Sorrell makes stunning comeback with S4C
Can the 75-year-old really create ANOTHER global ad giant? Don’t bet against him!
It was a warm Saturday night in April 2018 when the news came that Martin Sorrell had resigned from WPP.
to say there was shock at the departure is an understatement.
After all, he had, in 1985, taken a company that made wire baskets and turned it into one of the world’s most powerful advertising groups.
Few at that point would have predicted the ad mogul, then aged 73, would make a stunning comeback.
Indeed, most expected it would be the ignominious end of a long career for the tycoon, who had seen his reputation tarnished due to lurid allegations – which he denied – about his sex life. Another blow for Sorrell was the divorce from his wife Cristiana in February 2020, ending their marriage of 12 years.
But instead of feeling sorry himself over the summer months, Sorrell busied himself raising finance for his next project, S4 Capital. Now 75, he told the Mail yesterday he has ‘limitless ambition’ for his new company and that he wants to create a new model for the ad industry in a digital age.
‘I have missionary zeal, I don’t look back with rose tinted glasses at the Don Draper days that have gone,’ he said, referring to the lead character in the TV series Mad Men, about the 1960s ad industry in New York.
In an echo of the voracious appetite for acquisitions with which he built WPP, he started the new year by snapping up two businesses: Decoded Advertising, a creative agency, and Metric theory, a datadriven digital agency, for £146m.
Confounding the sceptics, shares in S4 Capital have soared over the past year, in sharp contrast to the steep fall in market value at his old shop WPP. So can the septuagenarian ad man build a media empire all over again? Don’t bet against it.
Sorrell raised £10m from the City over the four months and put in £40m of his own money as S4 Capital launched in September 2018.
Before the company was even launched officially on the stock market, he had sealed a £266m deal for Dutch ad firm Media Monks. It was vintage Sorrell. Over the course of the next two years S4 Capital has completed 18 acquisitions in total.
He dismisses accusations from some quarters that he is at heart just a merger maniac: ‘I’ve been called a lot worse, a bean counter or accountant, I’m fundamentally interested in the business and the industry,’ he said. the deals have led to rapid growth and revenues of £215m for S4 Capital in 2019.
the figure is expected to rise to £300m this year despite the coronavirus pandemic.
Clients include tech giants Google, Apple, Facebook, Netfl ix and German car maker BMW.
the group has a workforce of 3,800. Its shares have leapt 264pc since its formation and 165pc in the past year, giving it a market value of £2.7bn.
Some analysts are predicting it could be the same size as WPP in the near future. WPP’s market cap is £9.7bn, after its shares fell by a quarter in the past 12 months. Catching up with his old firm would no doubt feel like vindication for Sorrell, who says he is relishing
‘The old agency model is no longer fit for purpose’
the chance to start again. He has no plans to slow down, adding that investors favour S4 Capital because unlike WPP it has no legacy businesses.
‘S4 Capital has been a clean sheet of paper of me, no baggage,’ he said.
the firm is focused online with agencies like Mighty Hive mining i ndividuals’ data in order to tailor ads to their personal interests.
‘the old ad agency model is no longer fit for purpose,’ Sorrell says. ‘the days of preparing a piece of creative work for the client and then waiting two weeks for a response have gone. We’ve got the speed and the agility to respond online in hours and create one-to-one personalisation.’
Last year the global advertising market was worth £550bn and £250bn of that was digital.
By 2024 the digital ad market is expected to make up 70pc of the total. He adds: ‘We’re in the right place at the right time, the traditional ad market is falling by 10pc a year. I agree with Maurice Saatchi [co-founder of ad agencies Saatchi and Saatchi and M&C Saatchi]: you build the best and you become the biggest. We have limitless ambition. We want to create a new model.’
Sorrell, who still has a 2pc stake in WPP, keeps a close eye on the firm that he created.
He has concerns about where his former company is heading as it has failed to clock up any significant revenue growth over the past two years, putting significant pressure on chief executive Mark Read.
He adds that if WPP cannot find a way to grow over the next year then parts of the company could become a target for private equity. Sorrell himself does not rule out picking away at some of the digital assets, adding that he has always liked data mining arm Essence and digital design firm AKQA.
‘WPP is going through a tough time. Shareholders want value to be unlocked.’
the past few years have been a rollercoaster ride for Sorrell – but for S4 Capital investors the journey has only really started.