Sir Martin Sorrell has unveiled his next plans for his post-WPP venture, S4 Capital, and industry experts are predicting it spells bad news for traditional creative agencies.
Earlier this week, Sorrell released a 191-page prospectus outlining his plans for S4. In early July, Sorell famously outbid WPP to snare the Dutch production company MediaMonks for a whopping €300m ($A4487 million) and much of S4’s plans revolve around its expansion.
The document described S4’s mission as “to create a new-era, new-media solution embracing data, content and technology in an always-on environment for global, multinational, regional and local clients and for millennial-driven digital brands.”
Sorrell said the venture is already working with brands including Adidas, Corona, Google, Johnson & Johnson, Netflix and Shell.
However, as commentators have noted, the prospectus mentioned no plans to acquire any creative agencies to expand the business, meaning Sorrell will bring content in-house as he plans to work directly with clients and cut traditional creative agencies out of the food chain.
The prospectus noted that targeted acquisitions would include content, data analytics, media planning and digital media buying.
It noted: “The company will maintain a disciplined approach to acquisitions, both as to any acquisition consideration payable and the working capital requirements of any acquired business. However, given its focus on digital opportunities, valuations are likely to be full.”
The prospectus also listed S4’s primary competitors as “consultancy businesses with an emphasis on technological services in the digital marketing arena”.
Many are taking that to believe that Sorrell’s plans are to go head-to-head with the big consultancy players now playing in advertising’s traditional space, the likes of Accenture, PwC and Deloitte.
“In particular the integration of creative services and technology and the ability to deliver globally are viewed as being key to success,” the prospectus said.
“Moreover, a number of organisations that have traditionally been regarded as consultancy businesses with an emphasis on technological services in the digital marketing arena have begun to acquire creative operations and are therefore moving more directly to compete with combined operators such as MediaMonks,” it noted.
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