UPDATE 1-Strong U.S. demand and AI helps Sorrell's S4 to navigate tougher environment

Reuters · 05/11/2023 07:17
UPDATE 1-Strong U.S. demand and AI helps Sorrell's S4 to tougher environment

Adds AI details, writes through with details

- Martin Sorrell's S4 Capital SFOR.L said artificial intelligence (AI) was helping the advertising group to become more efficient and pressure from clients seeking to cut costs.

S4, founded by the ad boss after he left WPP WPP.L, reiterated its full-year revenue outlook after the first quarter, saying growth was driven by U.S. demand which offset a weaker performance in Europe, the Middle East and Africa.

Sorrell said higher interest rates, stubbornly high inflation, slower economic growth and geopolitical uncertainty meant many clients were looking for short-term solutions to drive sales and also faced a to cut costs.

"If growth is going to be less, they're going to have to manage their cost base much more effectively," he told Reuters.

Like other companies, S4 is using AI to speed up copy-writing, produce more personalised ads and place them on platforms most likely to be seen by the right consumers.

"The effects of these developments will improve the effectiveness and efficiency of what we do," the group said.

Sorrell spoke after S4 released a trading update, saying it was on target to meet its full-year guidance after reporting a 6.8% first-quarter rise in organic revenue.

The group has set a 2023 target of increasing like-for-like revenue by 8-12%.

"While revenue growth was at the lower end of our full-year guidance range, it was in line with our expectations," it said.

Growth was driven by a 10.9% rise in organic revenue in the Americas, well ahead of a 4.7% drop in EMEA.

(Reporting by Kate Holton
Editing by William Schomberg)

((kate.holton@thomsonreuters.com; 0044 207 542 8560; Reuters Messaging: kate.holton.thomsonreuters.com@reuters.))