Originally published on Adweek by Erik Oster

Code and Theory has made its fifth acquisition, bringing on a digital shop that expands its content production and ecommerce capabilities at a time when demands for those services have crescendoed.

The creative agency, owned by Stagwell Group, has acquired digital shop Kettle following discussions going back years between the two agencies.

“We’ve always been on the lookout for good groups of people with a culture that matches,” Code and Theory co-founder and CEO Dan Gardner told Adweek, explaining that in addition to cultural alignment, the acquisition also represented shared philosophical beliefs and the benefits of adding Kettle’s capabilities around content creation and production.

Code and Theory, meanwhile, provides Kettle with an opportunity to tap into its global network and expertise in specialized capabilities such as data and analytics.

Founded in 2009, Kettle has grown to a team of 65 employees across offices in New York, Los Angeles and San Francisco. Kettle has worked with clients including American Express, Discover, Glossier, National Geographic, Oakley, SoFi and ZocDoc, as well as a number of disruptor brands across the ecommerce, financial services, media and entertainment, and retail categories.

“We always looked up to Dan and the team at Code and Theory. We knew we had a similar culture and a mission of user-focused products,” Kettle CEO Olivier Peyre said. “We have a team of strategists that do research and data/analytics, but nothing as deep as what the Code and Theory team can do.”

Code and Theory began talking with Kettle about three years ago and revisited discussions around an acquisition last year. Gardner explained that the impact of the pandemic didn’t make Code and Theory any less enthusiastic about the deal, but did slow down the process.

“The world slowed down a little around March. No matter what you were doing it slowed down,” he said, adding that with no pressure to close by a certain date and both agencies’ insistence on maintaining culture, the process proceeded organically at a slower rate.

Kettle managing director Lauren Diamond Kushner claimed the acquisition wouldn’t have a major impact on day-to-day operations. The agency will continue working with clients independently, with some support from Code and Theory and partnering on projects when appropriate.

“We’ve been leaning into the Code and Theory network for help with scale and [certain services], especially with tech and data,” she explained.

Kettle’s way of working with clients was upended, however, by the pandemic. The agency had to pivot from a model built around in-person collaboration, which often included physically embedding talent within clients teams.

“We had to reinvent the way we worked with our clients, but we had a lot of tools in place that we’re using to inform our new model,” Peyre explained. “There were tough moments, but we’ve been thriving.”

Clients embrace digital transformation

Last year also saw a series of drastic changes across the ad industry, including the rapid acceleration of brands investing in ecommerce and further shifts into digital advertising channels. With the acquisition, Code and Theory builds on its established ecommerce capabilities with further expertise.

“It definitely helps having done a lot of ecommerce before the pandemic,” Peyre said. “Everyone is now focused on that, and we have the case studies to prove … we are experts in all of this.”

Code and Theory and Kettle are already working together on related projects, with Peyre citing Kettle’s role in creating a “complex and robust” client website for a project involving both agencies. They have also already begun working together on some new business opportunities.

Gardner views the acceleration of digital transformation trends brought about by 2020 as an opportunity for agencies such as Code and Theory.

Organizations are shifting to a user-first approach largely built around digital channels, he explained, and looking to agency partners for help in areas beyond advertising typically outside an agency’s purview.

“[It’s this] area where we have this blend of product and brand. It’s one and the same,” he said. “We’re now seeing clients finally coming around to it. … The events of the past year required them to change the way they do business.

“The industry is ready and looking for our companies to lead in how they’re transforming their companies, which is more than just good advertising. I believe in good advertising,” he added, “but it has to come from a digital strategy-led place or you’re not going to be competitive.”

The larger family

The acquisition announcement arrives in the wake of news that MDC Partners and Stagwell Group have agreed to merge.

Gardner described the culture of Stagwell Group, which acquired a majority stake in Code and Theory five years ago, as embracing collaboration between its individual agencies and avoiding the type of overlap that leads to competition at other holding companies.

“Our past experience with [MDC Partners] has only been successful,” he said, citing its collaboration with MDC Partners agency Doner to win Johnson & Johnson’s U.S. consumer health business. “We’re excited for the opportunity that’s been put out there for working closer with our cousin companies.”