Sir Martin Sorrell has wasted no time in making a comeback to the marketing sector after his less than cordial retirement.
The former boss and founder of FTSE 100 advertising giant WPP (LON:WPP) is reversing into cash shell Derriston Capital (LON:DERR) and all the signs point to an effort to rebuild his media empire.
READ: Ex-WPP boss Martin Sorrell making stock market comeback weeks after leaving advertising giant
He won’t be short of initial funds either, as his new company S4 Capital has already received non-binding commitments for more than £150mln from institutional investors, with the man himself injecting £40mln of his own cash.
Given such a quick turnaround in Sorrell’s fortunes, the key question is why, after leaving a company he has run for over 30 years, would he start again from scratch?
Some would say it is all a matter of reciprocation, with Sorrell seeking to undermine his former company by stealing away its market share through a nimbler investment vehicle.
This angle hasn’t been lost on the markets either, with Alex DeGroote, a stockbroker at Cenkos suggesting Sorrell might target major WPP assets for acquisition.
“It wouldn’t surprise me if he was discreetly sounding out JWT or Ogilvy, they were the anchor assets that built WPP,” DeGroote told the Guardian.
“I think Sorrell will make a headline grabbing, transformational deal within nine months.”
DeGroot’s sentiments seemed to be echoed across the trading floor on May 30, when WPP shares dropped 1.21% to close at 1,232.5p.
All this is speculation, however, as Sorrell has yet to make a substantive move against his old employer, and it may be that he is just not ready to exit the marketing business.
In this vein, Russ Mould, investment director at AJ Bell, has voiced scepticism at the market reaction: "While WPP shares fell...it is very premature to describe S4 as a challenger to the business, despite Sorrell’s involvement.”
Although, a subtler and perhaps more important aspect of the new Sorrell strategy is its relation to the future of the marketing sector and the massive corporate behemoths, like WPP, which inhabit it.
Marketing is at the forefront of the media revolution
Established players are now beset on all sides by challenger companies that are both more agile and more technologically integrated.
At the same time, they are having to adapt to new media channels and expanding emerging markets that have whole new sets of dynamics.
Peter Scott, chief executive of digital marketer Be Heard Group (LON:BHRD) and a similar vintage, believes Sorrell’s move reflects the new mood among advertisers.
The era of massive marketing holding companies with long-term client retainers like WPP is coming to an end, he says.
According to Scott, the new generation of marketing will be all about integration, with marketing strategy, technology and data all working together in a more reactive manner as opposed to pre-planned and identical marketing that has existed traditionally.
And while Sorrell is a stalwart of the large holding company model, Scott believes that his experience will carry over to this new way of operating.
“I’m sure he’ll make a great success of it” Scott says.