Martin Sorrell has been busy adding new digital marketing agencies to his fast-growing S4 Capitol roster, and found his latest addition in Toronto.
S4 announced early Thursday morning that digital design and experience agency Jam3 will merge with MediaMonks, the digital-first creative content company that has been the cornerstone of S4 since 2018. (Read our MediaMonks Q&A here.)
Sorrell launched S4 with a strong digital-first ethos, claiming he was building a digital agency platform for a “new age, new era” that traditional agency holding companies were not built for. Since then, he’s made a number of deals to grow the company, usually in fast-growing digital niches and specialities in markets around the world.
“Jam3 is another key step in our seizing the next decade,” said Sorrell on Thursday. “Data-driven creativity is at the heart of our offering and Jam3’s reputation, talent and client base is second to none.” The news came as S4 announced its 2020 financial results, with like-for-like revenue up 15.2% to £342.7 million, and gross profit rising 19.4% to £295.2 million.
Jam3 was launched in 2004 by founding partners Mark McQuillan, Adrian Belina and Pablo Vio. By the end of the decade, thanks to work like the digital experience for NFB documentary Waterlife, it was earning a reputation as one of Canada’s ground-breaking digital shops.
That reputation grew in the last decade, after it won a Gold Lion in Cannes in 2012, and expanded into the U.S. while continuing to cement its position as one of Canada’s top shops. The agency has produced a long list of modern, innovative, design-led digital experiences for clients including Adidas, Facebook, Sonos, eBay, and Levi’s. (See some of the recent work here, here and here and see the 2020 highlight reel below.)
Today, the agency has more than 150 employees across four offices: Toronto, Los Angeles, Amsterdam and Montevideo.
Like the MediaMonks deal in late 2018, and each of Sorrell’s deals since then, S4 and Jam3 both stress that this is a merger and not an acquisition. “It is a merger in the sense that we have bought in,” said Mark McQuillan, a founding partner and managing director at Jam3. “It’s a half cash, half stock deal. We still feel that sense of ownership.”
“All our deals are split 50% cash and 50% S4 Capital stock so the founders become major shareholders in S4,” added Sorrell in a statement. “We don’t do earnouts which create silos and negative incentives, we have a unitary structure so everyone is totally aligned on what we are trying to achieve from day one.”
Financial terms were not disclosed, but the deal is almost certainly the biggest for a Canadian agency since the sale of Grip to Dentsu in 2016, Cossette to BlueFocus in 2014 or the Taxi and John St. acquisitions by Sorrell’s WPP, in 2010 and 2013 respectively.
Sorrell reportedly paid $350 million for MediaMonks in 2018, which at the time had 750 employees. In December of that year, Sorrell paid $150 million for the programmatic ad specialists MightyHive, which had 200 employees and revenue of just under $41 million.
McQuillan said that the seeds of the deal were sown when the Jam3 leadership team decided they needed help if they wanted to continue to expand their business.
“Jam3 has grown tremendously over the last three years, and it was just clear a couple years ago that some sort of partnership, strategic in nature, would be necessary to help us maximize the success of our team, or the career of our folks that we employ,” said McQuillan. “We can only take on so much risk at a time and really fund our own expansion.”
S4 and MediaMonks were on their potential partner list when they started their outreach a year ago. Their first meetings with prospective partners were in New York City on March 10, just before the pandemic shut the city down.
Jam3 and MediaMonks have been crossing paths for almost a decade, said McQuillan. “We’ve got to know them… and we really liked what they’re doing… We’re looking for a partner that sort of shared some of our ethos and our maker DNA, and the Monks are that.”
“The work that Jam3 and our teams have done is really some of the most iconic work in digital over the last decade, and that attracts a certain level of talent,” said MediaMonks founder Wesley ter Haar in a statement.
“MediaMonks and Jam3 are two competitors who have had great respect for one another, and it’s been interesting from my point of view to bring the two together,” said Sorrell. “Bringing average people together is easy; bringing strong people together is not. We refer to founders internally as entrepreneurs, because they are taking entrepreneurial risk in investing in us and in themselves for the future. So we need to carve out for them a sufficiently motivating structure.”
MediaMonks officially expanded to Toronto a year ago. McQuillan said that specifics around the office space are still to be determined, although the name Jam3 will likely be retired. “The Jam3 name will sustain throughout the year,” he said. “We are moving toward a unitary brand. I can’t tell you much about what that branding will be just yet.”
“We’re particularly excited about furthering our expansion in Canada through the merger with Jam3, as Mark and his colleagues have deep roots in Toronto,” said ter Haar. “For Canadian marketers, who increasingly seek an end-to-end solution combining data, content and media, this news signals the ever-deepening access to the very best in digital content.”
