“We’re looking to extend more deeply into the media chain,” Penn said. “We’re building an ID graph now, we’re assembling all the data we have because we have a lot of polling and other data we can bring, and then we’re actively looking for and evaluating DSP/SSP opportunities.”

Penn’s theory is that by bringing such adtech in-house, Stagwell can offer more self-service software to advertisers who want it while also shrinking those clients’ ad prices and expanding its own margins.

Plus, with Google anticipated to call time on third-party tracking cookies later this year, Penn said advertisers are looking to agencies to provide more proprietary data solutions to help them find new customers and improve the efficiency of their marketing. The Stagwell ID Graph comprises data from the $5 billion the company places in media, data from The Harris Poll market research company, which it owns, and from its location-focused data firm, The People Platform.

Stagwell has already made a string of acquisitions this year, including Brazilian marketing agency PROS, French data consultancy What’s Next Partners, and Sidekick, a UK-based group of content agencies.

The company typically pays for acquisitions in multiples of five to seven times EBITDA, though Penn indicated that some adtech assets are more “affordable” because of the commoditization in the space, which is dominated by tech giants like Google, Amazon, and The Trade Desk. Penn didn’t disclose the names of the companies he is assessing but said the process may take until the end of the year.

While it’s somewhat unusual for an agency group to own an SSP in particular, there can be benefits in acquiring adtech, such as the ability to ensure inventory and supply chain quality, said Ana Milicevic, cofounder of the digital consultancy Sparrow Advisers.

Milicevic said Stagwell could also be looking to appeal to clients who care more about the service they receive than the underlying technology used to deliver their advertising.

“Owning more of the stack may mean paying less of various platform costs, hence improving their own profit opportunities,” Milicevic added.

But owning adtech could present challenges for the agency later down the line, according to Brian Wieser, the longtime advertising industry analyst and principal of the Madison and Wall advisory and insights firm.

“The big challenges are ensuring that enough investment goes into the software business to sustain its competitiveness and maintaining a capacity to hire engineers who might not otherwise want to work for companies that are primarily agencies, while also recognizing that ownership by one agency group may deter other agency groups for encouraging use of the software,” Wieser said.

Challenger brand Stagwell is competing for bigger contracts

Penn founded Stagwell Group in 2015 with $250 million in funding from investors, including former Microsoft Chief Executive Steve Ballmer. Later, it raised a further $260 million from the private-equity firm AlpInvest and then went public through a merger with fellow advertising holding company MDC Partners.

Stagwell has positioned itself as a challenger to traditional holding companies like WPP and Publicis Groupe. Its properties include the creative agencies Anomaly, 72and Sunny, and Forsman & Bodenfors; the media agencies Assembly and GALE; political consultancies Targeted Victory and SKDK; and communications companies such as Allison and Veritas.

Stagwell recently made a near-$700-million bid for S4 Capital, another challenger ad company founded by longtime WPP CEO Martin Sorrell, The Wall Street Journal reported. The bid was rejected by S4, according to the Journal.

While Stagwell’s individual companies initially operated fairly separately from one another, they’re increasingly collaborating more, Penn said, which is helping it get bigger contracts. The company recently began competing on its first $60 million account pitch, he added. This month, it opened its first EMEA headquarters, situating its UK agencies in one London office.

Stagwell, which has around 12,000 employees, reported $2.5 billion in revenue in 2023, still a long way behind the biggest group by revenue, WPP, which recorded roughly $18 billion in revenue last year. Publicis Groupe has the biggest market capitalization of the largest holding companies, at $28.2 billion, while Stagwell is trading at around $1.6 billion. Stagwell in February issued cautious financial guidance for 2024, which sent its shares tumbling.