The Rationale Behind S4 Capital’s Acquisition Of Digital Agency Circus Marketing

S4 Capital, Martin Sorrell’s scrappy new holding company, acquired Mexico City-based multicultural digital content agency, Circus Marketing, on Wednesday – its 11th deal in just over a year. Here’s why: an expanded footprint, more capacity in existing markets and data, data, data.

“It’s a smart deal that makes sense for their strategy,” said Jay Pattisall, a principal analyst at Forrester who got briefed by the S4 team at CES in Las Vegas on the rationale behind the deal.

Specifically, S4 is merging Circus into MediaMonks, the Dutch digital production company it acquired in July 2018 to serve as the foundation for its global content practice. Although the purchase price for Circus was undisclosed, the deal is being funded from a 100 million pound capital raise announced by S4 in October 2019. Half of the Circus deal will be in cash with the remainder in stock.

The common thread across all of S4’s acquisitions, beginning with MediaMonks and programmatic agency MightyHive in 2018, is that none are traditional marketing entities.

“Rather, they’re very digital at their core, whether that be related to production, creative, marketing, programmatic or data,” Pattisall said.

That digital-centric cocktail gives S4 the opportunity to sell clients on a holistic set of services that span performance and branding.

“There’s programmatic and performance on one side, and data-driven creative on the other,” Pattisall said. “The ability to track performance and to produce more upper-funnel brand marketing informed by an understanding of the audience and the consumer.”

Circus comes in with the ability to layer data into the creative process, to measure the results, and to combine those capabilities and data-driven mindset with digital production through MediaMonks.

It’s the same philosophy behind S4’s acquisition of San Francisco-based digital agency Firewood in October 2019, which was also merged into MediaMonks.

“Firewood and Circus bring strategy, creative and execution on the front end, while something like MightyHive brings the activation, data and delivery,” Pattisall said.

But another main motivator behind the Circus and Firewood deals is their overlapping books of blue-chip business. Circus and Firewood both count Facebook and Google among their clients, while Circus and S4 both serve Uber, Netflix and others.

“On top of adding capacity, these acquisitions help S4 immediately demonstrate an integrated digital offering for a group of shared clients,” Pattisall said. “If you’re pitching an integrated capacity, the first thing marketers look for is case studies, proof that demonstrates you can really do what you say you can.”

And, of course, Circus also broadens S4’s reach outside of North America, Europe and Asia Pacific into diverse new growth markets. Circus gives S4 its first presence in Spain, and expands its footprint across Latin America countries, including Mexico, Brazil, Argentina, Colombia, Costa Rica and Chile.

“North America is by far and away the largest market by way of billings and revenue,” Pattisall said. “But organizations looking for growth are going beyond North America, Europe and the top cities in China with an on eye on places like Latam, Africa and the Middle East.”

Circus adds around $38 million in projected revenues and another 350 employees to S4’s existing headcount of nearly 2,000.

In case you need a scorecard, here are all of S4’s acquisitions so far:

July 2018: Dutch digital production agency MediaMonks (the backbone of S4’s global content division) 

December 2018: Programmatic agency MightyHive (the foundation of S4’s programmatic division) 

April 2019: Netherlands-based digital production company Caramel Pictures (acquired for MediaMonks) and Brazilian programmatic solutions consulting firm ProgMedia (acquired for MightyHive) 

June 2019: Australian mar tech group BizTech (acquired for MediaMonks) 

August 2019: Amsterdam-based influencer-marketing network IMA (acquired for MediaMonks)

October 2019: Silicon Valley Digital agency Firewood (acquired for MediaMonks), London-based digital analytics company Conversion Works (acquired for MightyHive) and the South Korea operations of Australia-based data and analytics consultancy Datalicious (acquired for MightyHive)

November 2019: Delhi, India-based content creation and production company WhiteBalance (acquired for MediaMonks)

January 2020: Mexico City-based integrated digital content agency Circus Marketing (acquired for MediaMonks)

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