To the casual industry observer, Sir Martin Sorrell’s playbook to grow his S4 Capital holding company may have looked familiar.
He started in 2018 with two major deals to establish the base—MediaMonks and MightyHive—and since then has continued a steady stream of new additions—24 in all—growing the business to almost 6,000 people and a valuation of about $5 billion in just three years.
But since day one, Sorrell has also insisted he was building something new and different for a new age of marketing. The holding company was dead. Long live the holding company.
S4 would be digital-only, data and analytics would drive creative, and the company would be “faster, better, cheaper” than the competition. That difference was certainly evident in the kinds of companies Sorrell was adding. Rather than a hot-shop creative agency famous for its viral advertising, MediaMonks was a creative digital content production company and, earlier this year, it added Canadian digital content shop Jam3. Rather than a traditional media planning and buying agency, MightyHive was growing fast by focusing on programmatic and helping marketers take their media in-house, while others have specialized in platforms like Amazon and Salesforce.
But S4 also had another founding principal of having a unitary structure to avoid in-fighting and ensure cooperation across the entire enterprise. That was how it was built from the start, and that unitary structure was given a name earlier this month with the rebranding of the entire organization as Media.Monks.
The Message spoke with Sorrell and two key Media.Monks executives, Tessa Ohlendorf and Chris Martin, last week following the name change. The first part of that interview was published on Tuesday, and in this second part, we focus solely on Sir Martin, who—true to his reputation—was not shy about talking openly and freely, both about his own business and that of his competitors.
“Canada is littered with agencies that have failed, and holding companies that have failed,” he said.
Canada specifically? “Well, the entire industry… the model doesn’t work anymore.”
The new name for the holding company was in many ways a formality, but also a demonstration of how important the unitary structure has been to Sorrell—a lesson learned from his last role as CEO. “When I was at WPP we talked about horizontality, [but] that was a weak way of having one firm,” he said. Similarly, both Dentsu and Publicis have said they are moving toward being one company but, according to Sorrell, in reality it doesn’t work that way: It’s one company with many other agency brands working within it, he said.
That’s why Media.Monks does not “acquire” companies, but instead merges with them in transactions that are usually half cash, half shares. “We don’t do earn out because we think it splits everything asunder, and creates divisions,” he said. “We say to people ‘Look you can cash in half of what you’ve got, but roll the other half into the operation.’ And the company’s worth over $5 billion US, and it’s half-owned by people inside the company, so we all have a unified interest.”
So here in Canada, for example, you would say it makes sense for agencies like John St. and Taxi to move closer together with other WPP agencies?
“It’s a different model. We start to integrate from the moment we sign an exclusive letter of intent. We’re pitching business, working together from the day we sign the LOI, even though we might be negotiating a sale and purchase agreement and doing due diligence. We didn’t do that at WPP. I was as responsible for that as anybody; I said I didn’t want anybody playing together until we were 100% sure that we were going to get together.
“I know Taxi, and I know John Street well because I was there when they became [part of WPP]. The trade with those agencies was, you become part of WPP and we’ll take care of the back office. That is not our trade [at Media.Monks]. Our trade is to become part of the mission to create the new model—so there’s a missionary zeal here—and disrupt the old. So there’s a disruption theme. And you trade your brand for being part of something that is going to achieve that.
“We’re on a mission here to create a totally new approach which is fit for the digital age, not the analogue age… Why is it we can do the unitary thing and why can others not do it? The reason is we started with the clean sheet of paper and a totally new approach, and we were very, very focused on that.”
Why won’t the old model work for new marketing?
“For the modern CMO to run the brand, or run a product or run a service, he or she has to be always on 24/7.
“Why is in-housing so interesting? Because it gives you more control. You have to take back control in a 24/7, always on environment. You have to be much more agile and—on a much more specific point given what Google, Apple have decided in relation to privacy and cookies, etc—you have to use your first party data.
“But you have to get much more control. You can’t outsource this stuff. It is too important.
“You need more knowledge, more information, quicker responses. You can’t do it by calling up the agency and saying, ‘Come in next week, let’s put together a brief.’ And then you go away give me the response to the brief, and then two months later you have a 30-second TV film. It doesn’t work anymore.”
Do you think the age of the big idea is over? What about agencies famous for big, dramatic advertising ideas?
“You sound like one of those creative gurus from the 1970s and ’80s, with your rose-tinted spectacles. The world has changed. You’re like Don Draper from Mad Men. The big idea is still as important as ever, they’re just delivered in a different way.”
Let me reframe that slightly: Do you think clients are reluctant to see it that way and still want a great 30-second TV ad?
“If the market is $650 billion this year, digital is probably about 55% of it. So there’s still 45%, which is a good $300 billion, being pumped into traditional media—and it works. And, ironically, the big platforms—Google, Facebook, Amazon—use those traditional media to promote their products and their services.
“But I’m much more interested in growth. I’m too old at the age of 76 to fiddle around with no growth, it’s very demoralizing.
“I prefer for us to deal with clients who look at the sky rather than their boots. And who are expensive… Our forté is stimulating top-line growth, that’s in a digital world. We do Super Bowl ads, we’ve done one for Robin Hood. But our forté—our real forté—is helping clients build their sales in a digital world. Build their brands and their sales.”
How has the pandemic changed things?
“It’s just accelerated it. We’re in the digital sweet spot. I’ve just been writing our [financial] statement for Sept. 13 [and] without giving you the details. It is truly remarkable… Our growth profile is virtually exactly the same as the average of the platforms.”
You reflect the platforms because you specialize in the platforms?
“It reflects the platforms because our business is digital. I mean, it’s very simple. It goes back to the reason we started: We are focused on growth. We want to go with growth.
“It applies to those people we want to work with—whether they be clients or whether they be partner companies, Jam3 or wherever it happens to be… And we try and seek out where the growth opportunities are. We don’t want to wrestle with no growth or slow growth.”
And that’s why you’ve bought companies specializing in Salesforce and Amazon?
“We haven’t bought. We’ve merged.
“We’ve said these are the key platforms… we’re trying to build the best understanding of the best platforms and tech companies in the world. That’s effectively what we’re trying to do. When we talk about faster, better, cheaper, that’s the better—the better is understanding the digital ecosystem.”