Sorrell outlines S4's strategy ahead of stock market float

By AdNews | 14 September 2018
 
WPP chief executive Sir Martin Sorrell.

Sir Martin Sorrell has issued a company prospectus for his newly-formed S4 Capital stating that he intends to bypass agencies and compete head-on with global consulting groups.

S4 Capital released the prospectus this week mapping out the group’s strategy, ahead of it floating on the London Stock Exchange on September 27. 

Sorrell, who previously founded and ran WPP for more than 30 years, famously dismissed the threat of consulting groups like Accenture Interactive and professional services firms like PwC, Deloitte and KPMG to traditional media and creative agencies.

S4’s 191-page prospectus document noted several risks, including a “drive to disintermediate advertising has increased the strength of the relationship between brands and content producers”, as well as traditional advertising and media agencies and the emergence of consulting groups competing in this space.

“In particular the integration of creative services and technology and the ability to deliver globally are viewed as being key to success,” the prospectus said.

“Moreover, a number of organisations that have traditionally been regarded as consultancy businesses with an emphasis on technological services in the digital marketing arena have begun to acquire creative operations and are therefore moving more directly to compete with combined operators such as MediaMonks. Such organisations include IBM, Accenture, Deloitte and PwC.”

The prospectus document notes the strategy of the S4 Group is to provide a “global, multi-national, regional and local clients and millennial driven influencer brands with digital marketing services, which are agile, efficient, and of premium creative quality, in other words faster, better and cheaper”.

It will do this initially by building its geographic and functional footprint as a digital content platform with “data analytics, digital media planning and digital media buying”.

The prospectus says this means that S4 will look for strategic acquisitions in digital media to build on MediaMonks, a digital content and production company, which Sorrell acquired for €288 million in July.

MediaMonks operates in three areas: creative content and innovation, production across programmatic advertising and “precision marketing” as well as platforms and e-commerce. Digital agency competitors include R/GA, Sapient Razorfish and DigitasLBi and AKQA.

The prospectus said that MediaMonks is well poised to capitalise on current trends in the industry, including a shift to digital media, which is expected to account for 55% of global advertising spend by 2022.

There will also be consolidation of end-to-end services in digital media, which MediaMonks provides, as well as decoupling of middle men, such as agencies. The prospectus predicts that clients will deal directly with digital media companies like MediaMonks in the future.

The prospectus says that Sorrell will own an 18.6% stake in the business and will have controlling power.

His salary will be £100,000 per annum with a potential annual bonus of £100,000, well below his salary at WPP.

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