After more than a year as Microsoft’s chief strategy officer, Penn started Stagwell, his own marketing firm, in 2015. Stagwell was founded as a company that truly integrated marketing and advertising into digital technology. In the last decade, Stagwell has acquired several digital technology companies and marketing firms, and has a large contingent of both digital and creative employees.

I talked to Penn about technology in marketing today and how it’s changing the game for now and the future. This conversation has been edited for length, clarity and continuity.

In general, how has the CMO’s work changed over the last several years?

Penn: In the U.S. today, you’re seeing a new generation of CMOs that understands it’s a very different environment from what it was just 10 or 15 years ago. I had a $2 billion budget at Microsoft 10 years ago. We would look at TV first, and then spend some money on digital. 

Today, the CMO doesn’t do that anymore. Today’s CMO very carefully integrates across media and then also has to figure out what are the right media for the marketing problems that they have. A marketer has to ask him or herself: Are you Coke or are you a diaper? If you’re Coke, you’re marketing to 150 million people. You probably should primarily spend on big events, sporting events, sponsorships and things that reach everybody. If you’re selling diapers, there’s only 3 million women giving birth this year. That’s 1% of the country to reach. And a third of those have already picked their diapers from their first child. You maybe have $2 million, and within that you have maybe 60 days to market. 

That’s why you don’t see a lot of diaper ads on TV, and you should see a lot of Coke and ads for broader products. Part of it is understanding all of these different markets and products, what their target markets are, and then how they should market to them, because now it’s all about getting the right ad to the right person at the right time.

Tell me about AI: Where do you see it moving in marketing today, and how do you see it coming through as a force in making changes?

In marketing, it will make production a lot easier. In particular, there will be many images that now can be created without shoots. I think that’s the biggest transformative effect.

Research was already pretty well automated from when I started. When you needed 60 people to do a survey, today, you could do it with three. You’re not going to get below three if you get enhanced coding and analysis. 

Also, we can deliver things to clients now in a dashboard where they can ask any question of the data and it can search the data and provide them with answers that previously, they would’ve had to call us and pore through the data. 

What we are looking for and implementing is those pieces of the industry for which AI can be incorporated. What I think people always forget is that new technology is never about doing the old things more cheaply. It is about doing new things that you couldn’t do before. As I always say, there was radio and then radio ads, TV and TV ads, and Facebook and Facebook ads. There is AI and there will be AI ads. There’s all sorts of new skills and products that are going to be created and delivered as part of marketing. Our marketing cloud people are very on top of that. 

There’s a lot of interest in synthetic research, but you have to be careful. You could build junk synthetic research or you can build synthetic research that at least is trained on good data sets that give you something that could be useful across all of the marketing disciplines. We are working as quickly as we can to implement it. 

Most importantly, for [Stagwell-owned agency concentrating on tech] Code and Theory Network, they’ve launched their EXT practice. A lot of companies have bought marketing software, but they’re having trouble figuring out how they use it and how they apply it to tasks. That’s a new line of business for us in addition to creating new kinds of websites and consumer experiences that are based in AI. We consider AI to be something that is really going to help us grow, and that we’re going to be a part of.

What advice would you give a CMO who is trying to use technology in the best way for their brand?

The first thing always is to analyze where do you fit in. What is it that you want to use technology for, and how does that fit in with what kind of consumers you have? Are your consumers people who drive F-150 trucks? Are they consumers who wear hoodies in urban areas? This is not a one-size-fits-all kind of answer. You have to understand what your target markets are, what your consumers are like, where they spend their time. 

Then you’ve got to begin to look at tailoring your marketing, to where your people spend their time. There are two aspects of marketing. I’m either on the purchase channel—which means I’m really looking for a new pair of jeans—or it’s interruptive—I wasn’t really looking for it, but then I saw. I have to figure out the balance of that. I have to figure out whether I’m going brick and mortar. I have to be conscious about all of these decisions before I start the creative process, before I start the process of what kind of media channels are we going to do. 

Don’t just do what seems popular. Do it [leaning] against the goals you have and the kinds of people that you’re marketing to. I mean, the most successful ad of the year’s going to be the least digital one of them: The [American Eagle Outfitters Sydney] Sweeney ad.