S4 Capital reported an operating loss during its inaugural preliminary 2018 results today, yet Martin Sorrell's new digital marketing venture showed it has gained a fair amount of traction since its formation in May.
The company saw pro-forma revenue—which refers to consolidated results of MediaMonks, MightyHive and S4Capital as if the group had existed in full for the year—increase 58 percent from 2017 to £135.9 million or $181.5 million. It reported an operating loss of £8.5 million or $11.3 million.
After officially launching last year as a "new era" digital advertising and marketing services company via a reverse takeover of Derriston Capital, S4 brought MediaMonks on board last July and then acquired MightyHive in December. S4 now has approximately 1,200 employees in 16 countries and says it has new-business assignments from Mondelez, Bayer, Nestle, Procter & Gamble and more.
The company said its offering of first-party data-fueled digital content and programming is resonating with clients, as is a single profit-and-loss statement structure and a "faster, better, cheaper" positioning.
"With this environment, what clients want to do is take back control," Sorrell said. "That's the line that you may recall that Brexiteers used very successfully in the referendum campaign in the U.K. two or three years ago. I think it's exactly the same with clients. They want to take back control of their destiny … They feel that they have to exercise control and the battleground is first-party data and data generally, having control of that and if the platforms are not willing to share that data ... what clients are going to do is try and develop their first-party data and we're intimately involved in trying to do that with them."
Wesley ter Haar, MediaMonks founder and an S4 board member, said on a Monday morning results call that the digital production agency believes the traditional model is still very focused on "hero assets," in many cases TV ads, and that the effort that goes into creating content for the rest of the media ecosystem is less evolved.
"We think ideas are very important," ter Haar said on the call. "But we don't think we're currently in a landscape where it's all about a single big idea. It's a creative framework and within that framework we need to be be hypertargered, driven by data, personalized, constantly A/B testing, constantly optimizing against all of these different channels that the actual media buy is bought against … So less about a single big idea and more about lots of smaller ideas, hypertargeted and really attached to the context of the channel they're being distributed on."
MightyHive and MediaMonks also talked through case studies of how they're working with clients. For MediaMonks' work with Netflix show "Narcos," ter Haar said the shop is seeing an exponential need for content while budgets are stagnant or decreasing. He said with that trend comes a focus on data-driven creative. For Narcos, he said the shop is using first-party and third-party data signals along with a creative framework to create "a million-and-a-half different possibilities of tailored ads."
He said this is cutting costs by 40 percent, will cut time to market from 12 weeks to four weeks and will increase the performance of the ads since they're better-targeted and more personalized.