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Russell Goldsmith
Russell Goldsmith 27 May 2020

Podcast - Interview with Sir Martin Sorrell, Chairman of S4Capital

The second in a series of episodes that the csuite podcast is recording in partnership with the European PR agency Tyto and their own 'Without Borders' podcast, interviewing leaders of European Unicorns or those companies close to reaching Unicorn status. Our second guest of the series was Sir Martin Sorrell, Chairman of S4 Capital.

The second in a series of interviews with Unicorn leaders or those close to reaching unicorn status, produced in partnership with the European PR Agency, Tyto, and their own Without Borders Podcast. The second guest was S4 Capital’s Executive Chairman, Sir Martin Sorrell. This interview was recorded just shortly before lockdown. 

Podcast host, Russell Goldsmith (left) and Tyto's Brendon Craigie (left), with Sir Martin Sorrell (middle) in his London Office

S4 Capital PLC is focused on building a modern digital advertising and marketing platform for global minded clients and in 2018 merged with MediaMonks, its content practice and MightyHive, its programmatic practice and went on to add nine further content programmatic and data companies to the company.  Sir Martin confirmed on the day of recording that the valuation was now $1.3 billion and that they were in fact a Sterling Unicorn too at over £1bn.

He added that they came to the market when they injected S4 Capital into what was a shell company called Derriston Capital plc, with S4Capital, he said that they are running at the rate of about $400 million of revenue and about a $100 million EBITDAR before holding company costs.

But it’s not luck – he said that you make your own luck and that his dad used to say, “You make your own luck through what you do.” 

Sir Martin explained that the company is now in 30 countries and has 2,350 people. The company’s organic growth rate is 45%, which he said was not about deals but like for like growth, and Amsterdam will be up to about 600 or 700 people soon.  

Sir Martin thinks that Amsterdam is good for Brexit and is a good capital city. He thinks that it's one of the capitals of Europe, probably the capital, that's gaining most from Brexit.

The company doesn’t make acquisitions, they make mergers. What they are trying to do is to build a unitary company. People, the entrepreneurs, are totally entitled to capitalise on their hard work and get a little bit more security. But the other half, the consideration, is stock where there are lockups and so he said that they are in it together.

The heart of the business, whether we in Britain like it or not, is still America, with China coming up rapidly, Japan and Germany, important, all these other markets very important. But essentially, America and, he added that whatever people say about President Trump, he's good for business. He reduces tax, he reduces regulation, spends money on infrastructure and so America is going to become disproportionately more important.

Sir Martin said that S4Capital’s nearest direct competition is the French company, Fimalac, which acquired Jellyfish. Beyond that is the holding companies who he said claim they do what S4Capital does, although he says they don't!

A lot of S4Capital and Sir Martin’s communication sees repetition around very simple, clear descriptions such as ‘unitary structure’, ‘faster but cheaper’, ‘digital only’, however he doesn’t know whether they put a lot of thought into it or not. He said that if you think about the Brexit campaign, it was about “take back control” and concentrating on Brexit, these are the best examples of two second campaigns and ads work, very simple messages that resonate in a world which is 24/7.

He added that it is not that creative or big ideas are not important - they are essential, they are central. But it's the way you execute.

He said that MediaMonks have boosted significantly their communications staff across the globe, which he said was partly because MediaMonks has gone from around 625 people when they joined S4Capital to about 1,850 today, so tripled in size by number of people in just over 18 months. He added that is one of the good things, when your top line is growing by 45% and the industry in which you're operating is growing by 20%, you almost don't have the time to spend the money to catch up.

Sir Martin said that whilst MediaMonks and MightyHive had a following before they joined the business, he thinks that if you asked the leaders of those two pillars of the business, the content practice and the programmatic practice, they would say that they have far more brand recognition today than they had before. He said that they have had to launch a brand and he thinks they launched it successfully. He said they have had brand trial but the opportunity for them is to get to move from trial to what he would call conversion at scale. 

Sir Martin doesn’t think the structure at WPP now, with Mark ReedAndrew Scott and John Rogers, who's he said has just moved there from being in the race to be CEO of Sainsbury, means you have three people whose lines of activities overlap, so he doesn’t know quite how they're going to divide it up.  He thinks there are probably two jobs there and three people, and so it’s an interesting situation, but he said time will tell.

Google have made it clear that they're going to eliminate third party cookies over the next two years, and Sir Martin doesn’t quite know how that's going to play out, but that has a lot of serious implications for the industry. He thinks the bigger tech companies are starting to see that they have to exercise responsibility and he feels Google and Facebook don't get much credit for this, which he thinks is wrong. He thinks that Google has hired 10,000 people, Facebook 30,000 plus, which impacts on their margins and then their costs have gone up as a result, and they're trying to monitor much more the editorial content.

Sir Martin doesn’t think surrounding yourself with advisors is necessarily the best thing. He thinks that when you take advice, the advice tends to be around the side of caution.  He said you just have to be responsive and authentic and say what you feel.  He added that it doesn’t mean advisors are not valuable, they are, but it tends to hem you in and make you overcautious. 

Image source: Wikimedia By World Economic Forum - Cropped from File:Martin Sorrell - World Economic Forum Annual Meeting Davos 2010.jpg (licence review at this file), original source Flickr: World Economic Forum Annual Meeting Davos 2010, CC BY-SA 2.0, Link
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