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FY22 Revenue rises to record $2.7B following sixth-consecutive quarter of double-digit growth; company doubles stock buyback program to $250M

FY22 Revenue rises to record $2.7B following sixth-consecutive quarter of double-digit growth; company doubles stock buyback program to $250M 

• FY22 Pro Forma revenue growth of 21%; 16% in Q4
• FY22 Pro Forma organic net revenue growth of 14%; 8% in Q4
• Adjusted EBITDA of $451M in FY22, a 20.3% margin on net revenue
• Adjusted EBITDA of $123M in Q4, a 21.1% margin on net revenue
• FY22 Adjusted net income of $268M; $63M in Q4
• FY22 Adjusted EPS of $0.90; $0.22 in Q4
• FY22 Free Cash Flow of $270M; $268M in Q4
• FY22 Net New Business of $213M; $42M in Q4
• Reduced net debt by $47M versus prior year, ending with a net leverage ratio of 2.17x
• Issues 2023 Organic Net Revenue growth guidance of 7.5%-10% and 10%-14% ex-Advocacy
• Issues 2023 Adjusted EBITDA guidance of $450M-$490M and Free Cash Flow conversion of 50%-60%

New York, NY, March 2, 2023 (NASDAQ: STGW) – Stagwell Inc. (“Stagwell”) today announced financial results for the three months and year ended December 31, 2022.

FOURTH QUARTER AND FULL YEAR HIGHLIGHTS:

• Q4 revenue of $708 million, an increase of 16% versus the prior year period; FY22 revenue of $2,688 million, an increase of 83% versus the prior year period
• Q4 revenue growth of 16% versus the prior year period and 13% ex-Advocacy; Pro Forma FY22 revenue growth of 21% versus the prior year period and 17% ex-Advocacy
• Q4 net revenue of $583 million, an increase of 12% versus the prior period; FY22 net revenue of $2,222 million, an increase of 75% versus the prior year period
• Q4 net revenue growth of 12% versus the prior year period and 10% ex-Advocacy; Pro Forma FY22 net revenue growth of 15% versus the prior year period and 13% ex-Advocacy
• Q4 organic net revenue growth of 8% versus the prior year period and 6% ex-Advocacy; Pro Forma FY22 organic net revenue growth of 14% versus the prior year period and 12% ex-Advocacy
• Q4 Adjusted EBITDA of $123 million, an increase of 19% versus the prior year period; FY22 Adjusted EBITDA of $451 million, an increase of 78% versus the prior year period
• Q4 Adjusted EBITDA growth of 19% versus the prior period and 10% ex-Advocacy; Pro Forma FY22 Adjusted EBITDA growth of 19% versus the prior period and 12% ex-Advocacy
• Q4 Adjusted EBITDA Margin of 21.1% on net revenue; FY22 Adjusted EBITDA Margin of 20.3% on net revenue
• Q4 net loss of $28 million versus net income of $5 million in the prior year period; FY22 net income of $66 million versus $36 million in the prior year period
• Q4 net loss attributable to Stagwell Inc. common shareholders of $6 million versus net income of $1 million in the prior year period; FY22 net income attributable to Stagwell Inc. common shareholders of $27 million versus $21 million in the prior year period
• Q4 Adjusted net income of $63 million; FY22 Adjusted net income of $268 million
• Q4 Adjusted earnings per share for Stagwell Inc. common shareholders of $0.22; FY22 Adjusted earnings per share of $0.90
• Q4 net new business of $42 million; FY22 net new business of $213 million

“Stagwell closed out 2022 with industry-leading double-digit growth, strong margin expansion, record free cash flow, record earnings per share, and a net debt ratio significantly below our target. We promised to transform marketing, and we have built game-changing AI and AR-driven products as we continue to grow and transform both our business and the industry,” said Mark Penn, Chairman and CEO, Stagwell. “We look forward to another year of double-digit growth outside of our advocacy businesses in 2023, continuing our momentum.”

Frank Lanuto, Chief Financial Officer, commented: “The Company reported a record $708 million of revenue in the fourth quarter, a 16% increase over the prior year and Adjusted EBITDA of $123 million. Adjusted EBITDA margin as a percentage of net revenue rose to 21.1% for the quarter and 20.3% for the year as a result of careful cost management. Free cash flows rose to $270 million driving down the Company’s net leverage ratio to 2.17x.”

Financial Outlook

2023 financial guidance is as follows:

• Organic Net Revenue growth of 7.5% – 10%
• Organic Net Revenue growth ex-Advocacy of 10% – 14%
• Adjusted EBITDA of $450 million – $490 million
• Free Cash Flow Conversion of 50% – 60%
• Adjusted EPS of $0.90 – $1.05
• Guidance assumes no impact from foreign exchange, acquisitions or dispositions.

Stock Repurchase Program

On March 1, 2023, the Board authorized an extension and a $125,000,000 increase in the size of our previously approved  stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, as amended, we may repurchase up to an aggregate of $250,000,000 of shares of our outstanding Class A Common Stock, with any previous purchases under the Repurchase Program continuing to count against that limit. The Repurchase Program will expire on March 1, 2026.

Conference Call

Management will host a video webcast and conference call on Thursday, March 2, 2023, at 8:30 a.m. (ET) to discuss results for Stagwell Inc. for the three months and year ended December 31, 2022. The video webcast will be accessible at https://stgw.io/Q4andFYEarnings. An investor presentation has been posted on our website at www.stagwellglobal.com and may be referred to during the conference call.

A recording of the conference call will be accessible one hour after the call and available for ninety days at www.stagwellglobal.com.

Stagwell Inc.

Stagwell is the challenger network built to transform marketing. We deliver scaled creative performance for the world’s most ambitious brands, connecting culture-moving creativity with leading-edge technology to harmonize the art and science of marketing.  Led by entrepreneurs, our 13,000+ specialists in 34+ countries are unified under a single purpose: to drive effectiveness and improve business results for their clients. Join us at www.stagwellglobal.com.

Contacts

For Investors:

Jason Reid

Ir@stagwellglobal.com

For Press:

Beth Sidhu

Pr@stagwellglobal.com

Basis of Presentation

The acquisition of MDC Partners (MDC) by Stagwell Marketing Group (SMG) was completed on August 2, 2021. The results of MDC are included within the Statements of Operations for the period beginning on the date of the acquisition through the end of the respective period presented and the results of SMG are included for the entirety of all periods presented.

Non-GAAP Financial Measures

In addition to its reported results, Stagwell Inc. has included in this earnings release certain financial results that the Securities and Exchange Commission (SEC) defines as “non-GAAP Financial Measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company’s results. Such non-GAAP financial measures include the following:

Pro Forma Results: The Pro Forma amounts presented for each period were prepared by combining the historical standalone statements of operations for each of legacy MDC and SMG. The unaudited pro forma results are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or consolidated financial condition would have been had the combination actually occurred on the date indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition for any future period or as of any future date. The Company has excluded a quantitative reconciliation of Adjusted Pro Forma EBITDA to net income under the “unreasonable efforts” exception in Item 10(e)(1)(i)(B) of Regulation S-K.

(1) Organic Revenue: “Organic revenue growth” and “organic revenue decline” refer to the positive or negative results, respectively, of subtracting both the foreign exchange and acquisition (disposition) components from total revenue growth. The acquisition (disposition) component is calculated by aggregating prior period revenue for any acquired businesses, less the prior period revenue of any businesses that were disposed of during the current period. The organic revenue growth (decline) component reflects the constant currency impact of (a) the change in revenue of the partner firms that the Company has held throughout each of the comparable periods presented, and (b) “non-GAAP acquisitions (dispositions), net”. Non-GAAP acquisitions (dispositions), net consists of (i) for acquisitions during the current year, the revenue effect from such acquisition as if the acquisition had been owned during the equivalent period in the prior year and (ii) for acquisitions during the previous year, the revenue effect from such acquisitions as if they had been owned during that entire year (or same period as the current reportable period), taking into account their respective pre-acquisition revenues for the applicable periods, and (iii) for dispositions, the revenue effect from such disposition as if they had been disposed of during the equivalent period in the prior year.

(2) Net New Business: Estimate of annualized revenue for new wins less annualized revenue for losses incurred in the period.

(3) Adjusted EBITDA: defined as Net income excluding non-operating income or expense to achieve operating income, plus depreciation and amortization, stock-based compensation, deferred acquisition consideration adjustments, and other items. Other items include restructuring costs, acquisition-related expenses, and non-recurring items.

(4) Adjusted Diluted EPS is defined as (i) Net income (loss) attributable to Stagwell Inc. common shareholders, plus net income attributable to Class C shareholders, excluding amortization expense, impairment and other losses, stock-based compensation, deferred acquisition consideration adjustments, discrete tax items, and other items, divided by (ii) (a) the per weighted average number of common shares outstanding plus (b) the weighted average number of Class C shares outstanding (if dilutive). Other items includes restructuring costs, acquisition-related expenses, and non-recurring items, and subject to the anti-dilution rules.

(5) Free Cash Flow: defined as Adjusted EBITDA less capital expenditures, change in net working capital, cash taxes, interest, and distributions to minority interests, but excludes contingent M&A payments.

(6) Financial Guidance: The Company provides guidance on a non-GAAP basis as it cannot predict certain elements which are included in reported GAAP results.

Included in this earnings release are tables reconciling reported Stagwell Inc. results to arrive at certain of these non-GAAP financial measures.

This document contains forward-looking statements. within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company’s representatives may also make forward-looking statements orally or in writing from time to time. Statements in this document that are not historical facts, including, statements about the Company’s beliefs and expectations, future financial performance and future prospects, business and economic trends, potential acquisitions, and estimates of amounts for redeemable noncontrolling interests and deferred acquisition consideration, constitute forward-looking statements. Forward-looking statements, which are generally denoted by words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “create,” “estimate,” “expect,” “focus,” “forecast,” “foresee,” “future,” “guidance,” “intend,” “look,” “may,” “opportunity,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other variations thereof and terms of similar substance used in connection with any discussion of current plans, estimates and projections are subject to change based on a number of factors, including those outlined in this section.

Forward-looking statements in this document are based on certain key expectations and assumptions made by the Company. Although the management of the Company believes that the expectations and assumptions on which such forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. The material assumptions upon which such forward-looking statements are based include, among others, assumptions with respect to general business, economic and market conditions, the competitive environment, anticipated and unanticipated tax consequences and anticipated and unanticipated costs. These forward-looking statements are based on current plans, estimates and projections, and are subject to change based on a number of factors, including those outlined in this section. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the Company’s control. Therefore, you should not place undue reliance on such statements. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events, if any.

Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. Such risk factors include, but are not limited to, the following:

• risks associated with international, national and regional unfavorable economic conditions that could affect the Company or its clients;
• inflation and actions taken by central banks to counter inflation;
• the Company’s ability to attract new clients and retain existing clients;
• the impact of a reduction in client spending and changes in client advertising, marketing and corporate communications requirements;
• financial failure of the Company’s clients;
• the Company’s ability to retain and attract key employees;
• the Company’s ability to compete in the markets in which it operates;
• the Company’s ability to achieve its cost saving initiatives;
• the Company’s implementation of strategic initiatives;
• the Company’s ability to remain in compliance with its debt agreements and the Company’s ability to finance its contingent payment obligations when due and payable, including but not limited to those relating to redeemable noncontrolling interests and deferred acquisition consideration;
• the Company’s ability to manage its growth effectively, including the successful completion and integration of acquisitions that complement and expand the Company’s business capabilities;
• the Company’s ability to develop products incorporating new technologies, including augmented reality, artificial intelligence, and virtual reality, and realize benefits from such products;
• an inability to realize expected benefits of the combination of the Company’s business with the business of MDC; (the “Business Combination” and, together with the related transactions, the “Transactions”);
• adverse tax consequences in connection with the Transactions for the Company, its operations and its shareholders, that may differ from the expectations of the Company, including that future changes in tax law, potential increases to corporate tax rates in the United States and disagreements with the tax authorities on the Company’s determination of value and computations of its attributes may result in increased tax costs;
• the occurrence of material Canadian federal income tax (including material “emigration tax”) as a result of the Transactions;
• the Company’s unremediated material weaknesses in internal control over financial reporting and its ability to establish and maintain an effective system of internal control over financial reporting;
• the Company’s ability to protect client data from security incidents or cyberattacks;
• economic disruptions resulting from war and other geopolitical tensions, terrorist activities and natural disasters;
• stock price volatility; and
• foreign currency fluctuations.

Investors should carefully consider these risk factors, other risk factors described herein, and the additional risk factors outlined in more detail in our 2021 Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2022, and accessible on the SEC’s website at www.sec.gov, under the caption “Risk Factors,” and in the Company’s other SEC filings.

Originally Released On

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Media Contact
Sarah Arvizo
pr@stagwellglobal.com

By: Ray Day

CONTACT:

Ray Day
ray.day@stagwellglobal.com 

We wanted to share our latest consumer and business insights, based on research from Stagwell. Among the highlights of our weekly consumer sentiment tracking:

WORRIES ABOUT ECONOMY DECLINE AGAIN: 

Today, 85% of Americans are concerned about the economy and inflation – down 2 points from last week and up from 82% in December.

• 82% worry about U.S. crime rates (up 2 points)
• 81% a potential U.S. recession (up 1 point)
• 73% political divisiveness (no change)
• 72% the War on Ukraine (no change)
• 69% affording their living expenses (up 1 point)
• 55% a new COVID-19 variant (no change)
• 43% about losing their jobs (down 3 points)

AI-GENERATED BUZZ: WHAT DO CONSUMERS THINK?:

With all the buzz about generative AI, AI-powered search engines and ChatGPT, what do consumers have to say? Stagwell’s National Research Group took the pulse of public opinion in a new report. 

• 17% of those surveyed said they had heard a “great deal” about AI-powered search recently, and 53% had heard at least “some.”
• 92% of consumers who have heard about AI-powered search say they think it will change the way people use the internet.
• 71% say they’re excited about using the technology.
  
• 59% of those who have heard about AI-powered search say Google is best positioned to successfully deliver the technology to market versus 13% who would vote for Microsoft.
• Also see Stagwell’s whitepaper: “Can Picasso Live in the Machine? AI get smart: What to know, what to watch and what to play with”

BREAKING UP IS HARD TO DO SECURELY: 

Our latest survey with Norton finds many Americans – especially younger ones – are reckless online after breakups, including sharing passwords with their exes and not treating online stalking with concern.

• 25% of Americans admitted to being the victim of an online dating or romance scam.
• Gen Z (34%) and Millennials (35%) have “concerningly relaxed” attitudes about online stalking. One third say they don’t care if they’re being stalked online by a current or former partner as long as they’re not tracked in person – three times higher than older adults (10%).
• More than a third of Gen Z say they have shared passwords with an ex.
• Among those who have been in romantic relationships, 16% say that they’ve checked a current or former significant other’s phone to view texts, calls, direct messages, emails or photos, 12% have reviewed their former partner’s device search history, and 11% have tracked a current or former partner’s location using a location sharing app.

THE DOCTOR IS IN BUT BURNED OUT: 

America’s healthcare workforce is under unprecedented strain, and doctors and nurses are burning out in record numbers, according to our survey with HealthDay.

• 63% of doctors and nurses said they are experiencing a moderate or great deal of burnout at work.
• 66% of physicians and 75% of nurses cite understaffing as the most significant contributor to burnout, along with a growing amount of daily paperwork (58% for physicians and 51% for nurses).
• Many also cite time communicating with insurance companies on their patients’ behalf as a source of burnout (38% for primary care physicians and 20% for nurses).
• All of this is leading to decreased satisfaction among medical professionals. A year ago, 40% of physicians felt highly satisfied. Today, it’s 22%.
• As a result, only 57% of doctors say they would choose medicine as a profession again, compared with 72% last year.

RECENT HOME SELLERS REVEAL LESSONS LEARNED: 

An overwhelming share (84%) of Americans who sold a home for the first time in the past two years wish they had done something differently, according to our survey with Zillow.

• Regret #1: The most common thing recent first-time home sellers wish they had done differently is set a higher list price (39%). In January, nearly one in four listings had a price cut (22%), which is 10 percentage points higher than last winter. 75% of agents say pricing is the most important thing sellers need to get right in a less frenzied housing market.
• Regret #2: 87% of recent first-time sellers think something they could have done would have attracted a higher sale price. 39% say better listing photos could have boosted their bottom line, while 25% say a virtual tour could have helped sell their home for more. Fact: Listings that include a 3D home virtual tour or an interactive floor plan receive 69% more page views and 80% more saves.
• Regret #3: 25% of recent first-time sellers wish they had listed their home at a different time. If the owner has flexibility, the second half of April is the optimal time to list a home for sale nationwide.
• Regret #4: 25% of recent first-time sellers say they could have received a higher sale price if they had invested in more home improvements and repairs. Landscaping, interior painting and carpet cleaning are the most commonly completed seller projects, as they send a signal to a buyer that a home is well-maintained.

ICYMI: In case you missed it, check out some of the thought-leadership and happenings around Stagwell making news:

• Hiring Remains Strong, But Costly
• Don’t tell Americans the economy is getting better — they’re still worried about a recession
• February Harvard CAPS-Harris Poll: Perception of economy is improving but only a third believe it is on the right track

By: Ray Day

CONTACT:

Ray Day
ray.day@stagwellglobal.com 

We wanted to share our latest consumer and business insights, based on research from Stagwell. Among the highlights of our weekly consumer sentiment tracking (fielded Feb. 17-19):

WORRIES ABOUT ECONOMY MODERATE:

Today, 87% of Americans are concerned about the economy and inflation – down 3 points from last week and up from 82% in December.

• 80% worry about U.S. crime rates (down 4 points)
• 80% about a potential U.S. recession (down 2 points)
• 73% about political divisiveness (down 2 points)
• 72% about the War on Ukraine (no change)
• 68% about affording their living expenses (down 7 points)
• 55% about a new COVID-19 variant (no change)
• 46% about losing their jobs (down 1 point)

WORK FROM HOME BUT INTERVIEW IRL

A recent Harris Poll found that 41% of Americans are likely to consider pursuing a new job within the next six months. In our latest survey with American Staffing Association, remote employees like working from home, yet they want to meet their new boss face-to-face first.

• 70% of job seekers say they want to interview in person for a new job rather than a video (17%) or phone call (9%).
• 67% say they feel the need to modify their usual appearances in some way before a job interview.
• Before an interview, more Black Americans feel the need to shave their facial hair (33% versus 22% for White Americans), while both Hispanic (19%) and Black Americans (17%) also feel the need to cover tattoos (White 10%) and remove facial piercings (18% for Hispanic, 14% for Black and 9% for White).

COMMUNICATING MORE BUT NOT BETTER:

Today’s hybrid workplace is a whirlwind of communication – with employees spending more than 70% of their work week communicating on various channels. That’s up from last year – yet poor communications also is causing a steep decline in productivity and effectiveness, according to our “State of Business Communication: The Path to Productivity, Performance, and Profit” report with Grammarly.

• Employees are spending 9% more time communicating – 28.8 hours a week – compared with last year.
• Leaders report a 12% drop in the effectiveness of written communication over the same period and a 15% decline in productivity.
• This is causing employee stress – with workers reporting a 7% increase in stress due to poor communications compared with a year ago.
• 84% of business leaders are feeling the downsides of poor communication, with lower productivity, missed deadlines and increased costs ranking as the top three.
• Most leaders (60%) and nearly half (45%) of workers say personal connections have suffered in the hybrid workplace.
• 68% of leaders say they lost at least $10,000 or more in business in the past year due to poor communications. One in five also say poor communications eroded their brand credibility or reputation.

DOCTORS DON’T HAVE TIME FOR YOUR DATA

As patient portals become more common and telehealth data pours in from apps and wearables, doctors have more data than time, according to our survey with ZS.

• 71% of primary care physicians say they have more data than they can handle.
• The patient data problem is compounded by the fact that 57% of doctors report that technology flaws are a barrier to having better-connected health care.
• 86% of primary care physicians say that a lack of reimbursement for connecting health care is a hurdle.

ICYMI:

In case you missed it, check out some of the thought-leadership and happenings around Stagwell making news:

• February Harvard CAPS-Harris Poll: Perception of economy is improving but only a third believe it is on the right track
• All Generations Find Telehealth Beneficial, New CVS Health Data Shows
• Almost Two-Thirds of U.S. Doctors, Nurses Feel Burnt Out at Work
• Streamer ads performed well during the Super Bowl

As always, if helpful, we would be happy to provide more info on any of these data or insights. Please do not hesitate to reach out.

Thank you.

By

National Research Group

Full Report Here

CONTACT

nick.crofoot@nrgmr.com

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A new battlefront in the Tech Wars heated up last week with Microsoft’s announcement and hands-on demo of new AI capabilities in its Bing search engine and Edge browser. Google quickly followed suit by announcing its own conversational AI in a blog post on Monday and at an event in Paris later in the week. This all comes on the heels of ChatGPT’s launch late last year, which eclipsed 1M users in 5 days and 100M in less than two months.

With all the buzz, we wanted to take a pulse on public opinion and understanding of this emergent technology, so we surveyed 1,000 US Consumers on Tuesday this week. Here’s what we found…

NEWS STILL BREAKING THROUGH

While last week felt like a whirlwind of announcements and media coverage, it’s important to keep in mind that news about AI-powered search is only just beginning to break through to the masses. 17% of those we surveyed said they had heard a “great deal” about AI-powered search recently, and 53% had heard at least “some.” That’s not bad one week in, but there’s a long way to go before companies build mainstream familiarity and understanding of the technology.

DON’T COUNT GOOGLE OUT

Last week did not go as well as Google likely hoped with many headlines focusing on Bard’s inaccurate assertion that the Webb Space Telescope was the first to capture images of an exoplanet and a tepid media response to the event in Paris. But one week’s headlines will not determine the long-term trajectory of who wins the race.

SO WHO HAS THE EDGE?

Disruptor or incumbent? Microsoft certainly has taken the initiative, having released a functional product that is already available to beta testers (and a lengthy waitlist to gain access). They also plan on investing $10 billion into OpenAI. Google is the overwhelming incumbent in the search space, commands vast resources, and has assembled a formidable team that has been working on this technology for many years. The public appears to be favoring Google’s incumbency at this stage.

59% of those who have heard about AI-powered search say Google is best positioned to successfully deliver the technology to market …compared to 13% for Microsoft

Time will tell how much that shifts in the coming weeks and months as familiarity with the companies’ offerings deepens, and more users get their hands on the technology.

Looking forward, consumer excitement is palpable

A lot remains to be seen, but consumer excitement for the technology is building.

71% of those who have heard about AI-powered search say they’re excited about using the technology and 92% say they believe it will change the way people use the Internet. Why? Improved ease and speed of finding information and improved accuracy and relevance of search results are the key benefits driving their excitement.

IMPLICATIONS

As we look ahead, a few thoughts on how this will play out from here…

Finding the Early Adopters

Which companies will effectively find the segments of the population that drive early adoption and help their products cross the chasm? Our data points to the usual suspects as early adopters: Younger consumers (ages 18-34) who skew male, those working full time (who perhaps see workrelated applications/benefits), and more affluent and educated consumers.

Managing Expectations

The potential for conversational AI is clear, but as we’ve already seen, it’s still a work in progress. The process of “deep reinforcement learning” that drives applications like ChatGPT will take time to mature and there will be missteps and inaccurate results in the interim. Continual improvements in accuracy while managing consumer expectations will be important to mass adoption.

Achieving Product-Market Fit

In addition to generating excitement and driving trial, products will need to identify the Jobs to Be Done that will have staying power. With seemingly limitless applications for AI-powered search, what jobs can the technology do for users that deliver the most real, sustained utility? Keying in on these use cases and building products that are optimized for these needs will be critical to gaining a competitive advantage.

Monetization

Even new technologies that find the early adopters and achieve productmarket fit aren’t guaranteed a sustainable path forward—think of AI-powered voice assistants, which have achieved widespread adoption, yet struggled mightily to monetize. How will companies effectively monetize conversational AI? Will they follow the ad-supported playbook that Google has mastered? What subscription- based models will emerge?

Bringing AI into the Light

Now that AI is maturing across a new threshold, and as ChatGPT, Bing and Bard bring multidimensional algorithms forward in a radically new way, there may be an opportunity to incorporate a new level of transparency, education, and understanding of all AI, including existing algorithms that are already deeply interwoven into daily life. This may happen organically, as new AI are introduced; perhaps there is also an opportunity to create distinct and meaningful AI personas for existing tools, with inherent consumer choice built into the experience.

Proceeding Responsibly

There’s been much written about the unintended consequences and potential abuses of AI. Ambiguous and misleading answers, the expression of embedded bias, and the propagation of ideological filter bubbles are all concerns. Conversational AI will almost certainly be a proving ground for the extensive work that Microsoft, Google, and others have put in to anticipate consequences and safeguard against abuses. Close partnership between companies, their users, third parties, and regulatory bodies to ensure a responsible approach will be essential to maximizing the potential benefits of this new technology.

Want to learn more?
Contact Nick.Crofoot@nrgmr.com

Originally Released On

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CONTACT:

Alex Birmingham
KWT Global
abirmingham@kwtgloblal.com

Emily Falcone
Axios
emily.falcone@axios.com

Originally Released On

PR Newswire

CONTACT:

Brandon Dixon
pr@stagwellglobal.com

NEW YORK, Feb. 22, 2023 /PRNewswire/ — Stagwell (NASDAQ: STGW) today expanded its digital transformation and engineering network Code and Theory with the addition of Silicon Valley-born digital product and design agency YML (Y Media Labs). The Code and Theory Network now includes six agencies: flagship shop Code and Theory, Kettle, Mediacurrent, Rhythm, Truelogic, and YML. The move creates a truly differentiated integrated network boasting nearly 2,000 people with 50% engineers and 50% creative talent, equipping client partners with teams purpose-built to solve digital-first end-to-end business challenges.

“Stagwell believes a digital-first approach drives holistic business transformation and marketing innovation,” said Mark Penn, chairman and CEO, Stagwell.  “Stagwell is accelerating our investment in scaled digital transformation and engineering capabilities by aligning a truly impressive set of agencies to support our global client partners.”

Stagwell’s Code and Theory Network now boasts approximately 800 engineers who can execute 24/7 development cycles utilizing onshore, nearshore, and offshore engineering. YML’s arrival adds key offshore scale in India and award-winning native app development capabilities.

“We are excited to expand the Code and Theory Network with the addition of YML and the opportunities this will unlock for our clients and our talent,” said Dan Gardner, co-founder and executive chairman, Code and Theory Network. “Modern business is digital business. We now have both the scale of technology services and the balance of excellent creativity to deliver end-to-end services across the customer journey, which our competitors in traditional agencies or consultancies simply don’t have.”

Dan Gardner, along with Mike Treff, CEO of Code and Theory, will lead the Code and Theory Network. YML will continue to be led by CEO and Co-Founder Ashish Toshniwal. And, as part of this network expansion, Lauren Kushner has been promoted to CEO of Kettle.

“I could not be more excited for YML’s next chapter as we join the Code and Theory network. Building on our momentum, this move will bring our clients a new roster of resources, technology partnerships and near-shore global reach with engineering scale in Latin America,” said Toshniwal.

All agencies within the network will continue to operate under their individual brands, consistent with Stagwell’s focus on collaboration between complementary groups versus agency consolidation. Brands within the network will retain their cultures and unique capability sets, while scaling through more integrated work.

About Code and Theory Network

The Code and Theory Network is the digital-first creative and technology group within Stagwell, built to partner with businesses to navigate the complexity of changing consumer behaviors and emerging technologies. With a global footprint and the capabilities to work cross the entire consumer journey, we crave the hardest problems to solve. The network includes the flagship agency Code and Theory as well as Kettle, MediaCurrent, Rhythm, TrueLogic, and YML.

About YML

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By: Tim Hawes on February 3, 2023

Associate Strategy Director for Europe, Tim Hawes breaks down generative AI and gathers insights from teams at Assembly on ChatGPT and its applications.

Over the last two years, advancements in generative AI have been taking the world by storm, just check out some of the headlines:

Beethoven’s unfinished Tenth Symphony completed by artificial intelligence.

Why It’s So Hard to Resist Turning Your Selfies Into Lensa AI Art.

How a deepfake Tom Cruise on TikTok turned into a very real AI company.

ChatGPT passes exams from law and business schools.

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Generative AI utilises machine learning to create new and unbelievably real digital content with minimal human intervention, leaving many questioning the ethical role this tech plays in our everyday lives. In practice, brands and marketers are assessing how these tools will impact their work and the future of their industries.  

We spoke with some of the brilliant minds at Assembly to get their points of view and what they’re excited about when it comes to generative AI.

What can generative AI be used for, other than creating AI art of cats?

Tim Hawes, Associate Strategy Director for Europe: It has a tone of utility already and its rate of development is astounding. It seems like a new AI for “X” is released or posted every day. It can pretty much answer any question you throw at it (ChatGPT, that is). It’s like a chat-based Wikipedia in that regard. I’ve asked it to explain history, maths and random facts or even write some marketing headlines or code snippets. It can write recipes – which is what really kickstarted my renewed interest in it. I watched a video where a chef explains her preferences; type of meal and the bot outputs a full menu and instructions for a full Indian-inspired thanksgiving dinner.

Other than cats, it (DALL-E) can create some genuinely interesting art, some can come out looking a little uncanny valley-esque though, depending on what you ask it to generate. There are AIs for everything,  theresanaiforthat.com is a database of many of them; I wouldn’t be surprised if an AI curated it. Because of the way that the ChatGPT  is trained, it can recount any set of information it has ingested, merging sources together and creating ‘new’ text, depending on how you prompt it. You can even ask it to ‘speak’ in a particular mode or instruct it to take on a particular role.

So as far as “what else CAN a generative AI do?” with enough quality input I’d be asking “what can’t it do?”

Are there limitations with ChatGPT and similar tech?

Pedro Mona, Global Director Martech & Data: Two of the major factors limiting scale right now are server capacity issues and computing power – ChatGPT was down recently because half of LinkedIn were trying to access it at the same time. There are also organisations using ChatGPT to churn out essays and sell them to university students, granted the work was brilliant, however, the machine didn’t seem to understand the concept of referencing. So, plagiarism and duplicate content could certainly be an issue – which brings us back to my point on training models specific to clients and brands. On the topic of coding, it’s certainly got applications in shortening writing time but it’s essentially not much different from stealing code from the slew of libraries out there anyway – that’s what everyone already does.

David Hidasi, Senior Data Scientist: In the role of data science, it can help us to generate and fill holes in data as well as create basic functions and give us shortcuts for coding – which humans can then elaborate on and develop. We’re not there yet as far as relying on it end-to-end, there will always be some requirement for testing and human curation – given the pre-trained nature of the networks.

What does AI mean for marketers and brands?

Kristie Naha-Biswas, Head of Strategy & Planning for Europe: AI is pretty amazing, but frightening at the same time.  The ability to produce content faster and more efficiently than humans may be appealing to brands or procurement as a new cost-efficient evolution in their marketing deployment, but there is one vital human component that this technology still lacks, which is empathy and emotion. Emotion is what makes art, in any form be that a painter or a musician, unique.  Art is a human expression of emotion that cannot be replicated by AI, it is the artists’ personal experience and original thought that elicits an emotional response from their audience – do we love it or hate it. Advertising creative is no different. Emotionally led and real, insight driven ideas are what makes creative distinct so brands can stand out to build that critical mental availability vital to any successful brand formula. I think there is a future role for how we can use AI to drive greater personalisation of a piece of content, or messages from an overarching creative idea, or concept.

Pedro Mona, Global Head of Data and Martech: The way agencies and brands are going to win with generative AI is integrating it into human-assisted workflows – where maybe an analyst could work on one or two things at a time, now maybe its three or five at once! Training and integrating generative AI models into a brand, where it understands the tone – the voice of the brand – will take it much further to “on brand” content than its current public training models. I see big applications for content in this regard.

The most interesting part is testing human versus AI versus human + AI. In my previous experience producing predictive models for media performance, the human-assisted AI campaign won by a landslide – the input quality and the human context for the brand and therefore analysis bore the best results. While I don’t see it replacing search engines entirely (the ability to index up-to-date data isn’t there yet) it has wonderful applications for accessibility – text to speech rendering and explanation of advanced topics can have brilliant utility for the visually impaired, for example. Ultimately, I think it’s going to become the new standard, improve parallel workflows and companies that can utilise it in the context of their own brands. There will always be an element of human intervention in quality control and analysis that I don’t see going away any time soon.

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Originally Released On

PR Newswire

CONTACT:

Sarah Arvizo
Pr@stagwellglobal.com

Originally Released On

PR Newswire

CONTACT:

Sarah Arvizo
Pr@stagwellglobal.com