Former Microsoft strategy chief explains why most digital ads 'are not very good' — and how AI will help

Most internet ads are ineffective, Stagwell ( STGW ) CEO Mark Penn is quick to point out, and AI could make them better.

"Most digital ads are not very good," Penn, formerly chief strategy officer at Microsoft ( MSFT ), told Power Players with Brian Sozzi (video above). "You run through hundreds and hundreds of those in a day, and they have virtually no impact on you, by and large."

Stagwell provides creative, technology, media, and research services to major brands and organizations. Penn, who said he was "really co-CMO" at Microsoft at one point, explained that the potential payoff from AI isn't doing the old work more cheaply.

"People always make the mistake of thinking that new technology is about simplifying the stuff we used to do," he said. "New technology is about doing things we always wished we could do, but couldn't do in the past."

AI is "revolutionizing production," Penn said, and the bar for advertisers goes up with it.

"There's more of a premium now on getting the right ad to the right person at the right time with something that is ... really interesting and engaging," he said.

Asked whether AI would crush the ad industry, Penn said, "AI is more, much more of our friend, actually."

He explained that Stagwell has created "a series of products we call the machine," and demand is up: "We have more people looking for premium creative ... and more people looking for digital transformation than ever."

Internal AI tools helped us analyze transcripts. Humans wrote and edited this post.