Sorrell’s quest into digital jungle snares Amazon agency deal

The marketing services mogul Sir Martin Sorrell is accelerating his second bid to reshape the industry by acquiring an agency which manages consumer brands’ advertising relationships with the technology behemoth Amazon.

Sky News understands that S4 Capital will announce this week that it has agreed a deal to buy Orca Pacific, whose clients include the sportswear brand Reebok and the food manufacturer Del Monte.

The takeover, for an undisclosed sum, will be the first since S4 raised just over £115m from shareholders earlier this month to provide firepower for a string of acquisitions.

Orca Pacific, which was founded in 2008 by John Ghiorso, will be merged with MightyHive, S4’s data and programmatic media practice.

The agency employs more than 40 former Amazon staff, and is expected to help provide S4 with a full-service e-commerce offering including retail management, advertising and content on the tech giant’s platform.

Sir Martin’s latest deal comes amid an explosion in digital sales accelerated by the coronavirus pandemic.

His pursuit of an agency dedicated to helping advertisers optimise their presence on Amazon underlines the importance of the online retailer and other tech giants Facebook and Google in the marketing plans of big brands.

S4’s takeover of Orca Pacific comes on the same day as the bosses of four of the world’s biggest tech companies – Amazon, Apple, Facebook and Google – give evidence to the US Congress amid an intensifying political backlash against the quartet in America and elsewhere.

While global advertising budgets have been disrupted by the pandemic, Sir Martin’s timing in launching a digitally focused marketing services network now looks more prodigious than ever.

Since the coronavirus outbreak in Europe in March, he has unveiled three acquisitions, including Digodat, a data and analytics consultancy headquartered in Argentina.

S4 said recently that it expected to deliver “sector-leading double-digit like-for-like revenue and gross profit growth for 2020”.

Across its various operating subsidiaries, S4 employs approximately 2,500 people, making it a still-small but fast-growing rival to WPP Group – the business Sir Martin built over 35 years into the world’s biggest marketing services holding company – and rivals such as Omnicom Group and Publicis Groupe.

Previous takeover by S4 include Circus, an agency which counts Facebook, Google and Spotify as clients, Firewood, the largest marketing agency in Silicon Valley, and Delhi-based content business WhiteBalance.

S4’s shares have more than doubled during the last year, giving it a market value of £1.7bn.

Its rapid growth has been trumpeted by Sir Martin as vindication of his company’s strategy, which he launched within months of his controversial WPP exit.

One of their fractious exchanges centred on S4’s purchase of MediaMonks, which Sir Martin outbid WPP to buy.

A threat by WPP to withhold part of Sir Martin’s long-term compensation on the grounds that he had breached confidentiality obligations has since dissipated.

While Sir Martin’s pipeline of takeover candidates looks very different to those he pursued during much of his WPP reign, the playbook of bolt-on acquisitions and targeting of faster-growing geographies is similar.

Sir Martin remains a shareholder in WPP, with a big chunk of his wealth tied up in the stock of the company he took from a manufacturer of shopping baskets in 1985 to bestriding the global advertising industry.

By the time he stepped down in April 2018, WPP was valued by the stock market at more than £16bn, although a series of client losses and accelerating shifts in spending among global advertisers away from traditional media have hurt its valuation.

S4 declined to comment.

(c) Sky News 2020: Sorrell’s quest into digital jungle snares Amazon agency deal


Please enter your comment!
Please enter your name here