Layoffs are about to hit Martin Sorrell's S4 Capital advertising group

Martin Sorrell leads S4 Capital.Lukas Schulze/Sportsfile for Web Summit via Getty ImagesS4 Capital's Monks brand is undergoing a restructure that will include layoffs.The market value of the Martin Sorrell-led S4 has plummeted about 97% since its 2021 peak.S4's strategy focuses on digital marketing, aiming for efficiency and cost management.Changes are afoot at advertising mogul Martin Sorrell's S4 Capital.On Thursday, Monks, S4 Capital's operating brand, informed staffers of a restructuring that includes layoffs, according to a screenshot of an internal presentation viewed by Business Insider.The slide detailed how employees whose roles could be affected would be informed this week. In the UK, if more than 20 employees are affected by a layoff in a 90-day period, the company is required to enter a collective consultation process with representatives for the employees. S4 is headquartered in the UK.The presentation said that the "reshaping of teams," including reporting lines, redeployment, and changes to roles or departments, would commence on September 5."Managing our cost base effectively is a key priority in this environment and we have continued to work to streamline and integrate our businesses," an S4 spokesperson said in a statement.The company declined to comment on how many roles would be affected by the restructure.The layoffs come as advertising agencies face multiple challenges, with tough macroeconomic and geopolitical conditions making marketers cautious about their spending. At the same time, the rise of artificial intelligence has so far proven to be a double-edged sword — helping make agencies more productive and provide consulting services on how to use the technology, while also threatening to automate many of the services that were once outsourced to them.S4 has faced years of challengesS4 launched in 2018 with a bang, just weeks after Sorrell's bitter exit from WPP, the firm he built over 33 years from a shell company that made shopping baskets to a $20 billion advertising juggernaut.Sorrell set out a vision for S4 to be everything WPP, in his view, was not. Smaller and more nimble, S4 would only focus on digital marketing and would be "faster, better, cheaper" than the incumbents, he said at the time. Sorrell repeated his WPP playbook of building the company through acquisitions — this time at warp speed.S4's fortunes took a turn in 2022. The group was a casualty of the "years of efficiency" undertaken by many Big Tech giants around that time. Tech companies make up a sizable chunk of S4's client portfolio. It also faced internal challenges, including underperformance at some of its agencies and an auditing issue that forced it to delay the release of its annual report that year.S4's market value plunged and has remained depressed, encouraging takeover sharks to circle in recent years. Earlier this month, S4 issued a statement to confirm a press report that it had entered early discussions with the private-equity-backed ad agency MSQ Partners about a possible merger between the two companies. MSQ Partners later issued a statement denying its involvement in those talks. The statement said that while there may have been informal discussions between its majority shareholder, One Equity Partners, and S4, it didn't plan to pursue further talks about a possible transaction.During S4's annual general meeting in June of this year, Sorrell said the agency's 2024 performance had been affected by challenging macroeconomic conditions, high interest rates, and technology clients prioritizing capital expenditure over operating expenditure, such as marketing, amid the AI race. Sorrell said S4 was anticipating better performance in the second half of 2025, having recently picked up new business from the likes of General Motors, Amazon, and T-Mobile. Still, S4 said it expected full-year net revenue to be down this year versus last."The strategy of S4 Capital remains the same. Our four principles around digital only, data-driven 'faster, better, cheaper and more' or 'speed, quality, value and more' and a unitary structure all appeal strongly, even more so in challenging economic times," the S4 spokesperson's statement said.S4 has been working to improve its operating margins and reduce its net debt, in part by reducing staff through multiple layoffs in recent years. According to the company's latest regulatory statement, its head count has dropped to roughly 6,800 as of August 22, from around 9,000 at its largest. The company is due to release its interim financial results on September 15.Read the original article on Business Insider

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