Sorrell's S4 acquires Silicon Valley's largest indie agency

Dive Brief:

S4 Capital, Martin Sorrell's holding company, has acquired Firewood, the largest independent digital marketing agency in Silicon Valley, according to news shared with Marketing Dive. S4 paid $150 million for the shop, per reports.
S4 will merge Firewood with digital production firm MediaMonks. The move aims to further a mission of delivering a "purely digital, first party data-driven, faster, better and cheaper content and programmatic offer," per a press release. MediaMonks, snapped up last July, was S4's first agency acquisition.
Founded in 2010 by Juan and Lanya Zambrano, Firewood employs more than 300 people across seven offices in the Americas and Europe. The firm, whose clients include tech heavyweights like Facebook, Google and LinkedIn, takes an "embedded" approach to client work, pairing creative and strategic talent with brands' internal teams.

Dive Insight:

Martin Sorrell's S4 continues an acquisition streak that looks to establish an agency network centered on digital and data-driven marketing services. Sorrell, who last year was ousted from WPP after more than 30 years leading the ad giant, has pitched S4 as an alternative to a holding group model he views as outdated and poorly aligned with what brands need from their marketing partners today.

Firewood's core values around collaboration, integration and flexibility, embodied in its embedded client strategy, were positioned in the press release as combating the inefficiencies of traditional agencies. The company's client list and Silicon Valley roots add to the image of a more forward-thinking agency.

With the deal, fledgling S4 now has more than 1,800 employees in 23 countries. Other acquisitions include the programmatic advertising firm MightyHive, which S4 bought for $150 million in December, and the influencer marketing agency IMA, which merged with MediaMonks in August.

As S4 grows, Sorrell has focused on touting areas like first-party data and content over traditional creative and branding strategy. Major marketers, including Procter & Gamble and Unilever, have put a higher premium on wresting control of first-party data, and recent deals indicate that ad holding companies are thinking along the same lines as they look to modernize and spur growth.

Publicis snapped up Epsilon for $4 billion earlier this year, a move Sorrell criticized, questioning the notion that the data marketing firm deals in first-party data, according to Adweek. The executive views similar acquisitions, such as Dentsu buying Merkle, slightly more favorably.

Firewood's integration with MediaMonks is another sign that the independent agency market is shrinking, or at least losing some of its more venerated players. Accenture Interactive earlier this year purchased Droga5, marking the largest acquisition in its 10-year history. In August, Publicis bought Rauxa, the largest woman-owned agency in advertising.