PHOENIX – It was only three years ago that advertising agencies stood accused, by the ANA’s K2 Transparency Report followed by a host of others, of operating a system of rebates and kickbacks that worked against brand clients by hiding substandard effectiveness.
Now Sir Martin Sorrell, the man who used to run the world’s largest ad agency holding group, WPP, is reborn, as executive chairman of his S4 Capital Group, an investment-driven operating company that already acquired creative house MediaMonks for $350m to offer content and which in December merged it with MightyHive, a company with both programmatic and creative services in a $150m deal.
Asked if further investments are on the horizon, Sorrell tells Beet.TV, in this video interview: “We’ll make further acquisitions.”
But he’s not getting ahead of himself. “I think we have to demonstrate that the concept, or the idea, works,” he says.
Still, S4 and MediaMonks have already been taking contracts. “We’ve won some very significant global and multinational business,” Sorrell says. “Procter & Gamble, Braun has been talked about publicly. There are three other major assignments that we’ve received in the last month of similar nature to P&G and Braun – digital projects around content and programmatic.
“And what we’re seeing is, when we start to develop a content approach or a programmatic approach, we can combine the two. Not effortlessly, but clients want to explore how they can integrate the two into one.”
Sorrell’s S4 is already well capitalised for further deals. Having only been formed in summer 2018, after Sorrell’s exit from WPP, the company has a market cap of roughly £470 million (around $605 million) at time of writing.
That exit happened controversially for corporate reasons, but also seemed like the crescendo of a couple of years in which ad clients became frustrated with historic pricing and operating models of large ad agencies, some of whose many sub-agencies had become labyrinthine and unwieldy.
If Sorrell sees S4’s efforts as a response to that, he isn’t saying so overtly. But, in the new group’s companies, he says he will offer “no earn-outs”, ” a single brand” “with transparency in the full sense of the word”. No sprawl here, it seems.
“In a funny way, we’re reuniting creative and media,” he tells Beet.TV, acknowledging that brands want to “take back control”.
“We will want to see the holding company model survive and succeed. But the pressure is intense. That pressure’s likely to intensify, and give more opportunity to the disruptors in the business.”
Is S4 one of the disruptors which will challenge the likes of WPP?
“It doesn’t have the scale of what I’m used to,” Sorrell says. “But maybe we can remedy that in time.”