S4 Capital to merge with digital agency Circus Marketing

Martin Sorrell's ever-expanding S4 Capital has announced a proposed merger with Mexico City-based digital agency Circus Marketing. The move would strengthen S4's presence in Latin America—specifically in Mexico, Brazil, Argentina, Colombia, Costa Rica, Chile and Los Angeles—and expand the company's reach to Spain for the first time.

S4 said the plan is for Circus to merge with its global content practice, built around MediaMonks, which itself  merged last year with digital marketing agency Firewood; marketing and customer experience specialist BizTech; and production and creation shop WhiteBalance. (S4 also confirmed in the announcement that it has completed its merger with BizTech.)

According to the company, consideration for the Circus deal will be just over half in cash, with the remainder in S4 stock. Circus projects that it will generate $38 million in revenue and gross profits of $20 million in 2019, representing 21 percent and 25 percent increases, respectively, from 2018, according to the announcement. S4 did not disclose specific terms of the proposed offer for Circus, but said they are in line with its other transactions.

Founded in 2005, Circus employs 350 people across its eight offices in Mexico, Brazil, Argentina, Columbia, Costa Rica, Chile, Los Angeles and Spain. S4 described Circus as a "purely digital agency" that develops content strategies and campaigns for brands like Netflix, Spotify, Google, Facebook and Uber.

S4 welcomed Circus to the company in a video (below). It starts with a message "to the ringleaders" of data-driven and multicultural marketing, saying they will help S4 "break new ground with impactful ideas led by data." The end goal? "To become the greatest show on Earth," according to the video.

Examples of Circus' work include a Super Bowl stunt last year for grocer Northgate Market that featured a series of pre-roll ads imitating spots viewers would typically see from some of the biggest brands in the Big Game to show that those brands can be found in the aisles of its supermarket stores. In 2018, it enticed World Cup viewers in Mexico to swap beer for milk brand Lala in an amusing campaign, since the time difference with Russia (where the event was held that year) meant the games would air in the morning.

"Our culture is defined by diversity and the varied expertise of our team," Bruno Lambertini, founder and CEO of Circus, said in a statement, "and I am confident this merger will enrich our community even more, enabling us to bring unique point-of-view on creativity to the world."

MediaMonks Founder Wesley ter Haar said, "Having a group of self-proclaimed misfits like Circus join the family proves once again that we are building the biggest and best tent in the industry for talent."

Sorrell, executive chairman of S4, added that Circus and its team "share our vision of focusing on purely digital content, unencumbered by analog baggage."

S4's mantra is "faster, better, cheaper." Sorrell has described the company at various industry events, including CES this week, as the "the antichrist" to the traditional agency holding company. Sorrell, who ran WPP for over three decades and built it into the conglomerate it is today, has claimed on multiple occasions that S4's business model is the way of the future. In addition to being purely digital, the model includes giving employees a stake so they're invested in S4 and a so-called “holy trinity” method: focusing on first-party data, developing digital content and executing with programmatic media buying and selling. (The programmatic practice of the business is MightyHive, which S4 acquired in December 2018.)

S4 reiterated in its announcement today that it is on track to post a 40 percent increase in sales and profits for the 2019 year. The full-year report is expected to be released on March 18.