S4 Capital, owned by Sir Martin Sorrell, has seen its sales fall 15pc as the slowdown in advertising intensified.
Digital ad agency reported that revenues for the third quarter dropped to £211.5m, as clients cut back on spending.
The London listed company warned that full-year profits would be between 10pc to 11pc, down from the previous forecast of 13.5pc.
After Thursday’s update the shares of S4 fell by 24pc.
The company’s value has dropped from £5bn to around £340m. This is a dramatic drop compared to its peak of £5bn reached in 2021.
S4 blamed the continuing decline in the advertising industry for its disappointing figures, especially among tech companies.
Sir Martin said that the trading in the third quarter of 2008 was difficult due to the macroeconomic conditions in the world, with clients continuing to be cautious and sales cycles being extended, especially for large projects and some clients in the technology industry.
This warning is similar to that of WPP, the ad giant which reduced its forecasts last month due to lower tech spending and a slowdown on the Chinese market.
S4 is particularly vulnerable because of its focus on digital advertising and its reliance on large tech clients like Amazon and Google.
The company has begun a round of layoffs to improve its balance sheet.
The total number of employees fell by 4pc during the third quarter. Bosses said that more measures would be taken in the last months of the year.
Sir Martin, who launched S4 after his bitter departure from WPP in 2003, said that the advertising firm still saw growth amongst its largest clients.
He admitted that S4’s estimates were too optimistic.
He said, “We have sophisticated systems for forecasting but they are not sophisticated enough.”
The advertising boss said: “Of course, given the profit warnings, and all that we’ve been through, it’s not good. It hasn’t encouraged confidence to say the least.
“But we are trying to deal with issues that we believe we need to address, which is basically forecasting and the cost side.”
Sir Martin said that the company will treat 2024 like an “year of efficiency”, as it tries to revive its share price.
The revenue from the top 20 customers increased by 2.9pc, and that of its top 50 was up 4.6pc.
S4’s net loan debt was £185m at the end of Q3 and is expected rise to £185m in Q4 due to further acquisitions.
The company expects to make more money in the last three months of the calendar year, due to increased advertising in the lead-up to the Christmas season.
Sir Martin said: “We are confident that our strategy, business plan and talent, along with scaled-client relationships, will position us for above average growth in the long term. We also want to use free cash flow on dividends and stock buybacks. This is especially important as 2024 won’t have any more merger payments.”