By - CTL
July 24, 2018

By Marcus Honesta.

In an interview with English advertising magazine Campaign, Sir Martin Sorrell insisted his new company, S4 Capital, is listening to clients because they are “questioning” how agencies are delivering work.

The former WPP chief executive has stunned the ad industry by returning to the fray and agreeing to buy Dutch content business MediaMonks just three months after leaving his old job.

Sorrell said he has been listening to marketers such as Keith Weed at Unilever, Marc Pritchard at Procter & Gamble and Andrew Clarke at Mars and 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 they’re talking about”.

Here is an edited transcript:

Campaign: There has been talk that S4 Capital is paying €300m for MediaMonks but there are no details on price…

Martin Sorrell: “The full details will be given in due course when the company is relisted [on the London stock market].

“The structure is basically the private equity company owned half the company and they’ve been taken out for cash.

“The management owned the other half – and they are taking half shares, half cash.”

Reading the statement, there looks to be a number of differences with how you did deals with WPP.

“Does that surprise you?”

No. But the structure is different – no earn-out, the group will be run on a “single P&L” basis, MediaMonks already “co-locates resource” at both agency and client, S4 Capital will be “agile” and “flexible”. This is clearly positioned as a different company and maybe reflects the fact that some people said they were directions that WPP needed to move in.

“WPP is not a monolith. There is a number of different models inside WPP so I think it’s a bit unfair to say there was nothing like that in WPP. But, having said that, this is very different and built for a different age.”

S4 Capital has triumphed in a bidding war and some people say it’s got to be “a full price”, even that you could have over-paid, given that MediaMonks has €110m of annual revenue – so a valuation nearly three times annual revenues.

“It depends on what you compare it [to]. I guess – I don’t know – the competition [rival bidders] had an earn-out structure which would probably end up being even more expensive.

“The owners of the business didn’t want an earn-out. They didn’t want to be part of a larger entity. They wanted an entrepreneurial opportunity and they wanted to build on what is a very successful business.

“The game-plan is laid out very clearly: Firstly, build the platform that MediaMonks has even more broadly. There are some countries that we need to be in – India and Germany and probably Japan, although that would be more difficult.

“Then, we need to develop our operations in media data and analytics. And the third area is digital media-buying.”

How easy is it to develop MediaMonks organically? Or is the intention to buy more businesses?

“They [already] have a good reputation. Clearly, the biggest opportunity is to develop the business organically.

“The initial focus will be developing existing clients and additional clients. Secondly, to compliment that with what’s necessary [in terms of acquisitions].

“This is a structure that listens or attempts to listen to what clients are saying – whether you listen to a Keith Weed [at Unilever] or a Marc Pritchard [at Procter & Gamble] or an Andrew Clarke [at Mars].

“If you look at all three of them, they have been quoted recently as saying what they want or need. This [S4 Capital’s focus on content, data and technology and a more agile, flexible approach] is really in the sweet spot of what they’re talking about.”

WPP has claimed that your decision to pursue MediaMonks is in breach of the terms of your old employment contract and has warned that its plan to withhold up to £20m in bonus payments is “not an idle threat”…

“You’ve seen the quotes [from the Sorrell camp] about it being a weak and feeble attempt to destabilise the bid.”

How different an industry does marketing services need to become as clients’ needs change?

“This is a $1tn (£754bn) industry – not $1tn to $2tn as Ken [Auletta] said [in his recent book]. $500bn is traditional and $500bn is new areas [of digital marketing].

“If you take Google and Facebook together, they were $140bn last year and they claim to be 75% of the market [in digital advertising].

“So if you say the [digital advertising] market as a whole is probably $200bn of that [bigger, digital marketing sector of] $500bn, that’s what we’re focused on.

“Actually, listening to what people say reminds me of what it was like when we started WPP in 1985. We started in what we then called below-the-line areas of activity – the unfashionable areas – as opposed to above-the-line. We consolidated those areas and when you look at the new $500bn [market for digital marketing], it’s fragmented and ripe for consolidation, I think, as that part of the business grows and matures.

“That’s where the growth is and that’s where the consolidation opportunities will be in the longer term.”

You must be excited to have got started again.

“You can celebrate for a nano-second. The deal is the beginning. I suppose it is the end of the beginning. Now all the hard work starts.

“You move on to try to build the business. It’s a very good base. It’s a much different base to what we had at Wire & Plastic Products.

“There was a design and printing company at Kidlington Airport called CAP whose iconic emblem was a frog and when you walked into the reception area, there were a lot of frogs about.

“It’s a different time, a very different approach and a very different structure – one that is built for the future, not for the present and certainly not for the past.”

What’s your message for the marketing services industry as you return to the business?

“What we’re trying to do at the combined S4 Capital and MediaMonks is what we believe to be the future, what we believe clients want.

“We’re listening carefully to what they’re saying and trying to construct a company of scale that meets those needs.

“And we’re coming at it with a purely digital point of view. We’re not coming at it from a traditional point of view.

“We’re trying to tailor something and develop something that’s new and fresh and exciting – not just to clients but to people in the industry.

“The rate at which MediaMonks receives inquiries from people for jobs is incredible. The talent certainly finds it an attractive destination.

“The question is: how can we harness all that energy, motivation and talent to make sure we deliver what clients really want? Because clearly clients are questioning how things are delivered and how work is delivered.

“They’re not questioning the creative product or the quality of the work – they’re questioning the way that quality creative product is delivered.

“The message is: What we’re trying to do is to build the future platform or model – however you want to describe it.”


Martin Sorrell won the battle to acquire Dutch digital production company MediaMonks. But WPP, the holding company he formally helmed, reiterated on Tuesday that he may lose out on a multi-million dollar payout.

The acquisition by Sorrell’s S4 Capital was confirmed early Tuesday morning in an announcement to the London Stock Exchange. Shareholders of MediaMonks, which has revenues of $129 million, will receive cash and shares in S4 Capital. S4 describes the deal as a merger and says its objective is to “provide clients with digital services, which are agile, efficient, and of premium creative quality.”

“WPP’s lawyers wrote to Sir Martin’s lawyers last week pointing out the breach of his confidentiality undertakings in his approach to Mediamonks after his resignation from WPP,” a WPP spokesman said Tuesday. “Despite subsequent protestations from Sir Martin’s lawyers, we are well aware of the facts and he has jeopardised his LTIP entitlement.”

“LTIP” refers to a long-term incentive plan entitlement for Sorrell, as outlined in a contract from 2008.

Asked whether it would still pay Sorrell the share awards it says he is risking, WPP declined to comment.

As for Sorrell, “Sir Martin strenuously denies the allegation and is confident that the facts will speak for themselves,” said a spokesman.

“The WPP legal position has no merit,” the spokesman added. “We had taken legal advice before moving forward. The legal letters were just a feeble and weak attempt to disrupt our bid—and failed.”

During WPP’s annual general meeting in June, one shareholder pointed out that without further information shareholders would not be able to assess whether a termination package for Sorrell was appropriate. Another asked why Sorrell’s intention to start his own advertising company didn’t constitute “gross misconduct” in and of itself.

At that meeting, WPP released proxy vote results that indicated about 27% opposed the company’s compensation report, not including abstentions. That compensation report includes the long-term incentive plan entitlement.

The long-term incentive plan outlines that Sorrell is entitle to share awards  worth up to approximately $23 million (£20 million) in future payments.

WPP leaders at the June meeting cited Sorrell’s claim that he didn’t see himself as competition. In public appearances and interviews, Sorrell has compared S4 Capital to a “peanut” in comparison to the holding company.

As for his venture competing with his former company, Sorrell said onstage at the Cannes Lions International Festival of Creativity, “I have to admit that some people have peanut allergies.”

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