Sir Martin Sorrell recently sat down to chat with leading digital marketing investor, Florian Heinemann, the founding partner of Project A Ventures, for the Online Marketing Rockstars (OMR) Podcast. OMR is a German digital media and marketing news platform that organizes the annual OMR Festival in Hamburg.
They talked about how Sorrell plans to scale S4 Capital, what advertisers can do in a world of walled gardens, and his impressions of the digital marketing world at present.
Florian began by asking about the unusual move of taking S4 Capital public so quickly after forming the company, “If you look at companies like Uber or Airbnb, etc., they all stayed private as long as they can. And you chose a completely opposite kind of approach.”
Sir Martin responded that his extensive experience of dealing with public markets while at WPP meant that he was comfortable in that realm, and he talked about the speed and control such a funding source enables, compared to private funds: “I think you also access the public markets, listed markets, gives you an ability to move faster...Doing the private equity route or doing the venture capital route, I think it puts management under pressure. I’ve seen people in venture capital and private equity give away too much of the equity and give away control.”
Battlefield first party data
The discussion then moved to the broader industry, and Sorrell discussed where he sees an opportunity for S4. “Walled gardens are dominating digital business at present. Their reluctance to share data is increasing,” he said. Something he completely understands, especially against the backdrop of the current debate on data security. “With the advent of the internet and the demise of local businesses, many brands saw an opportunity to create direct client relationships for the first time. Platforms, however, have driven a wedge between brands and their customers,” he says. As prices increase, there is added urgency for brands to advertisers to amass their own data pool.
“The biggest battleground at present is in the control of data,” according to Sorrell. “There is a somewhat unfortunate Brexit analogy here. One of the slogans was ‘Take back control’ and that is exactly what many advertisers want to do.” S4 Capital stands for this model exactly, as the purchase of MightyHive shows. The agency supports companies in performing agency tasks in-house. The whole principle of S4 Capital is based on developing first-party data content and media sales with clients. “When I left WPP, I looked to see in which areas revenue was growing. And those were first-party data, digital content and digital media planning–exactly those areas we are pursuing now,” said Sorrell.
The fearsome five
When Sir Martin discusses the major platforms, he's not referring to the big four GAFA companies (Google, Amazon, Facebook, Apple), but the fearsome five of Google, Facebook, Amazon, Alibaba and Tencent. And though the biggest digital platforms split the lion's share of digital revenue among themselves, his aim with S4 is not to create a competitor. “We do not seek to steal margins from Google and Facebook. We aim to stimulate the use of digital media—regardless of the channel that works best for our clients.”
In 2019, the OMR Festival will bring together 50,000 digital executives and marketing professionals on 7 & 8 May, with speakers like author Yuval Harari and Headspace founder Andy Puddicombe. The Drum readers can receive 30% off with the code THEDRUM: https://omr.com/festival2019/en/tickets/
For the complete interview, check out the OMR Podcast.
And to learn more about the OMR Festival, taking place May 7-8, click here.