Digital advertising firm S4 Capital has cut 500 jobs as its share value plunged following a poor performance update stemming from spend-shy tech clients.
The digital marketing group, founded by ad veteran Sir Martin Sorrell, lost around 25% of its value Monday morning after it predicted a drop in cash flow in its latest revenue projections.
“We had a very mixed first half of the year reflecting challenging global macroeconomic conditions and consequent fears of recession, which resulted in client caution to commit and extended sales cycles, particularly for larger projects,” said Sorrell.
Sorrell said to Reuters that tech clients have been “more hesitant on spending” this year.
S4 Capital works primarily with tech industry clients, who made up just shy of half the firm’s revenue last year. A slowdown in the wider tech market has, according to Sorrell, resulted in reduced spending on advertising and marketing.
The firm implemented heavy job cuts at the end of June, with the total headcount dropping from 9,000 to 8,500.
Sorrell added: “You have to be much more selective about where you place your chips.”
The founder also noted that a boost in AI interest and a more settled period in tech will likely lend to a more positive performance for the firm in the back half of 2023.