coming out of the pandemic. Now that we’ve come out of the pandemic, for all practical purposes, you’re seeing them normalize back to much lower growth rates and us continue to separate out at a higher growth rate, particularly this year where there’s going to be an advocacy component as well.
S4 recently reduced its full-year earnings estimates and paused hiring. What are your thoughts about that?
Well, we’ve successfully hired several 1,000 people and yet we’ve kept our count-to-revenue ratio in check. In fact, it declined. So I think that it looks to me that, S4 was struggling to kind of find the right balance and keep that in check. Whereas in contrast, I think you look at what we’ve done, and we have grown. And we’ve been able to add the team as we needed to service the work. But we have managed to keep the count-to-revenue ratio in line. And that’s why we’re able to, I think, meet these rather bold projections for the year.
Where do you see Stagwell going? Where doy ou want to see the most growth?
Our goal is to continue to be the real challenger network against the majors. So, we have really grown significantly. If you look at the counts that might have started with four brands, like J&J, we’re up to 12 brands.
We’re looking to get into bigger global pitches as our network expands and grows so that we will become the ultimate digital-first challenger. You know, that’s our goal. And I think in addition, by mid-next year, we’ll be coming out with a series of products for the do-it-yourself marketer called the Stagwell marketing cloud. I think that will introduce another critical differentiation between us and the others.
Do you foresee any layoffs and ad spending cuts from clients?
We’re not really seeing that happening. I’m not saying it couldn’t happen. I think there’s been a very strong travel and entertainment season. I think what you had here that’s created some dislocation is that people were buying basically goods, and they weren’t able to buy services because they were at home, they didn’t go anywhere. And now people are buying services, travel, entertainment, all of those things in reducing purchases and goods.
So I think you’ll see some of those changes, then cutting CPG spending, but maybe increasing spending, balancing that out with spending and travel and other areas. So our travel business, for example, is back, our advocacy business is going to show strong growth as the political season heats up and we’re not really seeing clients cutting back right now. I don’t know, they may come back next year, but they seem to be pretty much on autopilot right now.
We’ve continued to add significant staff. Look, I think we’re a great place to come, I think showing the kind of growth and opportunity. And a great mix of client work here. So, there’s no hiring pause or freeze at this time.
By Keira Wingate. Published August 04, 2022.