‘Cautious’ advertising spending to persist over 2024, warns Sir Martin Sorrell
The businessman’s digital marketing firm, S4 Capital, told investors it is expecting sales to have dipped over 2023.
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Advertising mogul Sir Martin Sorrell has warned of another difficult year for the industry, with firms reining in spending on marketing during “unpredictable times”.
The businessman’s digital marketing firm, S4 Capital, told investors it is expecting sales to have dipped over 2023, in line with its previously downgraded expectations.
Sir Martin founded and led WPP, the world’s largest advertising and marketing company, before leaving in 2018 to launch S4 Capital.
But in the latest update to shareholders, he said the company’s clients had been spending cautiously over the past year.
He said: “After four years of very strong growth, 2023 was a difficult year impacted by volatile macro conditions and, consequently, cautious spending from clients, particularly those in the technology sector and from smaller project-based assignments.”
But he added: “Our client relationships remain strong and we have also managed costs tightly.”
The company has led campaigns for brands including Google, Meta and BMW through its content division, Media.Monks.
While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist
S4 Capital is expected to report a net decline in revenue of about 4% over 2023, compared with the previous year.
Its operational profit margin is set to be in the range of 10%-11%, which the group said reflects an improved performance as a result of “significant cost reductions” across the business.
It comes after the firm revealed last year that it was cutting its workforce, including reducing the number of staff working for Media.Monks by about 5%.
Sir Martin said he is not expecting conditions for advertisers to improve in the year ahead.
“While it is early in the year, we are not expecting 2024 to show macro-economic improvement, and client caution on marketing spend will likely persist, although not at last year’s level given interest rates are likely to fall over time,” he said.
“In these unpredictable times, we are focused on positioning the company for medium-term growth, improving profitability and returning funds to shareowners.”
His remarks come after Channel 4 revealed earlier this month that it is planning a round of job cuts as it looks to tighten budgets this year, thanks to a downturn in TV advertising.
Chief executive Alex Mahon said the broadcaster is focusing on streaming and digital services due to the “sharp and protracted advertising slowdown that has hit the whole industry”.
Consumer viewing habits are shifting away from linear television and towards streaming platforms, she has previously said.