Stagwell's organic revenue rose 14% in 2022 and its CEO is bullish on AI
Agency holding company Stagwell posted its sixth consecutive quarter of double-digit revenue growth.
MikeTyes
Stagwell Inc. CEO Mark Penn is bullish on AI and wants the holding company to gain more business opportunities in Europe, he said today as Stagwell reported its 2022 results.
Stagwell's pro forma organic revenue rose 8% in the fourth quarter and 14% in 2022. The holding company forecast organic revenue would rise 7.5% to 10% this year, or 10% to 14% excluding its advocacy business.
The company also doubled its share buyback authorization to $250 million. Stagwell's shares ended the day up 11.6% to $7.58.
Read more: Mark Penn on building Stagwell
Stagwell was invited to $1 billion in new business pitches in 2022, a record for the agency. It won $213 million of those new business opportunities including $42 million in the fourth quarter, it said.
Two of the company's key growth areas in 2023, according to Penn, will be its Stagwell Marketing Cloud and media studio. The media studio, when fully brought to market, will place Stagwell in “direct competition of the Trade Desk,” said Chief Financial Officer Frank Lanuto said on a morning conference call.
“I think we have some great properties and people in Europe, but I don't think that in Europe we're known as strongly as we're known in the U.S.,” Penn told Ad Age, noting that agencies including Assembly, NRG, Anomaly and 72andSunny operate there. “I think them going out marketing individually has not been as strong as it could be compared to what it could be marketing as a group.”
AI's potential
During the call, Penn mentioned that he is bullish on AI, highlighting Stagwell's AI-driven PR company PRophet as an example of the company’s investment in the space. PRophet's product can generate an entire press release from just a few sentences in a prompt, Penn explained.
“I think over at Google they're saying how did Microsoft get the drop on this,” Penn said after being asked about his thoughts on Microsoft’s Bing AI capabilities. “And I think that Google has the engineers and the talent to bounce back. So I think for the first time we're going to see some real head-to-head competition in the tech industry to see who winds up the leader.”
Currently, Penn sees AI ready to be used for verbal work. “We’re building central AI resources that then can be utilized by all the Stagwell programs and agencies in terms of what they do,” Penn said. “I think that in terms of visual content, it's a more difficult situation, but in terms of verbal content, I think we're really seeing immediate applications.”
Related news: How PR agencies are using AI
Stagwell posted a fourth-quarter net loss attributable to common shareholders of nearly $6.5 million, compared to a profit of $837,000 a year earlier. The holding company also set a goal to cut administrative expenses by $35 million over the next two years, including HR, accounting, and office costs.
Stagwell's revenue gains in the quarter were led by its digital transformation capabilities business, which turned in organic net revenue growth of 33%. Organic Consumer insights and strategy posted organic growth of 17%, performance media and data grew by 12% and creativity and communications grew by 3%.
Other holding companies
Stagwell is the latest holding company to release its fourth-quarter and full-year 2022 results.
In February, Publicis Groupe reported that its organic revenue increased by 9.4% in the quarter and 10.1% in 2022, and predicted single-digit growth for this year. WPP predicted revenue excluding pass-through costs will increase between 3% and 5% this year from £11.8 billion ($14.2 billion) this year. Omnicom posted 7.2% organic revenue growth for the fourth quarter and 9.4% growth in 2022, and predicted organic revenue growth of 3% to 5% for 2023.
