Martin Sorrell plots comeback with new company to buy ad firms

Martin Sorrell is staging a comeback just six weeks after he was ousted from WPP, using the same formula as in the 1980s when he transformed a little-known shell company into the world’s biggest advertising group.

One of Britain’s best known businessmen, Sorrell said he would invest 40 million pounds ($53 million) of his own money into Derriston Capital while institutional investors have pledged 150 million pounds ($199 million) to buy marketing companies.

The London-listed group will be renamed S4 Capital, in reference to four generations of Sorrell’s family, while he will become executive chairman.

Its next moves are likely to be closely watched in an industry facing questions over whether the ad guru’s model is still the best way to deliver ad, marketing, research data and media buying in a digital world.

WPP and its peers have struggled in recent years as major consumer goods groups such as Unilever trimmed spending on marketing and took some services in house, while consultancies such as Accenture have stepped up competition and Facebook and Google dominate the online ad market.

“S4 Capital is a company that aims to build a multi-national communication services business focused on growth,” the 73-year-old said. “There are significant opportunities for development in technology, data and content.”

Taking charge of a listed shell company repeats the tactic Sorrell used in the 1980s when he took a stake in Wire and Plastics Products, a maker of shopping baskets, and used it as a vehicle to buy some of the most famous advertising agencies such as JWT and Ogilvy & Mather.

Sorrell quit WPP after the board opened an investigation into an allegation of personal misconduct.

The company has not given any details and Sorrell has denied any wrongdoing. He told staff he had stepped down because the disruption was putting too much pressure on the business.