Stagwell was the latest holding company to post revenue growth in Q3 as the tech market declines in preparation for a recession.
The holding company generated $663.8 million of revenue in Q3, an increase of 42.3% year over year. In the first nine months of 2022, Stagwell grew revenue 130% year over year to $1.9 billion.
Organic net revenue growth for the quarter was 11.3%, driven by media, digital and insights services. Stagwell claims to be the only agency network with a majority of revenue (57%) stemming from digital services, and net revenue from digital grew 21% year over year and 17% organically.
Growth also came from record net new business, which brought in $86 million in revenue in the quarter. Wins included Bud Light, the NFL, Dropbox (GALE), Stella and Top Golf. Stagwell also expanded existing relationships with Microsoft, Salesforce, GM and 3M.
“We’re clearly taking share at this point,” Stagwell CEO Mark Penn told Campaign US in an interview after the earnings call on Thursday. “We’re getting into more and bigger pitches and having more opportunities.”
Stagwell is also investing heavily in the Stagwell Marketing Cloud, a suite of technology services for in-house marketers. In the second half of the year, Stagwell Marketing Cloud acquired Apollo Program, Maru Group and Epicenter Experience. The division is forecasting to bring in $140 million in revenue in 2023.
“We need to cover the marketplace from full service down to full self-service,” Penn said. “It’s the same thousand large marketers throughout the world who believe that some of their business should be outsourced to agency teams and some should be insourced to inside teams. We hope to sell across the clients, infuse the technology throughout the company itself.”
Penn added that while media, technology and digital services are bringing in more revenue at this point, the creative business had strong new business wins, particularly at 72andSunny and Anomaly.
Stagwell’s strong performance this quarter came in above other holding company peers. WPP posted 3.8% revenue growth in Q3; Omnicom saw organic revenue grow 7.5% in the quarter; Publicis grew revenue 10.3% in Q3; and IPG increased organic net revenue by 5.6%.
But overall, the agency market has maintained growth in a tough quarter for tech and digital media companies. For instance, Meta saw recent declines worsen in Q3 as revenue dropped 4%. Alphabet said YouTube revenue declined 1.9% in the quarter. Additionally, Snap posted its slowest-ever growth rate in the quarter.
Tech companies are blaming poor earnings on advertiser pullbacks as fears of a recession looms, but according to Penn, increased competition in the space might be a bigger factor.
“We think that the No. 1 change is that digital media is fragmenting, and so what the tech companies are facing is competition,” he said. “We can see the growth of TikTok, of Amazon, Walmart and the retail media networks. People are saying ‘Hey, I don’t have to stick to the old experiences.’”
He added that while some Stagwell clients are beginning to “exercise caution,” major pullbacks haven’t yet begun.
“The dominant thing we see is a flurry of new business we need to absorb, staff and get done,” he said.