S4 Capital is merging its content agency MediaMonks with integrated agency Decoded Advertising, and programmatic agency MightyHive with performance marketing agency Metric Theory. Both Decoded Advertising and Metric Theory are based in the US and will add just under 350 employees to S4 Capital's current headcount of 3,400. Both also have a projected combined gross profit of approximately US$70 million in 2020, representing 50% growth over 2019.
While the exact terms of the deal were not disclosed, both agencies will be paid half in cash and half in shares, with minimum customary lock-ups and no earn-outs, S4 Capital said. Decoded was founded in 2014 and works with clients including T-Mobile, Intuit, Visa, WW International, and SC Johnson. It seeks to bridge the gap between meaningful storytelling, data-led optimisations and commerce. Meanwhile, Metric Theory was founded in 2012 to offer services across search, social media, and commerce media. It has over 130 across San Francisco, Denver, New York, and Orange County and some of its clients include Gofundme, Zenefits, Very Great, Maisonette, and Hill House Home.
S4 Capital executive chairman Martin Sorrell (pictured) said Decoded shares its vision of using data to develop and produce effective creative work and distribute campaigns through digital media. He added that S4 Capital's data and digital media practice is founded on offering clients with transparency and measurable results, two values at the heart of Metric Theory. "Both combinations continue our momentum, broadening our digital, strategic, creative, data & digital media capabilities in line with our objectives for 2021," Sorrell said.
Separately, the UK-based firm has been unaffected by Brexit and with Britain approving a post-Brexit trade deal last year, according to the Financial Times, S4 Capital said much of the uncertainty being removed from the Brexit process will enable it to implement its strategy of creating a new age advertising and marketing services model even faster. S4 Capital added that further moves will be announced shortly.
Last November, the company saw a revenue increase of almost 53% to about US$113.8 million, and a 79% increase in gross profit to about US$99 million for the third quarter of 2020 (Q3 2020). sia Pacific "grew very strongly from a smaller base", with gross profit up almost 83% to US$9.6 million in Q3 2020 and up over 26% like-for-like. Year-to-date gross profit for the region in Q3 2020 grew over 85% to US$24.2 million and like-for-like increased to over 21%.
During that same month, Sorrell also told participants at MARKETING-INTERACTIVE's Digital Marketing Asia 2020 conference that "land and expand" could now be a better approach to building up the business, rather than the age-old ad pitches. Sorrell shared during the fireside chat that S4 Capital prefers to start working with clients on a project-basis and develop the relationship from that entry point.
Calling the pitch situation artificial, he added the “land and expand” strategy is a “second-by-second appraisal of what you're doing and is a far stronger way of building the relationship”. "The pitch situation is artificial. Land and expand is not. It's a second-by-second appraisal of what you're doing and is a far stronger way of building the relationship," he said.
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