S4 Capital opens new door for Martin Sorrell

Martin Sorrell has revealed he retains the same hunger for success that he had when he kicked off with WPP.

The founder of advertising giant WPP, Martin Sorrell, resigned as the company’s chief executive this year and has started a new venture, S4 Capital. Picture: Adam Yip

Martin Sorrell has revealed he retains the same hunger for success and appetite for deals with his new venture that he had when he transformed basket-maker Wire & Plastic Products into the world’s biggest advertising group over four decades.

Speaking to Media yesterday, Sir Martin said that he never contemplated retiring following his resignation as chief executive of WPP in April after The Wall Street Journal reported that WPP’s board was looking into an allegation of improper personal behaviour and whether he had misused company assets.

Sir Martin rejects the allegation unreservedly.

“Several people said to me after I left WPP, which was unpleasant, ‘take it easy’, but I wanted to get back on the horse. If you fall off the horse, you get back on as quickly as you possibly can,” the 73-year-old said.

“I’m not the sort of person who would contemplate non-exec roles and dabbling in investments. That’s not what I enjoy. I want to focus on something and the good news about S4 Capital is that it’s a clean sheet of paper. It has none of the legacy weights or chains that you have if you run a legacy business.”

A prospectus for S4 Capital, which plans to list on the London Stock Exchange through a reverse takeover of listed shell company Derriston Capital, was released last week at a time when WPP and the other four big marketing services holding groups are pursuing plans to streamline their business models in an age of technological disruption driven by big digital.

In a wide-ranging interview with Media revealing S4 Capital’s plans to grab a slice of the $US500 billion ($700bn)-plus global advertising and marketing market, Sir Martin also:

• Refused to rule out legal action over the handling of his resignation as CEO of WPP;

• Endorsed the recent appointment of his successor and former protege Mark Read, but said he preferred a structure with Mr Read and WPP chief operating officer Andrew Scott as co-CEOs of the group;

• Raised the possibility of re-entering the $16bn Australian advertising market with his new business, S4 Capital;

• Detailed how S4 Capital would focus on three main areas: content, data and digital media planning and buying.

Following his departure from WPP in April, Sir Martin said he was not treated fairly, and asked WPP to investigate a leak.

“The last chapter has not been written on that. That’s still very much in the forefront of my thinking. To be blunt with you, I’m not satisfied that the company took the necessary steps to investigate the leak, which was at a very high level,” Sir Martin said.

“The appointment of Mark Read took five months and I had agreed that structure with (WPP chairman Roberto) Quarta when I decided I was going to step down. It was the leak that caused that problem and that to my knowledge has not been investigated. You asked me ‘have I got over that?’ From the point of view of S4 Capital, I’m past it. But there are still elements of it I will pursue.”

In response, WPP has previously said: “The process followed relating to the investigation of the whistleblower’s allegations was exactly that put in place while Martin Sorrell was CEO.”

Of Mr Read’s appointment at the helm of WPP this month, Sir Martin says: “The plan I agreed with Quarta was a joint one around two people — Mark Read and Andrew Scott (WPP chief operating officer) ... I think it’s very important it’s a twosome. I’m not saying only two people can replace me. Far from it. I’m saying that if you look at those two together, they are far better than on their own. They are complementary and the two of them have a far better chance than one. To date, we have seen no change in the strategy.”

With a 1.83 per cent stake in WPP, Sir Martin is one of the London stock exchange listed group’s top 10 shareholders.

Sir Martin says S4 Capital will provide brands, global, multinational, regional and local clients with solutions that are “faster, better and more efficient” than rivals.

Areas of focus include digital content — following the recent €300 million ($487m) acquisition of MediaMonks — as well as data analytics and digital media planning and buying.

“Obviously, S4 doesn’t have the scale that WPP has but the objective is to build a substantial digitally orientated business.

“We’re not interested in buying businesses or merging with businesses where the principals want to sell out ... we want people to buy into the concept. Most of the businesses that we are looking at, the management have very significant equity stakes in the businesses that they run. They’re probably in their 30s and 40s and want to build the business for the future, not take the money and run.

“We haven’t been in business long enough to develop bad habits. The cost structure at MediaMonks and the other businesses we’re looking at have not been around long enough to develop iterative cost structures.”

Sir Martin also raised the tantalising prospect of a comeback in Australia, a market where he built WPP’s local operations into a $1bn-plus revenue pool.

“I want to do something in the area of first-party data, and digital media planning and buying, and then I want to do something else in the content area.

“I think that the likelihood is that the companies we are looking at will have operations in Australia, India and Japan. We’ve also identified Germany. The likelihood is that we will move quickly to build a bigger operation in Asia Pacific. The pace at which companies in Asia Pacific are developing and the strength of the models is even better than you see in the US and Western Europe.”

Sir Martin’s exit from WPP marked the end of an era, bringing the curtain down on a career that saw him create a FTSE 100 stalwart from nothing.

In 1977, Sir Martin joined the famous ad agency Saatchi & Saatchi as finance director. In 1985, at the age of 40, he struck out on his own, buying WPP. He swiftly turned it into an acquisitions machine, much like the plans he has for S4 Capital.

“For me, this is a third iteration. The first wave with the Saatchis lasted nine years, and 33 years with WPP. The nature of content has changed dramatically.

“Clients are almost running political campaigns on a 24/7 always-on basis. You have to be highly agile because you’re reacting to changes from your competitors, technology, and socio-political activity.”

Sir Martin has invested £40 million ($73m) of his own money in S4 Capital, while a bevy of institutional and other investors have agreed to commit an initial £11m ($20m) to become shareholders in Derriston.