Stagwell Revenue Hits Record $2.7 Billion in 2022 Amid International Growth Spree

Stagwell Inc. continued its growth spree last year despite global economic headwinds, with total revenue up 21% compared to 2021. It's racked up six consecutive quarters of double-digit growth, according to financial results released today. The holding company's full-year 2022 revenue reached a record $2.7 billion. Meanwhile, its fourth quarter revenue grew 16% from the 2021 period to $708 million. By contrast, Stagwell's net revenue was up 15% from 2021 at $2.2 billion, while its fourth quarter net revenue was up 12% and reached $583 million. With eight 2022 acquisitions and a growing global purview, Stagwell competed with legacy industry players for large accounts. Its client wins and expansions last year included Bud Light, Zillow, Lenovo, Dropbox, T. Rowe Price and Bosch. The growth follows an extensive reorganization, with consolidation and mergers in the media network. Why Stagwell Is Rebranding Its Media Network as a Brand Performance Network Now, Stagwell chairman and CEO Mark Penn is ready to move past the restructuring and tap the six to eight leading subsidiaries to tackle what he called a "record" new business pipeline. "We've got a formula here that's working, so let's just keep running with it," Penn told Adweek. Despite its resilience so far, the company acknowledges growth will slow marginally in 2023 before speeding up again in 2024. In a call with analysts this morning, it forecast between 7.5% and 10% organic net revenue growth for the coming year. Most growth is digital The company’s digital business leads its growth, accounting for 57% of both total 2022 and fourth quarter revenue. The digital bucket includes Stagwell's digital transformation, performance media and data, and consumer insights and strategy services. Its creative and communications work generates the remaining 43%. The group's communications business performed the best of all its networks in the fourth quarter. It was up 30% compared to the same 2021 period. By contrast, Stagwell's Integrated Agencies Network and Brand Performance Network achieved 5% and 15% growth, respectively. This year, Penn's top three focus areas include streamlining existing operations, reducing administrative costs and building out the group's SaaS offering, the Stagwell Marketing Cloud. New Marketing Cloud products include the AR product ARound, which adds brand-sponsored AR experiences to live sporting events, and a generative AI tool PRophet, which develops media pitches, press releases and social media content. With the Marketing Cloud, Stagwell has a SaaS offering that will diversify the holding company's revenue streams and help it edge away from services-first models more susceptible to marketing budget constriction. "We've made clear that we want to extend the business all the way from global full service, down to tech-based self service," Penn told Adweek. International growth outshines North America Stagwell is experiencing twice as much organic growth internationally as in North America, with 26% 2022 net revenue growth abroad compared to 14% in North America. The U.K. market is responsible for most of the international growth. Granted, Stagwell's international business is smaller than in North America, allowing better opportunity for growth. Since Stagwell's merger with MDC, Penn's followed an aggressive M&A strategy focused on gaining international expertise. Last year, it acquired the U.K agency Goodstuff, and the remaining 49% of the digital agency Instrument. It now employs over 13,000 employees across 34 countries. Penn plans to allocate a third of cash assets to pursue more M&A this year. He'll focus Latin America, the Middle East and Asia. "I want us to be able to compete for larger and larger global contracts," he told Adweek. The new business pipeline, according to the leader, remains healthy. Top 25 account sizes are up 19% A changing economy could present complications for Stagwell, though it hasn't yet. The company’s net new business wins totaled $42 million in the fourth quarter and $213 million for the year. Average account sizes industrywide are contracting, according to data from consultancy R3, indicating that many marketers are tapping agencies for project-based assignments instead of AOR work. This might present a challenge for the holding company, which remains invested in larger business opportunities. "Our general goal is to get rid of the smaller assignments and move into larger ones," Penn told Adweek. Stagwell's top 25 accounts are indeed growing, each worth $24 million on average. That's 19% more than in 2021, Penn told Adweek. To limit overhead costs and continue expanding, the chairman will be selective with hiring and open new roles only after winning new accounts. The company continues to slash its real estate costs, Stagwell CFO Frank Lanuto confirmed on the call with analysts. This year, it'll divest from some properties in Los Angeles and London. Why Stagwell Is Rebranding Its Media Network as a Brand Performance Network Rallying around 'key leaders' Like most other holding companies in 2022, Stagwell consolidated and organized its subsidiaries. In June, it formalized the executive team supporting its Constellation Network, which includes the agencies 72andSunny, Brand Citizens, Colle McVoy, The Harris Poll, Hecho Studios, Instrument, Redscout and Team Enterprises. In August, it expanded the its Brand Performance Network, then known as the Stagwell Media Network, pulling agencies Forsman & Bodenfors, Crispin Porter Bogusky, Vitro and Observatory into the fold, rebranding the division in October. This all follows it merging sister agencies Assembly and ForwardPMX in 2021, and later MMI and Media Kitchen. Organizational changes within the networks have now concluded, according to Penn, and the holding company is rallying around six to eight portfolio leaders. "We have media, we have research, several flavors of great creative," Penn said, adding, "I think that had been overlooked before and hadn't been organized, because the company wasn't organized holistically."