Business Standard: December 12, 2018
New Delhi: A new-age digital advertising and marketing services company, S4 Capital, which was launched soon after its executive chairman MARTIN SORRELL quit WPP in April, has wrapped up two acquisitions so far. Sorrell, 73, says he is hungry for more and will ensure that integration of acquired units is smooth. On his first trip to India since setting up the company, he speaks to Viveat Susan Pinto on what lies ahead for his venture, especially in India, a market he follows closely. Edited Excerpts:
Will you continue with the rapid pace of acquisitions at S4 Capital or will you take a pause and focus on organic growth?
What we have said is that we want to get to a base of around $300 million in revenue and about $45-50 million in Ebitda (earnings before interest tax depreciation and amortisation) in a short period of time. MediaMonks and MightyHive (the two companies acquired by S4 Capital) together are at about $150 million in revenue and about $30 million in Ebitda. And with growth expected next year, we are getting to where we want to be. I’d also like to focus for a little bit of time on organic growth. Will our model of content, first-party data and media buying and planning be a sufficient differentiator to gain share? That is the key. While there will be acquisitions that we will do, I do want to focus on organic growth as well.
Integration is the buzzword in advertising today. How do you propose to bring together the skill sets of MediaMonks and MightHive?
I don’t want two bureaucratic structures. It is a unitary business. So bringing MediaMonks and MightHive together in all the locations where we operate will be the key. I am clear that we want to have the technologists that MediaHive as a media buying and planning company brings to the table and the creative people that MediaMonks (as a digital content player) has under one roof.
When will you set up your India office?
India is important and has a lot of attraction for a number of reasons — its location, talent, and technology. We may start with an acquisition in India, but it will be small. There are a number of businesses that have started here purely as digital agencies. We may look at them in terms of potential acquisition targets, since we are a digital services company.
You have compared advertising to the Burning Man (festival).
Why is it so?
Burning Man to me represents creative disruption. Every year, they build all these fantastic exhibits at the festival (which is held in the US) and burn it once it is over. The signal is that you have to tear it all down if you want to build something new tomorrow. Advertising is going through something similar. There are massive changes sweeping the industry. The pace at which it is all happening is intense and quick and the industry has to adjust to this change fast.
Brands are increasingly by passing agencies. Will legacy agencies die as a result?
If your reference is to what WPP is doing by merging Y&R and VML or J Walter Thompson and Wunderman, then I'd say that they have got it the wrong way. The decision in my view was a bad one and the execution will not be easy. In India, for instance, Wunderman Thompson (the merged entity) doesn't make sense at all. Legacy agencies have been admired here and that will remain. However, they (legacy agencies) do need to adjust to the changes sweeping the industry.
On Tuesday, WPP unveiled its strategy for the future predicated on creativity and technology.
Your thoughts on this.
I wasn't expecting major surprises from it. Structurally, there is an issue at WPP. There is too much focus on London and New York and the senior management is, too, British. Andrew Scott (WPP's chief operative officer) is fine. He is a key partner and is focusing on the businesses to be disposed (within WPP), which is fine. But WPP has lost a lot of clients. There is work to be done to regain trust and build the company.
Piyush Pandey has been elevated as global creative head at Ogilvy. Won't that bring a new perspective to Ogilvy, a key WPP agency?
Piyush is a good choice. He is a world-renowned figure, who has been honoured at Cannes along with his brother. If anybody could do a global creative job from India, then it is he. WPP’s position in India is huge and it shouldn't be wasted here or elsewhere.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.