the times | Thursday November 11 2021 53
Business
Behind the story
T
he rise of
on-demand
services such as
Netflix and
Amazon was
supposed to have sounded
the death knell for
broadcasters like ITV.
But there’s life in the
old medium yet. Nearly
seven decades on from its
maiden broadcast, ITV
has largely put the Covid
blues behind it. Its studio
division is humming
again after pandemic
restrictions disrupted
production schedules.And advertising revenues
are set to rocket to record
highs this year thanks to
a predicted 24 per cent
jump in spending.
A steep rise in the
share price offers some
respite for shareholders
after a rocky few years
and will offer some
vindication for chief
executive Dame Carolyn
McCall. After jetting in
from easyJet at the start
of 2018, she has improved
ITV’s digital
performance. The
revamped ITV Hub hasadded two million
monthly users in the past
year, taking the total to
ten million. She has
improved its online
advertising sales with a
system that can offer
tailored adverts to
viewers.
McCall has also added
to her predecessor’s work
at ITV Studios, whose
services are in demand as
streaming platforms
invest ever larger sums in
original content.
But the main driver of
the yesterday’s rally in theshare price was the
enduring appeal of TV to
advertisers. Many
businesses increased their
spend last year, compared
with 2019, and plan to do
so again this year.
However, ITV still faces
headwinds, not least the
teenage generation’s
preference for short-form
TikTok videos and
YouTube. Investors,
who’ve seen holdings fall
by 25 per cent since 2016,
will be praying for more
GenZ hits like Love
Island.Sorrell counts cost of
plans to accelerate
growth of S4 Capital
The advertising group launched by
Sir Martin Sorrell is to increase invest-
ments to drive its growth, a plan that
will weaken its short-term profit mar-
gin and hit its share price yesterday.
Sorrell, the founder, executive
chairman and largest shareholder in
S4 Capital, said that he planned to take
full advantage of the shift to digital
marketing caused by Covid-19 by
investing part of its earnings margin.
The company had been hiring “ag-
gressively”, he said, increasing its staff
numbers to 6,926 at the end of Sep-
tember, its third quarter, up by 52 per
cent compared with the same time a
year ago.
News of the plans sent shares in S4
Capital down by 81p, or 10.3 per cent, to
702p, a market reaction that Sorrell
called “churlish”. Nevertheless, they
remain up by 41 per cent this year.
Three years after Sorrell, 76, acrimo-
niously left WPP, the FTSE 100 adver-
tising conglomerate, he has built
S4 Capital into a £4 billion company by
acquiring digital marketing and data
specialists, including ten deals this year.
S4 Capital said yesterday that it was
“well in line with its target of doubling
organically, both top and bottom line,
in three years by 2021” and was pre-
paring its fourth three-year target to
2024 to double the size of the company
again.
Despite a slowdown in global GDPAlex RalphTwitter launches crypto team
Times Business ReporterTwitter is launching a dedicated crypto
team in a push to embrace digital assets,
decentralised apps and the growing
communities around them.
The social media platform, which
was founded in 2006, has hired Tess
Rinearson to lead the new Twitter
Crypto team and “set the strategy for
the future of crypto at (and on) Twit-
ter”, according to the Financial Times.
Twitter Crypto is designed to be “acentre of excellence for all things block-
chain and web3”, it added, referring to
the term given to the growing number
of decentralised apps that run on public
blockchains.
“We’re exploring ways to incorporate
decentralised technologies into our
products and infrastructure,” Twitter
said, adding that in the short term it was
exploring payments, ways for people
creating content to earn crypto-
currency and the “decentralisation of
social media”.growth rates, the $2 trillion market is
forecast to grow by 15 per cent to 20 per
cent in the next four or five years.
Advertising as a proportion of GDP was
forecast to rise from 1 per cent to 1.75 per
cent, the company said, “purely driven
by the growth of digital advertising and
transformation”.
Sorrell reiterated that S4 Capital was
in the digital “sweet spot of an other-
wise stagnant traditional advertising
and marketing industry”. It has secured
six “whoppers” — clients with more
than $20 million revenue per year —
including Facebook and HP this year,
and has identified 19 more. “These are
all clients where we have existing rela-
tionships, which we think are capable of
expansion,” he said.
The investment has weighed on
profit margins as they “usually require
higher levels of initial expense before
significant revenue is earned”, mainly
in its content business.
Sorrell said that S4 Capital’s earnings
margin guidance had been reduced
from 19 per cent to 18 per cent, which
“in money terms is about another
£6 million we’ve invested in people and
technology and infrastructure”.
Its target is to get to 21 per cent, which
it hit last year. Third-quarter gross
profit increased by 42 per cent to
£144.4 million and revenue grew by 56
per cent to £178.4 million, on a like-for-
like basis. S4 Capital’s level of growth
means that it could gain promotion to
the FTSE 100 index.the success of Harry Kane’s England team in the Euro 2020 football championship, have helped ITV to lift its performance
ITV