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US-listed advertising group Stagwell is aiming to double the size of its business, in part through an aggressive strategy of mergers and acquisitions that seeks to capitalise on what it believes is upheaval at rival US and UK agencies.
Mark Penn, the firm’s founder and chief executive, told the Financial Times that he wanted to increase group revenues to as much as $5bn, from $2.3bn in 2024, as it hunts for deals around the world.
“There are good opportunities for us to finish building the network so that we can be as strong internationally as in the US. We’re going to use M&A to achieve that goal,” Penn told the FT.
“Nine years ago, I started with an assistant. Now we’re here just nudging up to $3bn. There’s nothing that I see that’s going to stop us from getting to $5bn with a healthy margin.”
Stagwell approached Sir Martin Sorrell’s S4 Capital in the UK about a deal last year, according to several people close to the situation, but was rebuffed by the British advertising executive.
However, the group completed 11 acquisitions in 2024, expanding its reach particularly in Asia and the Middle East. Its most recent deal, ADK Global, headquartered in Japan, added more than 2,000 people across 13 countries.
Penn described 2024 as a “breakthrough year” for the company last week, as it posted a 7 per cent increase in net revenue. On the same day, disappointing figures from rival WPP sent its share to a four-year low.
Penn said that some rivals had “gotten too big”, and he hoped to grow his firm to a “goldilocks” size of neither too big nor too small.
Penn predicted the proposed merger of his US rivals, Omnicom and IPG, would “dump thousands and thousands of people back on the marketplace” and “shed clients”. Omnicom and IPG did not respond to a request for comment.
“I’m not sure that I see any industrial logic. It’s a good opportunity for us during this period,” said Penn.
The US election cycle has also boosted its “advocacy” business, helping political organisations and companies create communications strategies, which grew by 80 per cent in the fourth quarter compared with the same period the prior year.
Penn, a former chief strategy officer at Microsoft and pollster for Hillary Clinton, said Donald Trump’s arrival in the White House brought “optimism for less regulation, lower taxes” for his business clients.
He added: “If what we’re worried about is tariffs in an environment of lower taxes and lower regulation, I think that’s a lot less worry than everybody has had for quite some time.”
He said that social media platform X, owned by Trump ally Elon Musk, has also started to win over advertisers.
Musk has had a running battle with some advertisers after they left the platform over concerns about being placed next to offensive content or misinformation. Last year, X filed a federal antitrust lawsuit accusing the World Federation of Advertisers and some large brands of co-ordinating an illegal boycott of X.
But Penn added: “X is a revived and increasingly vibrant platform. It is a better place for advertising than it ever was. And I think that political boycotts are dissipating because companies are realising that taking one side or the other, rather than basically [seeing it as] a channel, is a dangerous place to be.”
