S4 Capital merges Zemoga into Media.Monks, expands into tech
Sir Martin Sorrell: We need tech services as a third practice within S4 Capital.
Sir Martin Sorrell's S4 Capital is aiming to get closer to chief technology and IT officers – not just marketers – in a bid for further growth. The firm marked its entrance into tech services with deal for digital transformation services Zemoga. Sorrell flagged his intentions to Mi3 in May.
What you need to know:
- S4 Capital is making a play for greater share of IT tech budgets.
- Sir Martin Sorrell told Mi3 in May that S4 was keen to dive deeper into tech.
- Has merged digital transformation specialist Zemoga into Media.Monks.
- Predicts further strong growth following bumper June quarter.
Sir Martin Sorrell says S4 Capital is expanding into tech services, and marked its entrance by bringing LA-based digital transformation specialist Zemoga into the fold.
The firm has various US offices plus delivery teams in Colombia, where it was founded in 2002. It has 400 staff and clients include Bridgestone, Morningstar, Sony, Roku.
Sorrell told Mi3 in May that S4 was keen to dive deeper into tech, reiterating his desire for a tie-up with the likes of Globant, the tech services firm in which WPP acquired a significant minority share before selling – too soon in Sorrell’s view. And which, he thinks, could make S4 Capital "the perfect competitor to Accenture".
“We have two practices. One around content, 70 per cent of the business; one around data and digital media, which is 30 per cent. Do we need to broaden?," said Sorrell in this deep dive and feature-length podcast.
“I’ve talked publicly about Globant, another company that WPP sold out too early – they've lost a billion dollars in value by selling that 20 per cent stake in Globant at US$52 when it now trades at US$220," he added.
“But the point about Globant was that it approaches digital transformation from the tech services end. So do we need tech services as a third practice within S4?”
Announcing the Zemoga deal, Sorrell was unambiguous about his intentions: "Marketing digital transformation involves at least three corporate functions - marketing, sales and IT," said Sorrell. "Entry into the technology services sector through Zemoga gives us the full capability to talk to the Chief Technology or Information Officer, as well as the Chief Marketing and Chief Sales Officer. We now have the full set.”
Zemoga CEO DJ Edgerton said the deal represents “a natural next step" for the company he founded.
Wesley ter Haar, Media.Monks Co-Founder and S4Capital Executive Director said the merger is "already working."
S4 Capital's share price is up 60 per cent year to date, increasing its market cap to £4.47bn. By comparison, WPP's market cap is £11.44bn. Last week S4 posted strong results for the June quarter, with like for like profit up 49 per cent. Sorrell predicts 40 per cent growth for the full year and expects the company will organically double between 2021 and 2023.
