The ad industry is buzzing about Martin Sorrell’s next acquisition target after the former WPP chief executive announced that his new company, S4 Capital, has agreed to buy Dutch content business MediaMonks.
In an interview Monday with Campaign, Sorrell said he believes S4 Capital’s focus on content, data and technology and a more agile, flexible approach "is really in the sweet spot" of what marketers want today.
So, what’s Sorrell’s next move? Campaign U.S. asked industry insiders - several whom requested anonymity - to share what agencies and firms they think are right for Sorrell’s new S4 endeavor.
Greg Paull, Principal, R3: "I would expect he will look at more upstream consulting firms similar to the WPP Vemeer acquisition -- potentially firms like Prophet or Frog or others in that space - CMOs need big thinking to build long term brands. I also think he’ll be looking at ecommerce agencies much like his 2017 Atlanta acquisition. Every one of the top 100 CMOs is losing sleep over ecommerce."
Nancy Hill, CEO and Founder, The Agency Sherpa: "If I were Martin, I'd be looking at the agencies that are a client's secret weapon. The ‘go-to’ agencies when a client has a problem and doesn't want an off the shelf solution. They may not be the most well known agencies, but they are doing some of the work that is getting attention for all the right reasons. Areas of particular interest: health/wellness, experiential, media. That would bring up some suspects in each of those verticals. US- based: John X Hannes, Collins, Giant Spoon (full disclosure, they are a client). International: Taxi (brings a few agencies as a mini-network) or Gut (Anselmo has a track record)."
Lynn Branigan, President and CEO, She Runs It: "The She Runs It community - a collection of women in advertising at every level - has been intrigued by this topic and sees his next move as a real opportunity. Will he return as a new leader and create something entirely modern? Like a marketing company that makes gender equality a core principle? This could be his moment to start anew and we sincerely hope he builds it on a foundation of inclusion and diversity. Today’s CMO is prioritizing these things, will he?"
Gary Stolkin, Global CEO, The Talent Business: "Sir Martin’s next acquisition will be a data insight business. It’s the obvious capability to super-charge MediaMonks’ success even further. Why? Because a strategic, data-driven application of MediaMonks’ creative and delivery agility would be a compelling platform for S4 Capital."
Senior marketing consultant: "I think it’s going to be a data/analytics/mar tech option. Would have to be someone independent. Not that many of those around. He might also be interested in giving himself a nice starters portfolio. Like MDC? That’s got some tech and programmatic as well as media and creative."
Agency CEO: "He won’t be looking at US-based as the next deal. His intrigue for India and the Asia-Pacific region has been documented. I’d expect a digital or data-based Agency out of that area. Shooting the moon a bit, an off-the-wall idea in the US is to carve out an entity of MDC. He has a great relationship with Goldman Sachs who is a significant shareholder in MDC, which has underperformed this year. Martin will be competing more with David Jones’ company in the future than WPP. Will be interesting to see his former holding company public threaten action against him after they already lost to him out of the gate."
Communications executive: "He may be looking for an agency five to 10 years, with 20 percent revenue growth at a minimum. This may seem like a low number, but it's really hard to sustain for 10 years and he needs shops on his roster that can sustain growth so S4's profits continue to rise on their own. Very senior leadership at agencies that have been around the block, bonus points for those that made it through the downturn or at least existed during it. People who know how to weather the good and the bad. Differentiation through technology. Either they own their IP (best case) or are really, really good at using someone else's IP - signaling that whenever new tech comes out the agency will be nimble enough to adapt to it to stay ahead. Also, companies with a track record of investing back into the business - not lining their pockets and have a good public reputation and were in consideration by WPP. Anything with the word ‘consultancy’ in the pitch will get a look - shiny object syndrome, but a good sales pitch. And those with a proven ability to sell shit using a combination of creative, data and media and have clean books.
Industry strategy consultant: "An S4 acquisition strategy might look like this: Brand consultancies who can act as ‘relationship leaders,’ defining new brand growth strategies, and acting as the ‘front end’ for the specialized media companies, digital production companies and others in his portfolio; Specialized media companies who have very strong (consultative) analytical capabilities and who are paid handsomely because their services are valued -- much like the consulting firms; Creative ‘brokers’ who handle freelance creatives rather than employ them in-house -- companies who act like the ‘Uber’ of creatives and directors (they exist); Digital production companies who have a strong local presence and attractive pricing structures, and who can benefit by becoming global through add-on acquisitions.
It's just a guess, but I don't think he'll try to recreate what he created at WPP. Instead, he'll put together acquisitions that fit together like pieces of a puzzle, generating price premiums rather than low costs as their way of generating attractive profits."