It’s an il wind, as they say…
S4 Capital’s Sir Martin Sorrell has been opining on Sky News that the outbreak of what he somewhat contentiously called “the Chinese virus” in a City AM report (wouldn’t be SMS if he didn’t annoy someone) will “accelerate the digital revolution” with so-called transformation running at a much greater pace.
As ever, SMS has a point, telling companies: “If you have historic costs to write off, get it out of the way now and accelerate your digital transformation.”
His newish post-WPP venture is handily placed to profit from this, as he acknowledges, although he also admits that its trading will be impacted over the next two quarters. Most ad and media businesses are not looking for a real upturn until Q4.
With travel curtailed and big events like Cannes and Adweek Europe postponed until October (fingers crossed) Sorrell’s schmoozing of clients will have been curtailed too. What will he and his City backers be thinking about? One could be the fortunes of the ad holding companies, especially people-heavy WPP.
After writing off this lot as outdated legacy businesses Sorrell is hardly likely to bid for all of one but WPP – current valuation £6.9bn, up substantially with the market rebound yesterday – could be open to offers for some of its businesses. Publicis too is under pressure with CEO Arthur Sadoun forced to deny it was planning big lay-offs although he has said that freelance and other third party work will be cut back.