Sorrell’s S4 Capital bounces back although question marks remain

S4 Capital, owner of Media.Monks among many others, and its india-rubber boss Sir Martin Sorrell may be down but they’re certainly not out.

Sorrell says third quarter like-for-like gross profit (not actual profit) rose 29% to nearly £250m although real profit seems to be somewhere in the distance. S4 shares rallied on Monday although they fell back in early trading today, valuing the company at £1.25bn. Still not bad for five years of work.

Commenting, Sorrell said that the digital tide had not gone into reverse although many big tech companies such as Facebook clearly have. S4 seems able to pile on revenue, its problems with overstaffing and other issues may indicate it’s not able to charge enough. Its headcount fell slightly in the period, to just below 9,000.

As much as anything, the problem for S4 is that while at first it seemed to be riding an unstoppable digital tide it doesn’t look anywhere near as unstoppable any more. Digital accounts for 75% of adspend in some markets so it has to stop somewhere. Some estimates say that digital growth next year will be just 3.6% globally, a dramatic fall from the double digits that have become the norm.

New Twitter boss Elon Musk is hardly helping with many advertisers and big media agencies (IPG’s and Omnicom’s are the latest) running a mile.

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About Stephen Foster

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.

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