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S4 Capital advertising & marketing assignments

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S4 Capital is the new marketing group launched by Sir Martin Sorrell following his shock resignation from WPP in April 2018. Unburdened by any no-compete restrictions, Sorrell was quick to plunge himself back into the fray. In the space of less than three months, he acquired control of publicly quoted shell company Derriston Capital, rebranded it as S4 Capital and completed his first acquisition: creative production network MediaMonks, reportedly from under the nose of WPP itself. Unlike the model of WPP and other traditional marketing groups, Sorrell is developing his new vehicle as a single integrated entity rather than a collection of separate companies. MediaMonks was not so much acquired by S4 Capital as merged into the umbrella group, with its principals joining the S4 board as directors and shareholders. That company had revenues of approx €110m in 2018 and at the time of acquisition operated through 11 offices in 10 countries. Though it does develop some traditional advertising, it's best-known as a developer of digital content including VR and AR apps, and digital-enhanced experiences. It provides a solid platform for what Sorrell envisions will be a group offering "new era new media solutions embracing data, content and technology". A second major deal was confirmed in Dec 2018: programmatic media platform developer MightyHive, snapped up for $150m. A succession of other smaller purchases have followed, including Dutch production studio Caramel Pictures and Australian marketing technologists BizTech, specialists in Adobe Marketing Cloud. These and several more were initially absorbed into one of the two original purchases to form two distinct divisions of content (centred around MediaMonks) and data & digital media (around MightyHive). A change of strategy was announced in August 2021, with the elimination of the MightyHive brand as well as all subidiary company names. All units will now operates under a revamped Media.Monks banner. The purchases widened the group's footprint considerably. By the end of 2021, S4C employed around 8,400 staff in 33 countries worldwide. Unlike WPP and other traditional groups, S4C still works closely with agencies as a non-exclusive sub-contractor as well as directly with clients. It secured what is arguably its first "agency of record" assignment in 2020 with the capture of BMW Group's European advertising, in partnership with Serviceplan. Several other major account wins - "whoppers" in S4's terminology, with net revenues over $20m a year - have followed. For 2021, S4 Capital reported net revenues of £687m, effectively double the year before, with a net loss of £56.7m. Content creation accounted for around two-thirds of revenue.

Capsule checked 23rd October 2020

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Recent stories from Adbrands Update:

Adbrands Update 21st Jul 2022: S4 Capital's hyperbolic rhetoric and breakneck expansion is finally catching up with it. The group issued a profit warning to investors, advising that while topline growth remains strong, those increases are being overtaken by rising hiring and staff costs, especially in the content practice. This will impact on previously forecast profits. As a result, S4 has frozen recruitment and is implementing what it described as "significant cost reduction measures". The group's shares crashed by almost half on the news, falling to around 120p, from their peak last year of 878p.

Adbrands Update 30th May 2022: Hot on the heels of its long-delayed annual 2021 results, S4 Capital published figures for Q1 2022. Like-for-like net revenues excluding acquisitions and exchange rates jumped by almost 35% to £171m; the reported rise was just under 65%. The vast majority of revenue - almost 72% - was generated in the Americas region, primarily the US. "New business activity remains frenetic," reported Sir Martin Sorrell, "and the pipeline is above the level at this time last year, with considerable current pitch and land and expand opportunities across the board."

Adbrands Update 6th May 2022: S4 Capital finally released its long-delayed results for 2021. As had been promised by Martin Sorrell, there were no nasty surprises, despite auditors' PwC's postponements. The delays were caused by a lack of historical documentation within the legacy MediaMonks business. Sorrell admitted the delay had been "unacceptable and embarrassing" and said new controls were being implemented. The group claimed like-for-like annual growth of 44%. On a reported basis, net revenues doubled to £687m, but net loss rose sharply to £56.7m as a result of adjustments and taxation. The largest share of adjustments were for acquisition payments, followed by amortisation of assets. Excluding those items, operating profits almost doubled to £94.8m.

Marketer Moves 5th May 2022: The two top executives at MediaMonks Germany are leaving. See Marketer Moves (members only).

Adbrands Update 31st Mar 2022: S4 Capital shares plunged by more than a third after its auditors PricewaterhouseCoopers asked for more time to complete their audit of 2021 results. It is the second time in a month that they had asked for more time. S4 said the figures would "remain within the range of market expectations" but investors were spooked, sending down the share price by 35% to 310.5p, its lowest level since June 2020 and less than half the peak of 831p reached in August 2021.

Adbrands Daily Update 10th Nov 2021: S4 Capital reported another blow-out quarter in which like-for-like net revenues soared by 42% to £144.4m. LFL growth against pre-pandemic 2019 was a stunning 65%. The bulk of revenues are generated in the Americas (and primarily the US), which accounted for almost 71% of the total in Q3. The group reported staffing levels of over 6,900 people in 33 countries.

Adbrands Daily Update 14th Sep 2021: Rocketing growth continues at S4 Capital, aided by the bounceback in marketing spends and the group's accelerating acquisition drive. Net revenues for 2Q were around £133m, lifting the half year total to £237m. That figure was almost double 1H 2020's figure, and up 56% on a like-for-like basis excluding acquisitions and exchange rate. Sir Martin Sorrell said that S4's growth was more like that of digital platforms like Google or Facebook than of traditional marketing groups. However, S4 continues to report net losses - £21.6m for the half-year - as a result of acquisition payments and accounting adjustments.

Adbrands Daily Update 8th Sep 2021: In another slight shift in direction, S4 Capital acquired what might be considered one of its first traditional US marketing agencies with a deal for US multicultural shop Cashmere. No terms were disclosed, but Cashmere will become part of the unified global Media.Monks collective. The agency is perhaps best known for its work for Jack In The Box and DoorDash, and was recently appointed as culture AOR by Taco Bell. Virtually all S4's previous purchases in the US and Canada have been in the content creation, digital and data segments.

Adbrands Daily Update 3rd Aug 2021: S4 Capital announced a change of strategy with regard to its subsidiary businesses. Instead of operating two divisions of content (as MediaMonks) and data (as MightyHive), all units will now operate under a single shared banner of Media.Monks. The addition of the full stop allows for some further differentiation between individual teams as Media.Monks, Data.Monks or Tech.Monks. S4 Capital remains as the corporate brand.

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