- Sir Martin Sorrell’s advertising firm, S4 Capital, has announced its latest deal, for Zemoga, a digital product design and engineering company.
- The agreement will allow S4 to extend its offering to technology services.
- S4 also sees the deal helping it compete with consulting giants like Accenture and Deloitte.
S4 Capital has taken over Zemoga, a digital product design and engineering firm as Sir Martin Sorrell’s “faster, better, cheaper” advertising firm tries to take on consulting giants like Accenture and Deloitte.
S4 said Zemoga will merge with Media.Monks – the 6,000-person company S4 formed in August from production and content center MediaMonks and data and digital media firm MightyHive – and expand S4’s offerings to a third area of practice, technological services.
Zemoga, a 400-person company that competes with IT giant Globant, builds digital products that serve corporate customers as well as internal teams. Its clients include Bridgestone, Morningstar, Sony and Roku.
“The digital transformation of marketing involves at least three business functions: marketing, sales and IT,” said Sorrell, executive chairman of S4. “Entering the technology services industry through Zemoga gives us the full ability to speak to the CTO or CIO, as well as the Director of Marketing and Sales. We now have the full set. “
Indicating the demand for such services, a McKinsey survey last year showed that companies were three times more likely to say that at least 80% of their interactions with their customers were digital than they were before. the pandemic. The companies also said the pandemic has accelerated their efforts to get more digital three to four years faster than expected.
Wesley ter Haar, co-founder of Media.Monks and executive director of S4, said the deal would also allow Media.Monks to compete directly with consulting firms like Accenture and Deloitte.
Zemoga CEO and founder DJ Edgerton said the company counts some of the largest consulting firms among its clients. “It is obvious that they will not be [clients] longer, “he said.
Edgerton founded Zemoga in 2002 in Colombia as one of the country’s first nearshore delivery providers and one of the first companies to serve the United States from Colombia. It now has hubs in the Colombian cities of Bogota, Cali, Medellin and Barranquilla, as well as in the United States in Los Angeles, New York and Wilton, Connecticut.
Edgerton said Zemoga started thinking about options to raise funds or acquire or merge with other companies about five years ago, as buyers began to look at the growth in offshoring and relocation.
“When we found out that we were interested in partnering with someone or merging with someone, there was a knock on the door,” he said. “We knew who we were interested in. The news was communicated to them very quickly and the process was quickly made exclusive. It makes so much sense from a disruption perspective.”
S4 and Zemoga declined to provide financial details of the deal, but said it was a half-share, half-cash deal, similar to other S4 mergers. Zemoga, which will retain its brand and leadership structure for the time being, has achieved approximately $ 25 million in revenue to date in 2021 and has grown its sales by 45% on average per year, according to the companies. .
S4 reported second-quarter revenue up 66% to $ 327.6 million, a 49% like-for-like increase from the same quarter last year.
It has been on a tear of business, this year merging with multicultural marketing agency Cashmere; Specialized firm Salesforce Destined; the digital performance agency Raccoon Group; and the design and experience firm Jam3, among others.
“Of course we have a bit of war chest at the moment,” ter Haar said, adding that he currently sees an opportunity to develop further in the APAC region.