Okay. Jason Reid is the Chief Strategy Officer at Stagwell, where he leads growth strategy, long-term vision, innovation, new product development, market expansion, and strategic initiatives. He previously spent a decade as Stagwell's Chief Investment Officer, where he led more than 50 transactions and contributed to over $2 billion of revenue after earlier roles in technology and media investing and strategy, including Microsoft. Okay. Welcome, Jason.
Thank you.
I wanna start where we left off. We were on an AI panel earlier today. In the middle of that you said, "I wanna talk about this later, Laura, but I think Wall Street's got this totally wrong." I'm like, "Okay, I wanna start there," 'cause it sounds like you have something to say on that. Let's start with that comment you said on the last panel.
Well, I think the question was about what does consensus have wrong, right? I think this will come around eventually, but we're in this world where I think every time a new AI product comes around, it deems to be an existential threat to some industry, you name it. I think we're currently in that cycle. I think we're coming out of it from a marketing standpoint. You know, I think about the business that we're in, the business that Stagwell is in, you know, I think about the investable universe as a whole. There's consumer products, there's enterprise services, and there's government. These are the three big spenders.
Consumer spends money, enterprises spend money, and governments spend money. We serve the enterprise. If you break down the enterprise, the enterprise spends money in a few different ways. You got sales and marketing, you have operations and logistics, you have research and development. Let's say I'm a believer, right? Let's say I'm a believer in this age of abundance, right? Where everything's gonna become infinitely cheaper and accessible to humanity, and we're gonna flourish. What happens to the enterprise? Let's think about that for a second. There's a type of product that doesn't require much marketing. Let's say bananas, for example.
Bananas can go to a very low price point if you believe that we can optimize their efficiency and operations and logistics, and we can deliver a banana very cheaply to a consumer. There's marketable products, right? Which is we don't market bananas, but we do market Hermès scarves.
Right? Marketing is a core component of that business. Now, take that business, right? You would assume that every line item of that spend, right, gets operationalized and made very efficient. Which means that, in theory, profit margins for Hermès scarves should go through the roof, right? In theory.
Okay.
Following?
Costs would go down.
Costs go down.
Pricing doesn't.
Pricing go, doesn't, right? What happens? What would happen was up to the point that Hermès would spend $100 to market a scarves, up to the point where the marginal cost of the marginal profit would get down to zero.
Yeah.
Right? Now if I made your entire organization more efficient, that means you could arguably double the amount you spend on marketing.
Yeah.
That means now I will spend $200 to acquire the last customer because my operation is that much more profitable.
This goes to, like, an old economic theory called Jevons Paradox. You may have heard of it or not. It's the theory that if something becomes cheaper, you use more of it because the ROI still remains the same. Now, does the cost to acquire your first customer drop? It certainly does, right? Because marketing itself becomes more efficient. Overall, the curve just shifts. Dollars, if you look up back history historically in time during these cycles, marketing generally tracks GDP, but there's a nice little bump that happens when the technology hits because people can spend more dollars on marketing. I think that's being really missed in this, in the industry that we're in the sector, in the part of the world that marketing exists. Does that make sense?
No. I mean, just real time.
Yeah, got it.
Let me just react. One of the things that I think happens in real life is this idea of substitutes.
Yeah.
If the substitute is going to go and have the price, because some substitutes are priced as cost plus.
Substitutes today have an infrastructure cost and they're marking it up 10%.
In your scenario, in theory, a lot of these infrastructure costs are going to be halved, let's say. Okay, now that cost of that, let's call it a substitute product, is half the cost structure plus 10%. I don't think Hermès keeps its $200 price umbrella if the relative cost is too big a gap. Some of the people that today, if the gap is only $100 difference, they're buying the Hermès scarves. If it gets to be $150 difference, then no, they won't go up to the $200. You're going to get price pressure on the umbrella price product, that the gap stays the same, not They don't get to just keep their price point when substitutes go down by price 50%.
Well, if you imagine that there's substitutes for marketable goods, which that's a different debate, I do not think that this is the different I'm making a differentiation between commodity goods, which are bananas, and this is an extreme example, and Hermès scarves, which are not commodity goods. You are correct 100%, the more commoditized the good becomes.
That there was never any marketing dollars spent there to begin with.
Marketing is spent on consumer goods that are non-commoditized. Commodity goods are never gonna work here.
I don't think they're priced They may be priced inelastic, but they're not completely price insensitive. If everything that Hermès is competing against halves in price.
but that
the consumer spends.
That's the assumption that I would challenge. I do not know a world in which Hermès became a more efficient company and dropped the price of its goods. It's never happened.
I'm thinking of substitutes. That a scarve is a scarve, yes, some people will pay $100 gap in premium, but they won't pay $150 gap in premium.
Right.
They'll trade down.
in the history of time, you could argue that there's been substitutes for scarves.
Not Hermès scarves, right? This is a nuanced debate.
Oh, okay.
The higher the level of scarcity for that product, it's like a Ferrari.
Right.
It just, it's on a spectrum.
Right.
Right?
Okay.
It just hasn't happened historically. I don't know why it would happen now.
Only if you think that total addressable market gets smaller and smaller, 'cause there's fewer and fewer people willing to pay a bigger.
I see.
and bigger
Yeah
for that Hermès scarves
Yeah
To have that kind of, maybe the top half a percent does.
Yeah.
Today it's the whole for full top 1%.
Yeah
'cause there's not as big as difference between the cheap substitute.
Well, perhaps in the age of abundance, we all become infinitely wealthy, and the actual consumer base.
Without jobs.
scarves without jobs.
Without jobs.
goes up. Who knows? that's a different, that's a different scope.
Yeah.
But, but-
Well, I do think you're making a point, which is we do have sort of this bifurcation in the capitalist purchasing base.
Yes
that the people, there are people who really do care about all their brands, and there are plenty of people that are substituting out for Amazon.
Yeah, yeah.
for $30, right?
Yeah.
So-
That's the core of marketing.
That is.
Making a brand desirable.
Distinctions. Yeah.
Yes.
A lot of 40% penetration of Apple iPhones, which in theory they do as much as a Samsung.
Right.
You know, people are walking around with $1,400 iPhones, so definitely leisure and aspirational products are deeply penetrated in American society.
This question is perfect for you. Stagwell is profiting pivoting from growth by acquisitions to more organic growth. What is different about the revenue growth rates and margins of these two strategies? You are the architect of both.
Yes, this is true.
Talking to the guy. The guy.
Just for context, I spent 10 years just running the investment practice, and I bought 50 companies.
M&A practice.
Yes, the M&A practice.
Yeah.
Bought 50 companies. The theory for the case behind M&A is I'm really buying three things, right? I'm buying either a capability, which is I, you know, like I can't, I can't do shopper marketing now, let me go buy a shopper marketing company. I believe I could address that need through the funnel. I'm buying a geography. I've got a global Lenovo pitch, I don't have an office in Japan. I need to go own that, I can service the client better. Three, I'm buying a client. That means that, okay, this client has a foothold in Apple, I think we were just talking about.
Yeah.
They do $15 million of revenue. I believe if I own that client, I can provide a robust suite of services around that client and make that a $50 million relationship. You're really buying expansion or the funnel to expand. I think when you pivot from M&A to internal investment, what you're recognizing is that for every dollar deployed, I can either generate higher growth in today's environment or a higher margin, and that's why I think we're leaning into the products that we're leaning into, right? These enterprise AI products, first and foremost, they are driving a substantial amount of organic growth today.
They have higher margin naturally. Now, it is not software margins because we are sort of a technology-enabled services business. We are somewhere between a managed service margin and a software margin, but it certainly should be accretive over time.
Okay. Okay. I think we're still a single-digit grower.
We are.
So-
This quarter.
Okay.
This quarter, yes.
Okay. I guess we get the benefit, you have this advocacy business that adds like 500 basis points to your growth a couple quarters every two years.
Yeah.
Which I actually think is a curse more than a blessing. Anyway, the point is, if we're a single-digit grower and we don't have advocacy, we get two quarters of double-digit growth thanks to advocacy, does really Wall Street give you credit for that?
Well, okay.
6 months out of every 24 months?
I think our business is naturally sort of lumpy. If you go back one quarter, the two-year stack would imply double-digit growth for our company. We lapped a tougher comp, and things are naturally lumpy for us. You know, the target for our business isn't necessarily to be some rocket ship 15%, 20% grower. It's high single digit, sorry, low double digit, high single digit. We think we can outperform GDP and other services business. At the core, we are a technology-enabled services business. I think if we demonstrate those numbers over time, there's material upside to where we are at.
Okay
6 hours there.
Okay. One of the questions I mean, one of the things that Adam argues that should be good for you is his point is ad agencies are going to get re-intermediated so long as they make agents that talk directly to unique supply. Like, he owns unique supply 'cause he's a double-sided platform. Magnite has a single side, but their side is supply. Michael Barrett sat up here and said, "We have agents that, you know, you can buy through Claude, a Claude agent.
with this MCP protocol that for agents into our unique supply. Basically, Adam's thing is he thinks the ad agencies get re-intermediated and accelerate into double-digit growth because they can create agents that are buy-side agents directly into Unique Supply that's all set up through the programmatic ecosystem. Do you have an opinion on that?
I mean, I'd like to believe it.
Yeah. Why don't you believe it?
I'm not saying I don't. I'm not saying I don't. I think what sometimes is can I ask a question of the audience here? How many people are hobbyists? How many people have an Open Claude at home? Yeah, we got one.
Does ChatGPT count or it has to be Claude?
No, no, it doesn't count because I'll explain that because I think it's really important to practice what you preach, and especially when a new technology that comes around that you believe in like this. Like for me, like when the metaverse happened, I was like, "Let's just ignore that.
You were right about that assessment.
When this one came around, we, Mark Penn and I have been working on AI since we were at Microsoft together, like when this came around, I was like, "All right. I'm all in." Like, "Let's commit to this.
Like, I'm pivoting from acquisitions. I'm just doing this.
Yeah.
I'm investing in this. It's very important, like much to be like if you believed in the app ecosystem, to buy the iPhone 1, right? It was very important to be a hobbyist, to be an enthusiast, and I think when if you have an open Claude or you have something similar, you learn the architecture in a way that at least at a minimum, if even if you're managing a business, can give you insight into what you think is gonna happen in the future. What you realize if you have an open Claude or you're at least a little bit of a hobbyist, depending on you can use Claude, Cohere , whatever you use, is that. The inference engines themselves are like largely commodities. They're amazing.
They're, like, they're amazing, but you can switch them out and kind of be like, "I don't know. This one's not how you know, I'm gonna use GPT-5.5 today. I'll use Opus 4.7. Like, let's just figure it out." The most important thing is actually the layer of context and data you give the machine. That requires just continual optimization. If you don't have an expertise in the field, you can't write the skill, is what I've learned. Like, I create skills now all the time that effectively are replacing me, right? But only I can replace the skill 'cause I have a particular domain expertise. If you're an investment analyst, like, there, you have to write that skill. You have to do weights.
You have to change things around because Opus 4.7 is never gonna know exactly what you're trying to do. It's gonna rely on a bunch of, like, parameters that are generalized, and it's not specific. It's gonna pull the wrong thing. It's gonna hallucinate. It's really up to the human and the executive that has a specific domain expertise in order to train and use that thing. What, where I think agents are why agencies could be very relevant is because someone has to do that. You've got, you know, Mark Penn has 40 years of experience in market research.
he has to write the skill effectively.
Yeah
that trains the LLM to outperform everybody else and every other system there is out there to do market research.
We're doing that. In our survey companies, in our research businesses, we have written skills that increase the performance of just a raw LLM of interpreting survey data by 200%.
Right.
It's just going to make agents and humans more relevant rather than less, assuming you have domain expertise.
Well, I was just gonna say-
Yeah
You're gonna own that agent.
Like, if somebody wants to use your agent.
Yeah
that's trained by Mark Penn in polling.
Right
his 50-year career path.
Right
you have to go through Stagwell to buy it or use it.
Right, it's not just Mark. It's The Harris Poll that we own.
That's true.
We have-
That's true.
But
Updated data all the time.
We have data that goes back 50 years.
Right.
Right?
Yeah
You know, that data set plus the training.
What you put into the context window is extraordinarily important.
Right, to train the agent.
Right.
Okay. I think one of the debates that's been on this stage today is do programmatic rails get replaced by agentic rails with this MCP protocol? Do you have a point of view on that?
Uh-
‘Cause I think Adam believes it gets replaced, which is the role he sees for ad agencies.
Yeah.
They have a buy-side agent that they've trained.
Yeah, yeah.
That therefore doesn't even just go through the programmatic DSP.
I think MCP is controversial. I don't know if any of you guys.
Okay
have a take on it. I don't know. The answer is probably. Probably.
It's new. I mean.
Yeah
It will only get better.
I mean, it is the interface in which agents talk to each other.
Yeah.
It creates, it's a very frictionless experience. Once again, I encourage the hobbyists. Like, if you have to design your agent to interface with someone's MCP, it's interesting. likely would be.
Yeah
my conjecture. I'm not technologically savvy enough to.
No
know its weaknesses yet.
No. I think a lot of CEOs aren't either. I think the point they make, which I think is valid, is there's a lot of trust in the programmatic ecosystem to deliver ads in hundreds of a millisecond.
Yeah.
You can't just replace that with an agent 'cause if something goes wrong, somebody needs to fix it.
Right.
If something goes wrong, it's billions of dollars. I mean, we're doing $500 billion a year in this country on these protocols.
No
move it, you know?
Yeah. No, it's.
Too many things can go wrong.
it's gonna be a little slower than people think.
Yeah, yeah.
We'll get there.
I think that's one of the things Wall Street almost always gets wrong.
Right.
We have liquidity, and we can change our mind this minute.
Right.
We think everything happens in years, and sometimes these things happen in decades.
Well,
The decline of linear TV comes right to mind as something we overestimated by about 30 years probably.
Yeah.
We'll, we'll-
Well, to quote my old boss, Steve Cohen, "Panic first and panic early.
Panic first and panic early.
So
Yeah. If you have liquidity, that matters.
Yeah.
If you're a CEO, you can panic all you want, but you can't change people out that fast. Okay, let's talk about Stagwell's growth in terms of political and cyclical, not structural. Talk about structural growth drivers and why that doesn't get sort of masked by this huge updraft in this six-month period every two years, which then makes the next year's comp really difficult to see-
Yeah
the structural growth underneath, especially at the single-digit level.
It's in our guidance. You can break it out in our guidance for the year.
Yeah.
First I wanna say that I, you know, I think the political stuff is very underappreciated. What we're seeing in the market is that the presidential matches the previous year, you know, Sorry.
Yeah
presidential, and they.
Which is unusual. That's new.
Yeah, and they skyrocket on, against each presidential.
Yeah.
It is actually something that's growing in excess of the core core business, which we like. It's not designed to mask the business. We invested in it because we believe it's a strong secular grower. You know, I think the updrafts are powerful for us. You know, as I've made the case for the industry already marketing.
For Stagwell
I think there's a couple different forces, right? There's number one, that we've now established ourselves, I think, as a reasonable number three option.
Okay
to the, you know, within Omnicom.
Yeah
Omnicom and IPG as a single unit.
Yeah.
people and clients. We're getting some opportunities there. I think WPP is not in the greatest place. It kind of shows in their stock a little bit, but also just, you know, generally how the businesses are performing. I think that business is shrinking. It's giving us more opportunity.
Okay.
I think some of the upstarts that.
What about Publicis?
I mean, Legends obviously. Sorry. Great. They're great. They're great. But yeah, they're definitely in the top three. But I would argue that we're in contention with maybe not on the same scale as WPP, but as people as clients come to us and talk to us, we're on the same level of pitches.
Okay.
I think we're competitively well-positioned. I think some of the upstarts that came to market in the last few years are not doing as well. I think from a core technological offering, 'cause you asked about Publicis.
Yeah.
Publicis is doing extraordinarily well in media. That's their thing. Ours is arguably digital transformation is the cornerstone of our business.
I think we're coming it from a different angle, you know. Not, this is no way being critical of Publicis, but at one point in time, WPP was, like, two-thirds reliant on their EBITDA just for traditional advertising media.
Yeah.
Listen, and I'm not saying they're a one-trick pony, but they're heavily reliant on this one thing. Where we're trying to take Stagwell is to be, you know, my ambition for the company has always been to compete with the consultancies of the world, right? Marketing is-
Like Accenture and Deloitte.
Exactly.
Yeah.
I know that they've fallen out of bed.
Yeah
for the right reasons. They made these bets on coders and engineers, which isn't sustainable. To be that, to have that consultative layer, to be trusted as the strategic advisor to say, "Okay, we can do media.
We're more about orchestration and delivering business strategy.
Yeah
as opposed to, "Hey, here's, you know, here's growth through media.
How does that compare to, like, the BCGs and McKinseys of the world? It is different.
Yeah.
What Accenture does is different.
Yeah
than, like, the BCGs.
Yeah
Just the strategy layer.
Yeah. I would love to be at that layer of McKinsey's. That's not something you can really buy, unfortunately.
Yeah.
You have to build it.
Yeah.
I think, you know, we have agencies within organizations such as Gale that are led by five former consultants from these places. You have to hire these people.
Right.
You know, to me, marketing has always been the tip of the spear within the organization, right? It used to be we lived in a world where you would produce a car, it would sit on the lot, and then you'd try and sell the car, right? We now live in a world where it's like, okay, I can produce the car in real time based on consumer demand and consumer insights that I'm seeing that's delivered to me by Stagwell in real time. It's informing my research decisions, right?
On my product decisions. It's informing the entire ecosystem. I still believe that. I think there's a opportunity for us as we up-skill our talent.
Deliver on these solutions, that we can take part of that market share. Right now, we get a lot of money that gets pushed to us from the McKinseys and the BCGs of the world. I'd like to take some of that.
Okay. One of the things you've done a really good job of is when you did acquisitions, a lot of the pieces informed more than just their segment. Meaning there were synergies across the group.
Yeah
that you could bring somebody in on these on-ramps, and then you could upsell them. You had the right of first refusal. The minute a CEO said, "Well, I think I wanna do this," one of the things you pay your people for is to say, "Oh, I got a guy.
Yeah.
You'd, like, would If there was a Tuesday he said that, Wednesday you'd be introducing to your guy within the periphery that does that. If five guys said, "I wanna do this," you guys would go buy that if you didn't have it because you wanted the guy on the Wednesday to call and go, "Hey, we do this. Would you like to meet Jess?
Right.
He runs that division." Very synergistic. I don't see that with advocacy. I see volatility in the P&L.
Yeah
I don't see this, the sort of product market fit that informs or helps any other part of the business.
That's interesting. I would That's interesting.
I know it's where Mark came from.
No. No, no
I get that it's.
let's-
it's his favorite child.
Let's, yeah, let's talk about Targeted Victory, right? Targeted Victory is we represent both the right and the left. That's our right-leaning arm. We do campaigns. We do the majority of senatorial campaigns.
Obviously we don't do the presidential because he doesn't really contract that out.
The majority of the money comes from fundraising, and it's low dollar fundraising. It's, you know.
truckers who are donating $100 to a Republican campaign.
We developed a text messaging platform that we patented a piece of technology around that.
We're using that across the entire ecosystem now. The same technology that we use to solicit donations we're using for our clients to reach out and touch base with their customers. I wouldn't say that.
They all hate you.
Probably, yeah. I mean, no one likes to get a solicitous text.
Yeah.
Yes.
This is an example of synergy. They developed it for one of these advocacy things, and it's used everywhere.
You know, if you're gonna look for the synergy angle, it's not like I have a guy, you know, it's not like we're gonna say, "I have a guy that can do that.
Right.
It's what are you doing? You're influencing consumers. It's the same art, right?
You're raising money. You're influencing them to raise money or maybe to vote.
to vote.
Maybe. Yeah.
It's consumer influence.
If you can, if you have power, the intersection of politics and business these days, it's a fever dream out there.
Understanding that and managing it and, you know, the Sydney Sweeney stuff, right? The crisis campaign. Like, it's like we would not have been hired to do that if we didn't operate in politics.
Okay.
I just think that there's synergies.
Okay. All right, fair enough. I mean, I feel like there's I feel like if you're working on digital transformation with somebody and he needs something, it's probably gonna be business related.
Yeah.
There's more, I'm going to call it shots at the hoop, if it's a business adjacency.
Yeah, I agree with that.
than if it's sitting over there in politics. 'Cause the guy might have stuff to say, but you can't actually use the product.
Yeah
probably, because it's in a completely different vertical. Let's talk about government, speaking of politics. One of the things you guys are brand new to, and I'm whining bitterly at Mark, but he's pushing back, is these government contracts you guys have started signing. I think you've either signed one, you're about to sign a big one, and there's, like, four more sitting behind that.
Yeah.
He likes that business 'cause it's, like, five-year contracts, and it's really stable and really visible and almost gives you, like, I'm gonna call it a subscription business model underneath.
Yeah.
with the department of, like, you know, that can pay, with the Treasury. essentially with the U.S. Treasury.
Right.
It's a AAA credit sitting behind there, and it's long-term visible revenue.
Yeah.
It gives you a base. Let's talk about what you guys, what your vision is for government and how that fits into all of this. You gave me three categories. We've only talked about enterprise. You specifically listed government and never spoke it. It was just put the spotlight on government, 'cause I hate the political business.
Yeah
'cause of the volatility it adds to your P&L, and now you guys are doing government work.
Yeah
which should be more stable.
It's a very interesting market. It's a huge bucket of spend in global economies. You could argue, given politics these days, we are going towards more government spending, right?
So it's, you know, it's something that we spent a lot of time with at Microsoft. It's not a sexy business, but it's the backbone of those major consultancies we talked about, Deloitte and others, right? We think it's important. We win those contracts, and we think the TAM is massive, and we're not there.
Yeah. Okay.
I'm optimistic, but it's still very early days.
We had this whole brouhaha over Claude refusing to share its data with the Pentagon.
Yeah.
It kicked out the Pentagon, OpenAI took that, immediately it was the best marketing Claude could have ever done.
Right
'cause all these enterprises abandoned ship, and 'cause they don't want their data shared with the government.
Yeah.
Does this hurt you? If you're doing government work, does it potentially hurt you with some customers?
I mean, government work for us is, like, the National Park Service. We're not doing military applications.
Okay. Okay.
like, it's not Yeah, we're not You know, the I don't think the government's ever gonna come to us for any sort of thing that's potentially sensitive in the same way that they wanted to use Claude or OpenAI for military targeting.
Claude. Okay. When we're talking about government, it's like these sort of, like, mundane, they're big infrastructure projects.
Yeah.
They're on the periphery of what I think of as the government, which I think of national defense.
Yeah, I mean.
education as the two big buckets.
It's a big bucket.
Yes.
It's a big bucket.
Yeah.
we're not What we use Palantir for.
More resources. Do you use more people? Like, How does it differ in terms of a cost structure and return on capital for government versus enterprise?
I mean, fatter budgets, less oversight.
Okay.
it's
Longer term contracts.
Longer contracts
more visibility.
Yes, yes.
Okay.
It's stickier for sure. That's not what we use Palantir for, just for the sake of clarity.
Okay. Let's talk about Palantir. What are you using Palantir for?
Well, it's our, you know, Stagwell agentic targeting system, or SATS. I know it sounds vaguely like a military application.
Yes.
It's not. It's essentially, basically it's using the same targeting technology they have for military applications to target consumers for advertising. What Palantir sort of excels at is taking data, structuring it a certain way, and using models to maximize the performance on that. What's amazing about them as a company, from my perspective, is sort of the way they operate with us as partners.
Okay.
It's not just like, "Okay, here's some Foundry. You can use it." They become like engineering partners with you. You know, we had an offsite just a few weeks ago where they sent a team in, and we sat with our team, and we developed and scoped things, and they're very active in it. They give you a dedicated team, and the talent pool that they have at Palantir is extraordinary, as you know.
Yeah.
you know, very optimistic about that as a standalone application, but, you know, where we'd like to go eventually is to have sort of a real time, defense system, if you will.
Don't use that word. You just told me you're not doing defense.
Okay, we're not.
You're doing the Park Service.
Okay. If we can connect, real time sort of social listening and insights.
through our media monitoring backbone, I've told you about the In-Pulse business this morning.
Yeah. Yeah, you did
To audience building and activation, you can have a real time sort of marketing system. I think, you know, we have different names for that, but we call it the holy grail of marketing.
Okay
You know, I'm optimistic about that. There's a lot of directions we can go with Palantir.
Okay.
You know, near and long term, I think that real time system is on the horizon.
The way the business model works with Palantir, I assume you're paying them a consulting fee, and you keep the upside from any products you develop together? How does the business model work?
Yeah, we don't Like, they're not involved in our sort of pricing discussions. We pay them for usage of the Foundry-
Right
co-development.
I see. Okay. All right. Gotcha. Okay. I'm actually really curious as to how CMOs are behaving differently today compared to two years ago, and how does this help Stagwell?
Well, I mentioned the behavior around, you know, giving us a shot in the room.
Yeah. Yeah
for the first time. I think that's a notable change. That doesn't mean we're winning every contract.
Our win rate is going up, and our at bats are going up.
I think that's a good thing. I think I also do think that in this world of, you know, agentic nuance, people are looking for coherence and orchestration and for you to come to the table with a single solution.
Our answer to that is obviously The Machine, which I think is differentiated today.
You should tell them about The Machine in this room, 'cause it's really interesting.
sure. I mean, at its core,
It's a product.
it is a product, but it can be sold as a managed service. What it does is it orchestrates all of the functions of your marketing department in such a way that you can go from research to creative iteration and ideation to audience building, to activation all on one system. It can fit anything can plug into it, whether it's Figma or Slack, and it follows your context through this window, so it knows everything you did about your research and creative ideation. By the time you go to activation, it remembers all of that, and it's all agentically driven. As we're going to clients today, we're saying, "Listen, we can put this on your existing tech stack. We can deliver it to you.
You can use it, and you can buy seats or you can buy licenses. There's always an installation fee.
Yeah.
We'll just do it for you.
Okay.
Right? "We'll run it across our entire digital transformation organization." We're seeing great traction so far.
Which way?
Oh-
Which way are they preferring?
Actually on their.
On theirs-
Yes. Yes.
not managed. Okay.
Yes.
Okay.
You know, these engagements were, like, sort of $1 million-$5 million right now, including the implementation fee. I think that could get a lot bigger. I don't know.
Okay.
It's sort of very important because it addresses this changing architecture, the need to build skills and tools inside of an environment that tracks your context as you do it.
It helps you create the next email faster or create the next decision faster, it gives you suggestions. It's almost like you're training your own LLM to help you faster?
Right, because it just makes less mistakes.
Okay
if it knows the context of what you've done up to that point.
Okay. How would you use it? Would you ask it a question?
Yeah. Everything's. There's mini machines too, which are You're either operating inside the environment-
The mini machine follows you around your desktop.
Right.
Much like Cowork does.
Yeah
it's for the marketing functions, which means it brings a different set of context and data into it.
Yes. Okay.
You can, everything is agentively driven, right? I can just type in something and say, "Create these assets for me," and or, "Create these audiences for me." That is the interface, I believe that's What was your question? How would you use it?
Yeah.
Yeah.
Yeah. Like, how does somebody actually use it? Okay. I'm not surprised they don't want you to manage it, 'cause they would be sharing all their data and all their internal conversations.
I think that's why they want it on their system.
That's what I mean.
Yeah, yeah.
That makes sense to me.
Yeah.
Like, I was thinking, oh, it's probably managed service 'cause they're slow, but I totally see the privacy things.
Yeah
The minute you said they really want it on their system, that makes sense to me.
Yeah.
Actually. Okay. In terms of your attach rate, is it one of the fastest product adoptions you've had, do you think?
Definitely.
Okay.
For this level of a new thing.
Yeah
yes.
I assume these are warm leads. These aren't actually new. This is an upsell to existing client you have, right?
Oh, yeah. All of the majority of the sales cycles is currently running through Code and Theory.
Yeah.
They're existing clients.
Exactly.
Yeah.
This is just an upsell, which is what you guys are so good at, is coming in on an on-ramp and then upselling-
Yeah
a product. This attach rate has been faster than.
Yeah
other products.
For sure. We do wanna make it so it's not so dependent on the division. We're hiring a bunch of sales leads at corporate in order to sell The Machine for clients that are outside of the scope of Code and Theory.
Right. That makes sense. Within the warm lead perimeter of Stagwell.
Of course.
They just wouldn't necessarily be Code and Theory clients.
Of course.
Right.
Our actually our biggest bottleneck right now is salespeople.
Okay.
Like, which is, makes me bullish. Like, the products work.
Right.
Like, we need to hire salespeople because it is a new technology. People have to have their hands held.
Aren't the salesmen kind of a different kind of animal, 'cause they have to understand what the hell this does? They're probably selling to a CTO.
Well, that's why we're hiring a different type of salesperson.
Yeah.
Our, like, global CMO and his team, by the way, amazing guy, no offense, he's an amazing dude. We need to have a more technical sales lead.
Yeah.
Um-
You're talking to the CTO to sell this product, presumably, who's gonna integrate.
That's right.
I mean, he doesn't want his software to crash.
Right.
That would be bad for him.
Right.
He needs to make sure it integrates flawlessly.
Yeah.
It sounds like you have a bunch of case studies though, where you've done this with big clients and it didn't crash their systems.
We have done it.
Yeah. Okay. What is the long-term relationship between Stagwell and the hyperscalers, like Google, Meta, and Amazon? Are you becoming more dependent on them or more valuable because of them?
When you say hyperscaler, you're saying someone that delivers compute, like AI compute, or are you talking about the actual platforms, the ad platforms that they run?
I'm thinking about the ad platforms they run more than, like, the claude infrastructure.
Right. I suppose, look, like, platforms are platforms. They come and go. Like, whether or not the power of Instagram is more or less relevant, and I don't think it's becoming less relevant, determines how engaged and how strong a relationship needs to be with them, right? Like, we're negotiating pricing terms with Google all the time.
Okay.
You know, I think to the extent that their platforms grow and are more powerful, then we have to become more dependent on them and have better relationships with them. I think YouTube is really underappreciated in the ecosystem.
Okay
today. You know, I think they're great partners. The art for the agency is to have that sort of meta decisioning engine that sits on top of those, and there's always You know, you outlined this earlier. Its always a battle to get the ready made data.
Yes
deliver ROI and measurement across platforms.
Yeah.
That's always gonna be the battle for the agency, to deliver, like, that insight for your clients, that goes above and beyond a single or several hyperscalers, if you will.
YouTube is underappreciated. You just said that as a comment, defend.
Well, what do you think the future of the living room is? If I told you that YouTube, and not even YouTube TV, just YouTube.
is the most watched thing in the living room across America, I think most people wouldn't know that.
Well, Nielsen publishes it every month, they don't reread Nielsen.
It used to be YouTube TV was growing really well. Now it's just, like, reels, right? People are watching reels in their living room. I just think that that is not necessarily fully captured in the public mindset. I think, like so, how do you think about the future of the living room? How much share could YouTube, as an open platform to publish content, succeed over what people are absorbing today, right? I just don't know. I think it's an open-ended question, it's a battle for content, I do see a world when a lot of people are just watching YouTube in their living rooms.
The problem we've seen with YouTube is there's a big disconnect between hours viewed and monetization, 'cause there's so much risk on that platform.
Yeah.
As AI adds more lower cost content and lower quality, there's more and more rails put on any ad that's about to show up on YouTube.
Yeah
People are really worried about where their ad's gonna show up next to and the quality of it.
Yeah.
I don't know that the disparity between viewing.
Yeah
Money, 'cause I only care about money.
Yeah.
You may care about viewing, but I don't know why. If it's all gonna go to lower quality viewing.
Yeah
money will not follow.
Well, do you think that agents have the capability to make that environment safer?
I mean, it would have to be Google-imposed agents, 'cause they are completely within themselves. They don't.
Right.
If Claude has a great agent, they will not use it.
Yeah.
They will use Gemini.
Yeah
to try to fix it. They're really incented to maximize ad revenue.
Yeah
which means low transparency.
Yeah
not letting their data out, not making it you know, fungible with anyone else's. I mean, as Adam just said on the panel, I'm there to make the client budget go further. Google's there to make Google's budget go further, right? Google is there to enrich itself.
Yeah.
It isn't trying to help anybody else.
Yeah
including its clients.
Yes. I would imagine they're also in the business of making money. Over time, they'll make a very safe environment.
They have been so far.
I, I-
It's been 15 years.
I hear you. I hear you.
I mean, they don't get for 10.
I hear you.
I don't know. We'll see. It should monetize far better than it does given the hours of viewing.
Agreed
it gets.
Agreed.
Anyway. Questions from the audience. We have a couple minutes left. Any questions for Jason at Stagwell?
You can ask me about my OpenClaw if you want.
Yeah. Okay, go ahead. Tell us.
No, I'm kidding. It's just a joke.
Go ahead. Tell us. Okay. It sounds, one of the things you said that I think is interesting is you're really trying to move Stagwell strategically towards more of a Deloitte or Accenture kind of business model, which is this digital transformation consultative kind of fee generation, moving it away from, what I would actually say are Mark's true passions are like advocacy and PR.
Communications, which is where he sort of started in the world. Do I have that right?
Well, I mean, look, don't get me wrong, we debate this all the time.
Yeah.
The value of a incredibly strong single point solution to a problem.
versus having a consultative layer, and where does the economics get captured?
Right. You made the Publicis argument. Yeah, there's massive economics in their media business.
Yeah.
We debate this, but was Mark Penn a pollster and then a Chief Strategy Officer of Microsoft?
Yes.
Yeah, I think so. Right? Ultimately, the biggest dollars are the person who takes that perch, right? They can deliver on all of the point solutions, which is verticalization, right?
you know, I wanna have the business consulting relationship, so I can give you the best research product.
I can give you the best digital transformation products, the best Well, in this case, Publicis is winning, the best media products, et cetera, et cetera. There's this I think there's always gonna be this push and pull, and you don't wanna, you don't wanna overextend yourself too deep into a vertical because you can lose. Like, you know, this is not taking shots, but, like, I think you're interviewing Mr. Faster, Better, Cheaper this, during this cycle, and it's like, okay, well, if you went too hard.
Which is who?
Sorrell.
Oh, Martin Sorrell.
Um-
Yes.
Um-
Yes
If you went into faster and production as if you were like, "This is the future, and it's the only thing that matters," then you lost.
Right.
You gotta be very careful on how you balance those bets because you're right. Having these point solutions sometimes can make you so much money at fat margins, and you can they scale very quickly.
Consulting doesn't scale.
Right. That's true.
You have to find that balance between the two.
Well, and the point I would add is that.
Yeah
in GenAI world, if you think human judgment is the thing that actually has the most longevity and the highest LTV, being the strategy layer, regardless of two years ago and before.
Yeah
may become the thing that is most defendable.
But I wanna-
The judgment layer.
I would, I wanna win both, right? I wanna make sure I wanna have the best agentic solution and research. I literally just got off a phone call with our entire research department. I wanna have the best point solutions, but I also wanna make sure that everyone is thinking from a broader solutions mindset. You're not just selling research, you are selling everything our company has to offer.
You're selling The Machine.
Right? How many channels can I open up to sell The Machine? That's where I'm trying to go.
To push things. Yeah. Any questions? I'll ask my last one. What do you think Wall Street gets most wrong about Stagwell, and where like, what is the biggest upside surprise that Stagwell could generate that would surprise Wall you know, help the stock price to the upside?
Well, I think it's a cohesion of kind of everything that we've discussed. I think people are grossly underestimating the future of marketing. Marketing is, like, one of the oldest industries in the world, and I think will persist for a very long period of time, and budgets are actually set to grow as opposed to shrink, I think, in the agentic world. I've made my case there.
Number two, you know, we aren't burdened significantly by a bunch of legacy assets. We're not contracting in the same way that Omnicom and IPG or WPP are. I think on a relative basis, we're doing really well.
Okay.
You know, I think where you can really get things right is not if, when these products hit full maturation, or hopefully by the end of the year, and we have the full sales cycle in place, we have the right sales force, we have the right channels, I think there's significant upside to that. I'm not promising, like, 30% growth.
Certainly something well in excess of GDP in the comps.
Okay. We think, you think we might be able to start to see that kind of acceleration in 2027?
That's-
Because these products will be in place by the end of 2026.
I think that's when the flywheel hits.
Okay. Okay. Okay.
You'll see acceleration throughout the year.
Okay. Great. Okay, I think I will call it there. I appreciate your time. Thank you, everybody.