Despite COVID, our revenue grew by 15-20% in first 5 months of 2020: Sir Martin Sorrell

The Executive Chairman of S4 Capital took part in a conversation with Dr Annurag Batra, Chairman & Editor-in-Chief, exchange4media Group, in an e4m webinar powered by Adobe & IBM

e4m by exchange4media Staff
Updated: Jul 10, 2020 8:05 AM
e4m webinar

The COVID-19 pandemic is indeed shaping up to be the black swan event that will trigger a reset in the global economy. However, there are businesses who are turning the challenges thrown at them into opportunities, and choosing to shine through it all. Advertising mogul and Executive Chairman of one such company - S4 Capital - Sir Martin Sorrell joined Dr Annurag Batra, Chairman & Editor-in-Chief, exchange4media Group, to discuss the impact of Covid on the marketing landscape in an e4m webinar powered by Adobe & IBM. Sir Sorrell shared with us how S4 Capital was walking tall despite the challenges.

In the session 'Turning Challenges into Opportunities through Digital Transformation', Sorrell spoke about how digital entrepreneurs would shape the world in a post-COVID scenario. "Digital is where the growth is. Prior to Covid, it was 20% and next year too we should be back at 20%. We’re totally focused on digital because that's where the growth is even this year.”

The S4 Capital boss touched upon the decreasing value of traditional advertising and said clients have been demanding more digital services. “Many people in the advertising industry look back to the past with rose-tinted spectacles. And I think this is a weakness. Life has changed and the definition of creativity has broadened. It's no longer Mad Men, 30-60 second TV commercials. Traditional is a narrow way of looking at the industry,” Sir Sorrell observed.

Talking about how digital giants have an edge over the rest, Sorrell pointed out, "Google, FB, Amazon, Tencent, Alibaba, TikTok (ByteDance), Apple, Adobe, Salesforce, IBM, Twitter, Snap, Netflix, Spotify, Samsung, LG — they know client and agency inside out.”

Sharing the growth story of S4 Capital, Sorrell said, "In the first 5 months of 2020, despite Covid, we've upped the revenue by 15-20%. The delta between our business remains about 40%. Profitability in May has increased since we've dropped real estate and consolidated our properties. We're committed to doubling the company every 3 years.” The ad maven went on to say that S4’s competitors are not ad-holding companies as it has been regarded as being tech-based. “More than 50% of the company’s revenue comes from tech companies,” he further shared.

At a time when agencies are navigating an increasingly volatile landscape owing to the pandemic, Sir Sorrell shared the secret sauce behind S4 Capital’s success. “I want to maintain the strength of the balance sheet. Now is the time to take advantage of, as it’s precisely the time when the holding companies are laying off over 50,000 people. That's what they're doing worldwide. So, there's a huge cull. A Darwinian cull taking place. And what are we doing? We are hiring more people. We're cutting our indirect costs and our real estate costs, while also investing in people. We have gone from 2,400 people to 2,600 people over COVID,” he revealed.

Sir Sorrell also spoke about the marketing services space and how the business model over the years has changed. “The model has shifted. I would call it the Netflix model. The Netflix model is still the best model that I have seen. It uses first party data and with the mixing of the third party cookies by Google or Apple. The importance of first party data and control of first party data by all our clients is absolutely critical. So it's first party data driving the creation of digital advertising content,” he observed.

He also deliberated on how the COVID situation has accelerated change in certain areas of the industry. “COVID-19 has meant all bets are off. You have to get cracking and change. We are seeing inside companies a growing propensity or urgency to change. So, digital disruption, digital transformation is the key thing, and getting on with it as quickly as possible has become the premium,” he contended.

Companies need to be faster, better, cheaper and agile to up their game, Sir Sorrell noted. “In traditional companies, CEOs, CFOs, CIOs and CTOs complain. In an analogue company they don't move fast enough. And COVID-19 has made them jump. And they are jumping. I think it's something that everybody is saying that agility is key.”

For brands, now is the perfect time to invest, he pointed out. “Now is the time when our clients have to get their act together. It was not the time to do it in March and April. In March, April and May, it was a time to conserve. I know things are difficult in cities like Mumbai and Delhi, and other parts of India life continues to be extremely difficult. COVID is still a big threat. But I think now is the time when we have to get consumers into a more positive frame of mind and to do that we will have to spend, and invest,” the ad mogul advised in his concluding remark.

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