Sir Martin Sorrell has been particularly vocal during the coronavirus outbreak, predicting tough times for agency land and ramping-up his anti-holding company rhetoric.
Just last week, B&T reported his latest comments that the major holding companies – WPP, Omnicom, Publics, Havas, IPG, DAN – were in, as he put it, “deep doo-doo” and in the industry was heading for a “Darwinian culling” (ie only the fittest agencies would survive the pandemic).
And now new documents leaked to the media suggest Sorrell’s S4 is licking its lips at the opportunity to acquire top agency talent, agencies and their clients who’ve found themselves in trouble due to the massive CV-19-inspired downturn.
The memos, acquired by Business Insider, reveal S4 has drawn up a list of “distressed” agencies and production companies around the globe that have applied for government-funded relief programs.
The 75-year-old Sorrell has repeatedly lambasted the holding companies for their reliance on TV advertising dollars and over-paying ECDs when they should be promoting digital experts.
Sorrell has said he has no interest in “slow growth agencies”, although he’s also said that the TV-driven GroupM is about the only part of the WPP business he’d be interested in, valuing it at $US15 billion annually.
In a memo to S4 staff and published on Business Insider, Sorrell reportedly said, “Clients want us to share ideas. Most of our competitors are hiding and clients don’t like it.”
He added: “We’ve picked up stresses and strains already at B-Reel, R/GA, M&C Saatchi and Deutsch, but we’re really interested in hearing about potentially distressed companies in our sector,” Sorrell wrote, before adding he wanted S4 staff to look out for “competitive intelligence” around the world.
“There will be opportunities to pick up good people and clients and, of course, for consolidation,” the memo said.
Last week, S4 posted its first-quarter numbers that proved impressive given the business environment. You can read B&T’s reporting on that here.
The London-headquartered S4 grew its revenue by 17 per cent like-for-like in the first quarter of the year, the company said.
Reported revenue was £71 million ($A135 million) in the first three months of 2020, with gross profit up 19 per cent like-for-like to £61 million ($A166 million).
Sorrell has said S4’s predilection for a client base consisting of big tech companies has given it some immunity to the global pandemic downturn.
He also noted clients that planned to spend during the Olympics had moved spends into the digital space.
However, it wasn’t all good news. Sorrell noting that some clients faced “extreme financial pressure” and had asked for more time to pay their agency fees, later stating that S4 leadership is “concerned” about “possible non-payment”.
It also appears that S4 will use the downturn to ramp up its data analytics services to clients and offer services to help clients move events and conferences online. Or, as Sorrell put it: “There’s gold in those hills.”