S4 Capital Increases Revenue Forecast for 2021 as Advertising Demand Grows

With advertising demand in overdrive, S4 Capital has seen a growth of almost 90% in reported revenue for the first four months, as the company sets its sights on a better-than-expected revenue growth forecast for 2021, up 5% from its previous estimate of 30%. At the beginning of May, S4 Capital reported like-for-like revenue growth of 35% to $169.3 million in the first quarter, while gross profit rose 33% to $144.4 million. In a new statement outlining the progress of the advertising company launched by chairman Sir Martin Sorrell three years ago, S4 Capital said it saw increased speed in demand following the global impact the pandemic had last summer on the advertising industry. Growth in demand Sorrell said the company expects its figures for May and June will be similar to the growth witnessed in April while it has announced a three-year plan to double organically over the coming two years. Initially S4 had predicted 25% revenue growth in 2021, which it raised to 30% following its Q1 performance. That has been increased again due to the demand experience during Q2, the company said. S4 mergers over the last 12 months have included data digital companies such as Racoon Group, Datalicious, Jam3, Decoded, MetricTheory and Tomorrow. Further deals are expected to be completed in the coming weeks, after the company said it was in the process of raising a term loan of over $350 million. "We have added 12 content companies and 11 data and digital media companies, 12 before last year’s AGM and 11 in the last seven months of 2020 and the first five months of 2021," Sorrell said in the statement. S4 Capital also includes major digital production and data firms such as MediaMonks and MightyHive, respectively. The mantra “Quicker, Faster Cheaper” has also seen clients respond positive including blue-chip names such as BMW and Mondelez among its roster. The company also now counts tech giants such as Google making up over half of its revenues. Sorrell also reiterated the ambition to rebrand the company following the current integration process which would see the entire business operate “under one flag.” Speaking to Adweek, Sorrell cited two factors for the fast growth in demand: the GDP growth in 2021 and 2022, and clients' undergoing digital marketing transformation, an ongoing process that was accelerated by the pandemic. Response to the G7 Tax Agreement Sorrell was also dismissive of the suggestion that the newly agreed tax deal agreed by finance ministers meeting in London as part of the G7 summit would have any impact on the advertising sector. The deal between the U.S., the U.K., France, Germany, Canada, Italy and Japan, as well as the EU, agreed in principle, will see the introduction of a global minimum corporate tax rate of 15%. This is expected to impact tech giants such as Amazon and Google but raise billions of dollars put towards the repayment of the debts incurred due to the Covid-19 response. “It’s not anything to get excited about,” said Sorrell of the deal, which has been a long time in the making. He added that the agreement would likely replace the idea of digital taxes being introduced into countries, and he expected Ireland, which is home to a number of tech companies enjoying a lower tax threshold as a result, to be hardest hit. He also expressed his delight at the reunion with Miles Young, the former chairman and CEO of Ogilvy who joined the S4 board last year. That board, Sorrell said, is now made up of four male and four female non-executives. “It is only natural the people we have inside the business are different. We are purely digital, we are focused on our digital trinity model, so the skills we need are around data, production, creative ideation and distribution," Sorrell had previously told Adweek while talking about the hiring expectations within the group. Sorrell’s S4 Capital Is Not Seeking Traditional Holding Company Talent