S4 Capital Acquires Two Agencies, Signals More to Come in 2021

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New York-based creative agency Decoded Advertising will join S4’s MediaMonks, while Metric Theory, the San Francisco-based performance marketing agency, becomes part of S4’s programmatic firm MightyHive.

“We think that 2021 will be a very strong rebound year for the world economy,” Sorrell told Adweek in an exclusive interview ahead of the public announcement of the deals. Sorrell is particularly bullish on the U.S. market which makes up about 70% of S4’s business “and virtually 100%” of Decoded Advertising’s business.

According to Sorrell, S4 Capital navigated the pandemic with between 16% and 17% growth through the end of September, 2020. Sorrell said Decoded managed “to do even better than that.” S4 projects a gross profit of around $70 million in 2020, representing 50% growth over 2019.

Decoded Advertising, MediaMonks and Metric Theory were all recognized in Adweek’s 2019 Fastest Growing class.

Six-year-old Decoded cut its teeth in the DTC space—one of the agency’s first clients was Dollar Shave Club—and has major brands including Intuit, SC Johnson, T-Mobile, WW International and Visa as clients.

The shop’s integrated approach combines creativity, technology and media. Campaigns like Visa’s “Money Is Changing,” HP’s “The Fixer” (fronted by Breaking Bad star Johnathan Banks), a virtual Santa program for T-Mobile and expanding WW’s audience more efficiently are a few recent successful endeavors.

‘Scale as an Opportunity’

“Creativity is at the heart of this,” said Matt Rednor, who founded Decoded in 2014. “We see scale as an opportunity to do more creative experimentation and have more data points to inform that. The lever of creativity is responsible for 70% of the performance opportunity, which means we need to experiment and try new things across the entire customer journey,” he said.

According to Rednor, there were several overtures from other companies. But in S4, and Sorrell in particular, Rednor “found a group of like-minded collaborators who can immediately expand our ability to continue with a more modern approach to creativity.”

“We weren’t looking to sell necessarily or be acquired,” said Rednor, who spent almost 5 years each at BBDO and MRY before launching Decoded. “We were looking for a partner that would allow us the right environment to continue to thrive and keep building, to allow us to compete and win.”

Sorrell told Adweek deals like these—structured with both cash and shares in publicly-traded S4—are essential to the company’s growth.

“We don’t like buyouts,” said Sorrell, who, over more than 30 years, built WPP into the world’s largest advertising agency conglomerate. “We think that they are past their ‘sell-by’ date and probably the Achilles heel of the traditional agency holding companies.”

Sorrell said the holding company model, pioneered by Marion Harper Jr. in the 1950s, which focused on market share, “doesn’t work anymore.”

Sorrell noted that S4 has five global clients in the $20 million-plus range—internally, called “whoppers”—including 2020 wins BMW Mini and Mondelēz. “With Decoded’s help, I’m sure we’ll get to 20 [whoppers] and get the first 10 in short order,” said Sorrell, who pointed out that S4 companies have pitched against agencies and holding companies including Dentsu, IPG, Publicis and WPP, and took some business away from AKQA.

Sorrell said that Brexit hasn’t impacted S4’s business and is a non-factor looking forward. Part of the ambition and strategy is based on building outside of the U.K. market, focused on the more growth-rich digital end of the business. With a market cap of around $3.6 billion, S4 has a presence in 31 countries.





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