S4 Capital, Martin Sorrell's pure-play digital advertising group, posted 40% like-for-like revenue growth in the March quarter, with an optimistic outlook for the full year.
The company grew "strongly" and ahead of market guidance.
Reported revenue was up 70.1% to £206.8 million and gross profit/net revenue 64.6% higher at £171.1 million. Like-for-like and proforma revenues and gross profit/net revenue were up 40.6% and 34.5% respectively.
S4 Capital has maintained its like-for-like gross profit/net revenue growth guidance of 25%.
Sir Martin, the executive chairman, says client demand for digital marketing transformation intensifies as GDP growth slows and organic volume gains lessen and become more difficult.
"Change agents inside companies, who were ignored when times were good are given more oxygen, as the need to increase efficiency becomes critical," he says.
He says GDP growth is a driver of S4 Capital's four addressable markets - global media, marketing services, trade budgets and digital marketing transformation.
However, the digital segments of these markets, as opposed to the analogue, are still forecast to continue to grow significantly.
Digital advertising is forecast to grow 10% to 15% inside the US and outside, while analogue growth will be anaemic.
Advertising as a proportion of US GDP is still forecast to rise from under 1% to about 1.5%, more like where it used to be, purely because of the continued rise of digital advertising ==to a share of 68% in 2025 against 61% this year.
Other addressable markets are projected to grow at significantly higher rates such as cloud platform growth (34%), Marketing Technology software (32%) and Digital Transformation spend (20%).
"We remain optimistic about our prospects for this year, particularly as consumer and corporate balance sheets remain strong, cushioned by the Covid stimulus," says Sir Martin.
"The chickens may well come home to roost in 2023, as interest rates rise further this year to counter the inflation surge.
"But, digital marketing expenditure remains robust, even in a recession, as, for example, our results in 2020 demonstrated, given its secular growth trend."
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