Asia Pacific results for S4 Capital sees tremendous growth

S4 Capital has had what executive chairman Martin Sorrell (pictured) described as an "outstandingly successful" 2020, as billings for the year increased by 19.6% like-for-like to approximately US$894.15 million, according to its unaudited 2020 preliminary results. Its pro-forma billings jumped 22.3% to US$1.05 billion. Revenue for last year increased 15.2% like-for-like to about US$468.97 million.

Having established brand awareness and secured brand trial in the back end of 2018 and in 2019, Sorrell said it set about converting client relationships at scale and now have five "Whoppers" secure or in sight. "Whoppers" are clients with more than US$20 million revenue per year and its ultimate objective is to have 20 "Whoppers", also known as its 20 squared objective.

Asia Pacific's pro-forma gross margin increased by 44% to about US$45.42 million compared to 2019. The Americas saw a 25% increase in pro-forma gross margin to about US$370.19 million. Meanwhile, EMEA had an 11% growth in pro-forma gross margin to approximately US$89.25 million. S4 Capital's content practice witnessed a 26% growth in pro-forma gross margin to about US$362.21 million, while programmatic jumped 18% to About US$142.72 million.

Despite COVID-19 taking the world by surprise last year, S4 Capital was still able to grow its business in 2020 with mergers between MediaMonks and Circus Marketing last year, as well as MightyHive and Digodat, Lens 10, Orca Pacific, and BrightBlue Consulting.

Last September, BMW/MINI announced a new agency partner network in Europe, called THE MARCOM ENGINE, which included MediaMonks. That same day, MediaMonks also merged with Paris-based digital creative agency Dare.Win. Shortly after, MediaMonks bagged the Mondēlez International last November to manage its tech infrastructure and websites globally, plus content production for North America, Latin America, Asia, Middle-East and Africa.

The expansion and new business momentum continued into 2021 and S4 Capital said it had a good start to the year. Like-for-like January gross profit is well ahead of budget while like-for-like budgeted gross profit growth for 2021 is 25%.

Just today, S4 Capital entered into a conditional agreement to merge MediaMonks with Toronto-based design and experience agency Jam3. Through the merger, MediaMonks will deepen its creative capabilities and expand its presence in Los Angeles, the Netherlands, Canada and Latin America - with an all-new expansion in Uruguay. Founded in 2004, Jam3 is based in Toronto, Los Angeles, Amsterdam, and Montevideo led by Pablo Vio, Michael Dobell, Mark McQuillan, Adrian Belina, Jordan Cuddy, Miguel Moraleda. It has more than 150 employees globally and works with clients such including Facebook, Sonos, Adidas, eBay, Levi’s and CrowdStrike.

In January, MediaMonks merged with New York-based Decoded Advertising, while MightyHive merged with Metric Theory and acquired the assets of Datalicious Australia in January and February respectively. The group also added functional talent teams in fashion and luxury, social media and government communications from competitors, the first during 2020 and the last two in 2021.

At the same time, it also appointed Miles Young to non-executive director of its board. This appointment highlights S4 Capital's focus on developing its advertising and marketing services know how and geographical expansion, particularly in Asia Pacific. Young was previously with Ogilvy for 35 years until 2016, and Sorrell said Young helped Ogily expand its footprint "aggressively" in growth areas such as digital content and media. S4 Capital now has about 4,400 individuals in 31 countries, trending towards double where S4 capital was this time last time.

"The year 2021 has started strongly, well in line with our latest three year plan to double organically in three y ears and we are focused on three objectives for the year to bed down our two new 'Whoppers' and develop and identify five more; to roll out our unitary branding; and to continue to broaden and deepen our digital client offering by combination," Sorell explained.

According to S4 Capital in its financial statement, the pace of on-boarding both the new BMW/MINI and Mondēlez “Whoppers” has intensified during the first and second quarters of 2021. In addition to these two BMW/MINI and Mondēlez, there were also major new remits from clients such as Google, Facebook, Amazon, Netflix, Procter & Gamble, T-Mobile, Bayer & HP and major new assignments from Cisco, Embibe, Harley Davidson, PayPal, LA28, Shopify and Verizon amongst others. S4 Capital explained that this reflects the strong tech orientation of the company’s client base and the growing healthcare and FMCG focus, and that its current pipeline is running at stronger level than last year.

Sorrell said 2021 and 2022 will be "very strong years economically", as the world rebounds from the pandemic and spends and invests the huge pandemic driven fiscal and monetary stimulus. He added that digital marketing expenditure is closely correlated, but not dependent on GDP growth, just as traditional media spending used to be in the last century.

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