It’s now been over three years since Sir Martin Sorrell, ex-CEO of WPP, began building S4 Capital through its first acquisition, MediaMonks. Sorrell said his new company would compete with both the traditional advertising holding companies, and the consultancies which were increasingly encroaching on their space.
Judging by value alone, those first three years have been a success. Driven by a mix of acquisitions and organic growth, S4 has grown to be valued at over £3.5 billion – over a quarter of the size of WPP.
But from the off, Sorrell has pitched S4 as a different take on the agency model, aiming to be “faster, better, cheaper” than the long-standing holding groups. Indeed, understanding exactly how S4 is different requires training in “Sorrellspeak” (from whoppers, to peanuts, to the holy trinity).
One clear difference is that it solely works with digital media. Another is its focus on having a ‘unitary structure’ where agencies are siloed and operating separately from each other – though it’s worth noting the big holding companies have been pivoting towards this sort of model too.
Timeline of a shopping spree
But to fully understand what S4 Capital is, you have to look at where it’s spent its money.
Sorrell has always been vocal about the need to acquire companies in order to grow S4’s capabilities and reach. And the holding group’s shopping spree has been impressive, acquiring no less than 24 businesses since launching in 2018.
A look at this shopping list shows how S4’s capabilities and market presence have rapidly built over time.
S4’s strategy is best represented by its very first two purchases, MediaMonks and MightyHive.
MediaMonks, bought in July 2018, is a digital production company. The Dutch business’ work historically has included websites, video content, games, and other interactive content. The company had made a name for itself, also attracting interest from WPP in the bidding process, and was ripe for expansion into new markets.
The second acquisition, MightyHive in December 2018, represented the other pillar of S4’s business. MightyHive describes itself as a “data and digital media consultancy”. In a 2018 profile of the company by Digiday, published before the S4 acquisition, CEO Pete Kim said that MightyHive essentially acted as a coach to train clients in programmatic buying across all media channels.
The MightyHive announcement laid out the strategy. Through MediaMonks, S4 would handle digital content creations, bolstered by data insights from MightyHive. And then MightHive would handle programmatic buying for clients.
Subsequent acquisitions have then been folded into one of these two companies (until both were combined under the banner of Media.Monks earlier this year), adding new capabilities, clients, and markets:
April 2019: Caramel Pictures – a Dutch film studio specialising in foods and beverages (MediaMonks)
April 2019: ProgMedia – A Brazilian programmatic consultancy (MightyHive)
June 2019: Biztech – An Australian marketing transformation and customer experience business specialising in in Adobe’s marketing tools (MediaMonks)
August 2019: IMA – A Dutch influencer marketing company (MediaMonks)
October 2019: Firewood – A US digital advertising agency handling creative, strategy and planning, and performance media (MediaMonks)
October 2019: Conversion Works – A UK data analytics and targeting business (MightyHive)
October 2019: Datalicious Korea – The Korean branch of Datalicious, an Asia-Pacific social measurement specialist partnered with Google Analytics (MightyHive)
November 2019: WhiteBalance – An Indian content creation and production company (MediaMonks)
January 2020: Circus Marketing – A Mexican multicultural digital content agency (MediaMonks)
May 2020: Digodat – A Latin American data and analytics consultancy (MightyHive)
June 2020: Lens10 – An Australian digital strategy and analytics consultancy (MightyHive)
July 2020: Orca Pacific – A US full-service Amazon agency and consultancy (MightyHive)
August 2020: Brightblue – A UK measurement company specialising in econometrics (MightyHive)
January 2021: Decoded – A US fully integrated agency covering creative, media and technology (MightyHive)
January 2021: Metric Theory – A performance marketing specialist which buys media across search, social, and ecommerce (MediaMonks)
January 2021: Tomorrow – A Chinese creative agency, with a focus on creating integrated brand and social campaigns (MediaMonks)
January 2021: Low Earth Orbit – A US communications and public relations firm specialising in digital experiences (MediaMonks)
February 2021: Datalicious – The ex-parent company of Datalicious Korea, which S4 bought in 2019 (MightyHive)
May 2021: Racoon – A Brazilian digital performance agency specialising in paid media, inbound marketing, and data analytics (MightyHive)
July 2021: Destined – An Australian marketing services business specialising in Salesforce (MightyHive)
September 2021: Cashmere – A US creative agency, specialising in culturally-relevant content (MediaMonks)
September 2021: Zemoga – A US tech services group which handles product design, engineering, and delivery (Media.Monks)
November 2021: Miyagi – An Italian content marketing agency (Media.Monks)
Missing puzzle pieces?
These are the ingredients of S4 Capital. What does all of this make?
Sorrell has spoken of competing with both traditional holding groups and consultancies – and the latter does shine through.
MightyHive, the rock upon which S4’s programmatic capabilities have been built, described itself as a consultancy, and specialised in helping clients get to grips with programmatic trading. And companies it has merged with have taken a similar stance. Several of its acquisitions specialise in one of the major advertising or marketing platforms – be it Google, Amazon, or Salesforce.
The theory is that S4 can therefore guide overall strategy for clients, which is then executed through its two pillars of content creation through MediaMonks, and provision of managed services through MightyHive.
Recently it has begun working on a third pillar to its offering too. Zemoga, bought in September this year, describes itself as a “tech services” company. Sorrell said this would help S4 compete even more directly with the likes of Accenture and Globant, allowing it to offer digital advertising services, but also handle more broad digital transformation projects for clients by helping them move onto new customer-facing technology platforms.
S4 executives have said future mergers will continue to fit broadly into these three pillars – content, media execution, and technology services – without picking out specific areas for expansion. Judging by earnings calls, the company will simply continue to look for companies which can strengthen its capabilities in these areas, as well as strengthen its reach in different markets.
Some say there are still gaps in its portfolio. A senior figure from a consulting business, who preferred not to be named, said that on the content side of things, S4 is strongest in later stages of content creation.
The source split content creation into four stages – conceptualisation, filming and production, assembly, and transcreation (where a piece of content is adapted for different markets and mediums). They said it is the last of these four stages where MediaMonks is strongest – as well as all the pieces which come after such as tagging and digital asset management.
“It appears as though they have a content and media play and can do whatever the client requires,” they said. “The fact is they can’t. They’ve portrayed themselves as a cool, slick creative agency which can help you recreate your brand, but they’re nothing like that – they’re not a creative agency”.
Whether S4 wants to handle the top level conceptualisation aspects of creative advertising is up for debate. The company is clearly doing good business in the less glamorous aspects of creative work – and these all integrate more neatly with MightyHive, which can handle programmatic integration and layer in first-party data.