Advertising and digital media group S4 Capital has warned that “volatile global macroeconomic conditions” and ongoing US tariff negotiations are prompting clients to rein in spending, leading to lower sales and deeper losses in the first half of 2025.

The company, founded by industry veteran Sir Martin Sorrell, saw revenues fall nearly 15% to £360.4m in the six months to 30 June, while pre-tax losses widened to £25.1m from £17.1m a year earlier. Shares dropped 8% on Monday morning as investors reacted to the update.

S4 has been cutting costs and trimming headcount, reducing its workforce by 9% to around 6,900 employees. Executives said uncertainty over tariff negotiations, geopolitical tensions and a slowdown among major tech clients have all weighed on growth. Many of its biggest customers, including Amazon, Samsung and General Motors, are prioritising artificial intelligence (AI) investment over traditional marketing budgets.

“Clients are likely to remain cautious while assessing tariffs and global risks,” Sorrell said. “But as new rates settle, companies will refocus on efficiency and technology – this may be the time when AI adoption accelerates at scale.”

For entrepreneurs, S4’s update reflects the reality of building a business in a volatile global market. Even established brands with major clients are feeling the squeeze, forcing leaders to pivot quickly, diversify revenue streams and invest strategically in innovation.

S4 is betting heavily on AI, with some clients already funding experimental projects to integrate automation and data-driven marketing. Its ability to adapt its service offering could prove critical as spending shifts toward tech-driven efficiencies.

The company hopes new client wins in the second half of the year will stabilise revenue. However, its results highlight broader challenges for entrepreneurs: navigating policy uncertainty, managing costs, and identifying growth opportunities in a rapidly changing landscape.