22 January 2024 , 12:18
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Advertising boss Sir Martin Sorrell has warned that businesses will continue to be careful with their advertising spending until 2024 due to "unpredictable times".
His digital marketing company, S4 Capital, expects sales to have dropped over 2023, matching its earlier lowered expectations. Sir Martin, who founded and led the world's largest advertising and marketing firm WPP before launching S4 Capital in 2018, told shareholders that clients had been cautious with their spending 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. Our client relationships remain strong and we have also managed costs tightly."
S4 Capital, which has run campaigns for big names like Google, Meta and BMW through its content division Media.Monks, is predicted to report a net decline in revenue of about 4% over 2023, compared to the previous year. The company's operational profit margin is expected to be between 10%-11%, reflecting an improved performance due to "significant cost reductions" across the business.
Last year, the company announced it was reducing its workforce, including a 5% cut in staff at Media.Monks. Sir Martin doesn't anticipate an improvement in advertising conditions this year.
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He added: "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 explained that in these uncertain times, the focus is on positioning the company for medium-term growth, improving profitability and returning funds to shareholders. This follows Channel 4's announcement earlier this month of planned job cuts due to a downturn in TV advertising.
Channel 4's Chief Executive, Alex Mahon, stated that the broadcaster is focusing on streaming and digital services because of the "sharp and protracted advertising slowdown that has hit the whole industry". She has previously mentioned that consumer viewing habits are shifting from traditional TV to streaming platforms.
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