Stagwell bets the business on ‘The Machine’ – and on not being too big to change

“This is a pivotal moment for the company,” he says, plainly. “We’re making a bet that we’re going to be an AI winner – and that some other companies may not be.”

Why Stagwell thinks this moment matters

The Machine was launched as part of CES 2026, but Penn is keen to stress this isn’t a flashy CES demo built for headlines. It’s the culmination of several years of work across Stagwell’s agencies, products and data partnerships, brought together into a single system designed to run marketing end-to-end.

Marketing, as Penn describes it, is a relay race: strategy hands off to audience creation, audience creation to media modeling, media to content, content to activation, activation to analysis. Historically, each of those stages has lived in different tools, different teams, different silos.

The Machine’s ambition is to connect them – without ripping everything out and starting again.

“We call it an operating system because it orchestrates the entire marketing workflow. With the exception of human creativity, every step can now be systemised and supported by AI.”

What makes The Machine different?

The big distinction, according to Michael Treff, CEO of Stagwell-owned Code and Theory, is that The Machine doesn’t ask clients to abandon their existing technology stack.

“Most marketing AI tools ask you to rip out your infrastructure and start over,” he explains. “This does the opposite. It works where you work.”

That means The Machine sits on top of tools marketers already use – Adobe, Figma, Slack, Teams, performance dashboards – pulling data, workflows and intelligence into a shared environment. Stagwell calls these integrations “mini-machines”: agentic layers that bring intelligence directly into the tools people are already in, rather than forcing them into a new platform.

“It’s your stack, your tools, your data,” Treff says. “We’re not forcing you on to ours.”

This open architecture is also where Stagwell draws a clear line between The Machine and comparable offerings from larger holding companies like WPP or Publicis. Where those systems tend to be vertically integrated and proprietary, Stagwell is positioning The Machine as interoperable by design.

The war room, rebuilt for the AI era

For Penn, this isn’t theoretical. He’s been here before.

During his time running marketing at Microsoft, overseeing a $2bn budget, Penn built what he calls a “war room” – a central nerve center that pulled together performance, spend and activity across the organization. It was radical at the time, but also manual, fragmented and slow.

“How would I do that today?” he asks. “I’d bring in The Machine.”

The difference now is automation, AI and continuous learning. Every campaign feeds the system; every result informs the next. Penn points to a familiar Microsoft failure – advertising Xbox consoles when there was no inventory – as the kind of coordination breakdown this system is designed to prevent.

“This is that war room,” he says, “but automated, AI-driven and always on.”

Why size matters – and why fear doesn’t

There’s also a more philosophical argument underpinning Stagwell’s move. Penn believes the group is at exactly the right scale to pull this off.

At roughly $3bn in revenue and around 12,000 people, Stagwell is big enough to invest meaningfully in technology – but not so big that change becomes paralysed by fear.

“We’re not a company with 110,000 people trying to work out who to fire,” Penn says. “We’re not too big to adopt this kind of technology.”

That matters, because The Machine isn’t just a tool – it’s a reorganization of how work gets done. And while AI anxiety still hangs over the industry, both Penn and Treff argue that this kind of system actually increases the value of human creativity rather than diminishing it.

“The better the tools get, the more important original thinking becomes,” Treff says. “Technology homogenizes. People and ideas differentiate.”

A business model, not just a platform

Commercially, The Machine serves three purposes: it runs Stagwell internally, operates as a shared environment between agencies and clients and can be deployed directly inside client organizations as a managed SaaS-style service.

Stagwell already generates around $120m in software and SaaS fees. Penn believes that could double or triple over the next few years, but he’s clear that this isn’t about efficiency for efficiency’s sake.

“This isn’t just about cutting costs,” he says. “It’s about scaling better work, servicing bigger clients and proving ROI.”

That last point matters. CFO scrutiny of marketing has never been higher and The Machine is explicitly designed to show where money is working, where it isn’t and why.

“Marketing can’t be a black box any more,” Treff adds. “CMOs need to justify spend. This gives them the tools to do that.”

Betting the ranch

CES is full of bold claims. Most don’t survive the year. But Penn doesn’t hedge.

“This is a bet,” he says. “A big one.”

If he’s right, The Machine won’t just be another AI layer bolted on to marketing. It will be remembered as the moment Stagwell repositioned itself – not as a holding company playing catch-up, but as one built, deliberately, for an AI-shaped future.

And if he’s wrong? Well, Penn has lived through enough technology cycles to know that standing still is the bigger risk.