FILE PHOTO: Sir Martin Sorrell attends a conference at the Cannes Lions International Festival of Creativity, in Cannes, France, June 22, 2018. REUTERS/Eric Gaillard
March 16, 2021
By Kate Holton and Paul Sandle
LONDON (Reuters) – Martin Sorrell, the world’s most famous advertising executive, expects global economies to roar back to life as they recover from the pandemic over the next two years, but is worried about what comes after that.
“The drum beat in our daily meetings is getting louder and louder and louder, things are flying,” he told Reuters, adding that tech and healthcare were leading the charge.
The 76-year-old, who has spent almost half a century making acquisitions – first at Saatchi & Saatchi and then as he built WPP, is eyeing more deals for his S4 Capital, including a possible transformational one further down the line.
The almost three-year-old company counts Google, Facebook and another undisclosed global tech firm as clients and is purely focused on digital advertising, which has continued to grow through the pandemic and now accounts for more than half of ad spend.
“I think we’re a royalty on the growth of digital transformation,” Sorrell said, on the potential for the firm to be at the heart of the shift. “We will be at the north end of the market’s estimates of 15 to 20% like-for-like growth during COVID,” he said, of S4’s 2020 gross profit performance.
He said he was “extremely bullish” about 2021 and 2022, but longer term is worried about soaring government debt.
“The consumer has been saving like crazy, and I think companies have been saving like crazy and I think they’re going to open the spigots in Q2,” he said.
“It’ll be great for ’21 and ’22, but then how do we figure out who’s going to pay for this?”
Sorrell, who built WPP into the world’s largest ad company by acquiring the likes of Y&R, JWT and Ogilvy, launched S4 shortly after he left the British group in 2018 over a complaint about personal misconduct. He had always denied any wrongdoing.
It is already worth $3.5 billion after its shares rose over 200% in the last year, when many ad groups faltered.
Able to analyse data quickly to place targeted ads online, S4 succeeds because it is not held back by legacy agencies designed for an era of TV and traditional campaigns, Sorrell said.
The company he wants to rival is Accenture, the consultancy using its expertise in data to muscle into marketing.
Sorrell suggested the ideal destination for S4 would be to find a bigger company it could inject itself into and run. The most suitable, he says, would be New York-listed Globant, a digital transformation group that WPP held a stake in.
“Globant comes at the digital transformation process from the IT and tech end and we come at it from the marketing end,” he said. “If you put S4 together with Globant you have the perfect competitor, in my view, to Accenture.”
Globant did not immediately respond to an emailed request for comment outside of normal U.S. business hours.
In the meantime, Sorrell expects to announce another smaller acquisition on the content side soon.
While his appetite for deals is undiminished, the pandemic had forced Sorrell to re-examine the value of constant globe-trotting. He said he won’t be travelling as frequently in future, but the trips will be longer.
“Businesses have been better run during COVID because we haven’t been able to travel,” he said. “Management has been given more room to manoeuvre.
“The stranglehold of the centre has not been as great.”
(Editing by Louise Heavens and Mark Potter)