Sir Martin Sorrell warns Kwasi Kwarteng on business red tape as S4Capital surges through lockdown and buys ad agency Jam3

Advertising industry guru Sir Martin Sorrell today warned business secretary Kwasi Kwarteng against coming up with more red tape for company directors as they battle to rebuild their companies from the current economic crisis.

Kwarteng’s recent white paper includes a host of new responsibilities for directors and radical changes to the way companies are audited.

Sir Martin today said: “I can see why he’d want to improve regulation to stop fraud and deal with the top four audit firms but businesses are dealing with globalisation, climate change, the pandemic, digital disruption, Brexit. To pile more stuff like that on them just doesn’t make sense.”

In general, however, he remained bullish about the global economy as his S4Capital digital advertising conglomerate beat City forecasts with underlying revenues growing nearly 20% despite the pandemic.

“We’re looking at 4-5% GDP growth this year and 4-5% next year. When was the last time we saw back to back growth like that? The question is what happens in 2023 when the question comes: how do we pay for all this. The monetary and fiscal stimulus was absolutely necessary but at some point we have to pay it back.”

S4C boomed last year despite the economic crisis, he said, because it was in the “sweet spot” of helping companies move to digital.

Today, alongside his annual profits announcement, S4C’s flurry of mergers continued with the takeover of Jam3, a digital creative agency with 170 staff in Toronto and Los Angeles.

S4C’s eighth merger since lockdown began, Jam3 will be merged into S4C’s MediaMonks rival. Jam3’s biggest client is Facebook, Sorrell said, although “it works with all the top tech companies, “ he said.

Stripping out revenues from the flurry of acquisitions Sorrell has done over the year, like-for-like billings to clients were up 19.6%. Revenue was £342.7 million up 59.3% on £215 million a year before with underlying profits of £62.2 million, up 18% on a year ago like-for-like.

January gross profit was “well ahead of budget”, he said, with projected growth for 2021 of 25%, like-for-like.

Sorrell describes big clients as “whoppers”. The company now has five and Sorrell said it had identified five new “whoppertunities” on the horizon.

During the year, S4C’s MediaMonks division won food giant Mondelez International’s pitch to manage its global tech infrastructure and websites and was included in BMW/Mini’s roster of agencies in Europe. Other new client wins included work with Google, Facebook, Amazon, Netflix and Procter & Gamble, the company said.

Stockbroker Jefferies issued a note to clients saying: “S4 is a disrupter with structural growth tailwinds.”

Shares gained 1.2p to 489.2p, valuing the company at £2.66 billion.