Stagwell folds YML into Code and Theory network to blend tech expertise with creative chops

The blending of creativity and technology within the agency world continues at a dizzying pace.

The latest example of this fusion comes from Stagwell, which Digiday has learned is moving its digital-and engineering-heavy YML agency into its Code and Theory network of agencies, which tend to lean toward digital creative work.

YML joins a group of agencies that all operate independently from each other but share best practices, expertise and access to clients. Those agencies include the namesake Code and Theory, which is a digital-first creative shop, along with Kettle (content production and creative), Rhythm (CRM specialists), Truelogic (near-shore capabilities, which means offshore talent in the same time zone) and Mediacurrent (experts in Drupal). 

“The complexity to reach consumers from a technological lift standpoint is way greater,” said Dan Gardner, Code and Theory’s co-founder and executive chairman of the network, talking about brands’ evolving tech needs. “You have to have technical capabilities, super deep benches across multiple technologies — both back end and front end — to actually deliver on the creative visions they have. And YML being part of the expanding Code and Theory network really allows that to happen.”

“Twenty years ago, there used to be the CMO and CIO, right? Now, if you look at like how the teams are changing on their side, there’s the chief digital officer,” said Ashish Toshinwal, co-founder and CEO of YML, who noted his shop brings its mobile-centric tech skills to bear while adding offshore access to talent. “It’s kind of a combination of a little bit of power from the CIO a little bit of power from the CMO but they’re leading the product experience or the customer experience for that brand. That position is gaining lots of steam, and this network is targeting that position in a very, very big way.”

The move very much fits Stagwell’s long-term goals of matching concentric circles of expertise together to expand talent capabilities and broaden organic growth among its clients. And it comes at a time when CMOs are thinking more about technology’s impact on marketing than ever before — certainly with the rise of artificial intelligence, as well as other ad-tech innovations that require as much of an engineering degree as marketing acumen.

While neither Gardner nor Toshinwal would provide actual revenue numbers individually or combined, they explained that the Code and Theory network has generated just under 25% revenue growth each of the last three years, while YML has seen closer to 30% growth. The expectation is the expanded network, which encompasses some 2,000 staffers, will continue to hit close to 20% growth in 2023.  

“It follows the Stagwell playbook to create cooperative practice groups,” noted Jay Pattisall, vp and senior agency analyst at Forrester. “This type of coordination among the holding companies’ operating agencies is becoming more common because the engineering resources (both talent and budgets) are precious commodities.”

Pattisall cited GroupM’s bundling of multiple units into Nexus as a shared tech and engineering resource for the WPP media agencies, as well as Publicis Groupe’s Epsilon acquisition combined with Sapient’s offshore engineering work, as examples elsewhere.

“The benefit of this is cost efficiency,” Pattisall added. “Clients get access to resources otherwise found in larger system integrators and digital consultancies. Stagwell does not bear the cost of building and rebuilding the same technology and engineering backbone across multiple companies. At the end of the day, a shared tech and engineering resource is not true integration. Code and Theory and YML are still separate brands, leaders and P&Ls.”

https://digiday.com/?p=490163

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