Former Clinton pollster Mark Penn is riding the A.I. wave and building a digital-first marketing agency to take on top ad companies

The marketing world is getting far more complex as A.I. tech like ChatGPT allows practitioners to crunch mounds of data to better target and personalize new ads more quickly. Those capabilities often require more firepower than a boutique firm possesses and more flexibility than the large marketing incumbents have.

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So Mark Penn, the political pollster and adviser whose A-list clients include the Clintons and former British prime minister Tony Blair, is building a sizable marketing and advertising portfolio of stand-alone ad tech companies to bridge that gap. The 70 portfolio companies are run independently and get fees for referring business to each other. And Penn says they allow Stagwell, the firm he founded in 2015, to gradually assemble the tools he thinks clients need in the marketing wars.

Stagwell generated $2 billion in revenue last year, enough for 2% of the global marketing services market. Though its portfolio companies are typically small, they specialize in one marketing area, such as data analysis or foreign language translation of e-commerce sites. Stagwell is well behind leaders like WPP, Omnicom, and Publicis, but Penn, who recently told Wall Street analysts that revenue could hit $4 billion within a few years, thinks Stagwell can outmaneuver them as a digital-first firm.

Penn, whose corporate background includes stints as CEO of Burston Marsteller and, later, Microsoft's chief strategy officer, says A.I. like ChatGPT is already changing the advertising and public relations sectors. For instance, A.I. is used for the automated drafting of press releases and for creating ad scripts.

Of course, political polling remains close to his heart and is central to what he does daily, even as he bemoans the dumbing down and nastiness of political discourse today. "The problem is that a lot of campaigns now are no longer talking about the issues," he says.

This interview has been edited and condensed for clarity.

Fortune: What is one example of the productive use of A.I. in your industry?

We've long had an A.I. tool that takes your news releases, analyzes them and who has covered a similar subject, determines who could cover a news release positively, and then helps send pitches to that person. Now we have a second-generation, generative A.I., that can draft the news release and rewrite it in any tone you like: friendly, professional, rude.

I am constantly bombarded by misdirected e-mail ads. Is ad tech where it needs to be for effective targeting?

The promise of the internet relative to traditional advertising should be effective targeting. Most advertising started with TV, which gave you scale to target certain demographics, whether age, men, women, etc. The promise of the internet has been that but for a lower cost. We can now serve an ad tailored to the things you want. If the data gets better, the internet should produce a well-targeted, lower-cost ad, but we are still a reasonable distance away.

Assuming targeting improves, is there not simply too much advertising, making it hard for advertisers to stand out, whatever the medium?

It's a good question. People might see 2,000 ads in a day. And I always say that I think the best TV ad has probably already been made but that we are far away from the best digital ad made. A lot of advertising is being crammed in every square foot everywhere, so much of it is really ineffective. About 50% of advertising used to be seen as effective. I would put that down to 10% now.

Stagwell has about 2% of the global marketing services market, far behind the big four agencies. What does Stagwell bring that others can't? 

I was at the largest companies and ran all the advertising at Microsoft. I don't think people management is very good at the big agencies. They have a system designed to use the best talent for a few years and then say goodbye. Now there is a massive transformation in the industry. When you're an established player, it's really hard for you to let go of, say, your newspaper ads business, particularly when you've built up massive assets. And so you're going to fall behind in the transformation to digital. I thought I could do better because I could start fresh with digital first.

You made your name in political polling, but that discipline was maligned in many quarters after the last two federal elections. Is the criticism unfair?

Yes, polling has been unfairly maligned. Twitter is not accurate. Your friends are not accurate. Good polling is accurate within a range, and that range's importance is magnified in politics versus commercial applications because, in politics, the winner takes all. A 2% margin of error doesn't matter in making a commercial decision, but it makes all the difference in politics.

What is the difference between marketing a politician versus commercial products?

Corporate campaigns are like large battles. They are planned well in advance, strategically thought through, timed with the release of a product, and are on a massive scale. Political campaigns were until recently much more 'seat of the pants,' connected to what was going on on a given day, and responsive. The normal lead time for commercial ads was four to six months, and now it's been cut down to two or three. On the other hand, a lot of the political stuff is junk, disposable. It's not focused on the long term, and it's too short-term. Political campaigns have only gotten more horrific.

Have political ads become more riddled with false information?

I believe in free political speech and having to combat arguments with other arguments. We had standards back in the day and had to have at least a set of verification standards on TV. You didn't have to prove every line in an ad was completely true, but you did have to have some reasonable basis for making the statement. But the internet doesn't have that standard. The problem is that many campaigns are no longer discussing the issues. So many political ads today are about finding out you got a parking ticket in 1979 and didn't pay it on time. 'I'm going to call you the world's biggest scofflaw because you didn't pay this parking ticket years ago.'

So what's the way out of this? 

At some point, you'll have another leader who successfully rises above it, like Ronald Reagan and like Bill Clinton at various times. And, at least in his first election, Barack Obama did rise above it. So I think leadership is usually the right anecdote.

Get to know Penn:

• Penn is credited with coining "soccer moms," a group that swung the vote in the 1996 federal elections.

• As Microsoft's strategy chief, part of his job was revitalizing the Bing search engine and running a $2 billion advertising budget.

• He launched Stagwell in 2015 and, four years later, bought MDC Partners and merged the two.

This story was originally featured on Fortune.com

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