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S4 Capital kicks off 2021 with Decoded and Metric Theory acquisitions

S4 Capital has already kicked off 2021 with the acquisition of US-based Decoded Advertising and Metric Theory

The dust has hardly settled on the new year but Sir Martin Sorrell's S4 Capital has already kicked off 2021 with the acquisition of US-based Decoded Advertising and performance agency Metric Theory.

Despite headwinds from the pandemic, Sorrell's holding group competitor enjoyed a prosperous 2020. Now, S4 is setting the tone for the year ahead as it enters post-Brexit era, bolstering its tech-led, digital advertising and marketing services company's programmatic and creative expertise.

The Drum breaks down the acquisitions, and what they mean for S4 in 2021:

What's the deal?

  • S4 has been on a path of rapid acquisitions since it was established a mere two and a half years ago. As Sorrell builds a model fit to clash with what he oversaw at WPP, he is making it known that 2021 will be no different.

  • Tipped to have cost a total of £150m, the buyout includes the acquisition of six-year-old creative agency Decoded Advertising, which will join MediaMonks.

  • Strengthening its programmatic offerings, it has bought the San-Francisco-based performance marketing agency, Metric Theory, which will pulled into its programmatic firm, MightyHive.

How will the two new businesses fit into S4 Capital?

  • Slotting into its creative agency MediaMonks, Decoded Advertising has been brought it to help S4 reach its 20 squared objective [securing 20 clients that represent more than £20m revenues each]. Last year, MediaMonks won BMW and Mini European content and production, which it aims to develop in 2021.

  • Boasting Dollar Shave Club, Intuit, SC Johnson, T-Mobile, WW International, and Visa as its clients, S4 was attracted by the agencies prosperous growth in 2020. It will join Firewood, who merged with MediaMonks back in October, influencer agency IMA who joined in August and Paris-based creative agency Dare.Win.

  • Built to help marketers in-house digital functions, MightyHive is a business that has been accelerated by the pandemic. Last year saw it merge with Digodat a leading Latin America data consultancy, and a top Australian strategy and analytics consultancy, Lens10. It also integrated Orca Pacific, a full-service Amazon agency and boutique consultancy based in Seattle, as well as London-based Brightblue, an econometric and media optimisation consultancy.

  • With clients that include GoFundMe, Lyft and Optimizely, Metric Monks 130 employees will help grow MightyHive's US footprint by 50%.

What does this mean for S4 Capital in a post-Brexit 2021?

  • Firmly turning his back on the holding company model that made his name, S4 is devised on the belief that a "new age, [needs a] new era model.

  • “We are well-positioned in the digital sweet spot of an otherwise stagnant advertising and marketing industry and clients are responding very well to our new age/new era, purely digital, ‘holy trinity’ model of first-party data fueling digital content, data and digital media," Sorrell told investors at its Q3 earnings performance back in November.

  • In 2020, when much of adland was licking its wounds, S4 saw its sales, profits and headcount soar. It's gross profit was up 79% to £75.3 ($100.6m) leaving S4 in pole position for further growth in 2021.

  • As 2020 came to an end, Sorrell admitted to The Drum he was bullish for the new year. "2021 will be a global bounce-back year from the pandemic with worldwide GDP growing 5-6%, which we haven't seen in many years," he shared. "Tokyo 2021 and Euro 2021 will provide additional tailwinds represent significantly more than 50% of total advertising spend for the first time. All in all, a very exciting year ahead after a very successful 2020.”

  • By acquiring two US-based agencies, Sorrell's acquisitions arrive in the wake of the UK's recent departure from the EU. As the UK navigates its way through this post-Brexit era, the ad industry will play a crucial role in resolving Britain's post-Brexit future. Presently, the US market makes up around 70% of S4's business. According to the Advertising Association, between 2009 and 2018, the UK's advertising services exports grew approximately 229%, making it the second-largest service export.

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