Sorrell’s S4Capital says growth still on the cards even as Covid-19 hits – targets Germany

Even Sir Martin Sorrell’s S4Capital isn’t immune to the depredations of Covid-19: reporting like-for-like revenues and gross profit in March this year up 6% compared to 33% in January and 21% in March. So even go-go S4 is slowing down amid the crisis.

But for the first quarter of 2020 S4 still delivered a 73% rise in reported revenues to £71m and gross profit up 85% to £60.7m. Gross profit excludes fixed costs.

Executive chairman Sorrell (above) says S4 remains confident it will deliver sector leading double digit like-for-like revenue and gross profit growth and a “reasonably strong operating EBITDA margin in 2020.” S4 still has, he says, a “fighting chance to achieve the group’s three-year plan of doubling organically.”

Content business MediaMonks, contributed 79% of total gross profit, with programmatic business Mighty Hive 21%. S4, which now employs about 2500 people across the world seems to have performed strongly in all its main areas. S4, like its peers, is cutting some salaries, reducing expenses and taking previous bonuses in shares.

It’s still on the look-out to expand though, targeting Germany where it says it has a number of new business opportunities.

New business came from a multitude of sources including PayPal, Quibi, Twitch, Domino’s, CEMEX, Fuji Television, Dole Food Company and AkzoNobel plus roster assignments from two unnamed mutlinationals, one FMCG, one pharmaceutical.

Sorrell says: “Our clients have continued to increase their investment in digital content, programmatic and data and analytics, but at varying rates depending on the individual categories. Our tech clients, which account for approximately half of our revenue, have by and large continued to invest, particularly in purpose campaigns, although there has been some genuine postponement of spending from the first or second quarters into the second half.

“The other half, dominated by FMCG or CPG companies, pharma and retail is more mixed, with some cutting or reducing spend and, of course, investment in purpose campaigns too. The travel and hospitality verticals have virtually all stalled. Mostly all, however, are switching investment from traditional or analogue media to digital, as consumers increasingly shop, educate and communicate online, with online being cheaper, more flexible and more effective.”

Nobody really knows what the rest of the year will bring but this is a pretty bold statement of intent from Sorrell and S4. Certainly its focus on digital and tech clients (some of whom seem to be immune to whatever the world throws at them) seems to be paying off.

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About Stephen Foster

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Stephen is a former editor of Marketing Week and London Evening Standard advertising columnist. He wrote City Republic for Brand Republic and is a partner in communications consultancy The Editorial Partnership.