All right. Please note that important disclosures, including my personal holdings disclosures and Morgan Stanley disclosures, all appear as a handout available in this registration area and on the Morgan Stanley public website. Excited to welcome back to the conference, Philippe Krakowsky, the CEO of Interpublic Group. Philippe, thanks for being here. Thank you. Nice to see you again. Good to see you. I feel like this is the first year we're able to sit and talk about what might be a normal year, a normal-ish year. Is that possible? We've been through this sort of COVID rollercoaster. Inflation, war in Europe, uncertainty about, you know, yesterday. I don't feel super normal to me. Does it feel normal? Okay. Maybe it's the new normal. Maybe just stepping back- Sure. What are your priorities for the company this year as you try to navigate all the things that are out there in the world? I mean, our priorities haven't really changed a lot. I mean, I think folks that know us and that have been following us for a couple of years know that, you know, we made a series of decisions, and we've focused the company so that we can be higher value partners to our clients in a world where, you know, what's happening in media and what marketers are dealing with clearly involves a lot more complexity, but also tools that allow you to get much more clarity about the impact of the work that, you know, the work that you put in the marketplace or the way that you engage with consumers. That, that hasn't changed, that I can tell. To our mind, whether it's a three or a five-year performance period, you know, we've demonstrated that we can evolve a professional services model by adding to it kind of a layer of data and technology. This feels like an execution year in a lot of ways. Yeah because we're still unclear about what new normal looks like. Yeah. Do you think the asset base at IPG is, you know, materially different? I mean, not materially, but different enough from the pre-pandemic version of the company that it sort of impacts how we should think about the growth prospects for the company? Well, again, I think that in a world where what you do tend to have kind of across the board, if you look at almost any industry or sector, is kind of a greater disparity of outcomes. You know, we run a pretty complex portfolio. We've got a lot of clients. You're gonna find, you know, different needs and pieces of the business that are further along in that evolution or that transformation. I'd say that again, folks like you who follow us, you've seen where the focus on, you know, media and the connectivity to that data layer or the, you know, the growth and the investment behind our healthcare capabilities. You know, the pandemic clearly accelerated clients' focus on business transformation work, and on digital, you know, kind of going faster down a digital track. Pre or post-pandemic, you know, not a dramatic change in the asset base. You know, we're definitely we can, you know, we do keep investing and reskilling. If you think maybe, you know, in 2020, which obviously was difficult for everybody, maybe a bit less for us, where we did have to right-size businesses, we didn't then bring the same skill sets. What we were really looking for was more of what we've been baking in over time. There has been a shift in that regard. Yeah. The assets. Yeah. Client needs of what clients are expecting or looking for, has that changed in a way that's significant to the growth outlook for the business today versus three years ago? It, it tracks the same. You know, I think clients do want focus in a couple of areas. I mean, I think that clients want as much more self-determination in a world where taking control of first-party data is clearly something they understand as important. Being able to be less reliant on the platforms, and clearer on sort of what's a data strategy, what's a marketing technology strategy, how does that connect into the breadth of the activity that they're engaged in. You know, we see more opportunity for kind of higher order strategic work. Okay. That's not consistent across the board. I mean, There's a lot of variability on a client-by-client basis, and even within a sector. Sure ... you can see quite disparate, you know, levels of sophistication. Makes sense. On your earnings call, you guys provided guidance for 2023, 2%-4% organic growth, 10 basis points of margin expansion. How should investors think about that guidance, particularly as it relates to sort of the macro risk and what, you know, that you've tried to incorporate into that outlook? The way that we build the, you know, the budget is very much a bottoms-up budget. We're not coming at it with a view of macro. Mm-hmm ... and then pushing that down because it is a portfolio. It's a fairly complex set of assets, and as I said, there are a lot of clients involved. We will go bottoms up. We will then, with our largest clients who are either, you know, the ones where we've got multiple agencies engaged with them, we support them, you know, at a global level, we can have that discussion. It, it doesn't sort of bake in, as it were, a point of view about how much. Normalcy to your very first question, we're assuming, it's really just a function of given what clients need, given what we provide them, you know, how does that. Obviously again, for us, with a number of years of really strong performance, we're compounding, you know, a lot of growth. It demonstrates that in a world where there is a lot of volatility in media, if you're an advisor to clients, that's something that they clearly look to and, you know, increasingly see the benefit of having an advisor that has the expertise and the tools, you know, around, like I said, around data and tech particularly. How should we think about your guidance relative to some of your competitors? Are there idiosyncratic factors that are impacting 2023 for IPG that you wanna highlight? I think we highlighted them. I mean, whatever it was, a month and a half ago. There are some specifics in our portfolio. You know, we talked a little bit about two of our kind of premium digital agencies, which are at a moment in their evolution where they have to kinda reinvent the value prop every three to five years. You know, that will be something that is, I can't say idiosyncratic after seven and a half or however many of these we've done. Unique. Specific to us, we've got that. In a kind of client sector of view at a macro level, you know, what is happening in tech more broadly does seem to be leading to a measure of caution, you know, among those clients. I think that's specific to us. Yep. I think that's how we get to that, you know, 2-4 that you heard from us. Should we expect some flex potential up or down in margin, depending on where you come in within the guidance range for 2023 on revenue? Well, I mean, we've talked about this in the past, right? Where back to how volatile things are. There was a moment in time, kinda late last year, when the question is, if something macro comes along and at flat, can you hold margins, right? I think the answer that we would've given you then is the answer that we would give you now, which is that it depends a lot on where you see the revenue. Right. Whether that's within our, you know, agency segments, whether that's geography, et cetera. To our mind, you know, we've consistently shown that where there's growth, we convert that to incremental profit. There are things about running a flexible model that allow us to do that. The discipline and the alignment around how we get paid and the fact that margin is actually a larger component which aligns all of our operators on that. It could well be, to your point, that, you know, depending on where we are in that range, you know, and whether we are selling more of these higher value services. In the long run, we see this as a, you know, we've increased margins by, you know, 260 basis points over the length of the pandemic. We continue to see long-term margin upside to the business. That's good. I was gonna ask you about that because it's interesting. You guys have guided to margin expansion, but your competitors have largely not. In fact, some of have guided to margin compression for 2023 at least. I was wondering if anything had changed structurally in the asset mix that suggests the incremental margins we've seen in the business historically are no longer the right way to think about the business. Um- You know, you can. Again, not to our mind, because with growth, the capacity, and I think to our mind, the responsibility to turn that into incremental profit exists. Ways in which we are thinking about or sort of re-engineering our business and looking at our processes, we see opportunity there. The new services that are more truly outcome-based or where there's the opportunity to link to results because there's more precision and accountability in what we do. All of those, to our mind, we see a number of years of continued margin expansion. Should that ever change, obviously we would clearly communicate it with folks like you. Yeah. if no one else. Of course. You guys recently appointed a Chief Commerce Strategy Officer. We did. One area of, that's gotten touched on a lot at this conference has been retail media as an area that seems to be gaining share from a client point of view. What do you see as the opportunity there? How are your clients approaching it? I mean, you know better than most that our media business, is one in which we don't, we don't take inventory and we don't, you know, there's no, there's no acting, in a way where the volume that moves through us benefits us. Other folks may be thinking about retail media in that sense. It clearly comes up, very consistently in that broader commerce conversation with clients. I think to our mind, you know, in a number of the groups that we've had over the course of the day when we've talked about it, you know, we've demonstrated that with the data layer that we've built in the business and then technology to enable that, we've connected that with media, and that's been a differentiator and a driver of value with clients in the ad tech ecosystem. I think the opportunity we see is to do same- Mm-hmm. Whether it's clients' MarTech investment on some of the large platforms or whether it is with the retail media. To our mind, you know, we see opportunity, and that's why, you know, bringing somebody in at group level, who joined us, you know, he ran omni-channel commerce at Accenture, to think about the flying formation for the assets and then how we plug into the, into the data stack made a lot of sense. Let's talk a little bit more about media. I mean, it's interesting, as I think about advertising trends right now, Philippe, Q4, Q1, a lot of companies at this conference we're seeing negative numbers. Omnicom was here yesterday, and, you know, you guys in the agency world are seeing growth and expecting growth, and particularly in media. Maybe you could just spend a minute at talking about stepping back and looking at your media business broadly, which I know is a big business with a lot of different pieces to it. What's driving the strength in the business, and why do you think we should disconnect that a bit from what we're seeing with some of the even the digital media platforms that are right now struggling? I mean, I think if you, if you dial back, you know, many years ago, the question was, is what's happening with, you know, digital media ultimately gonna disintermediate folks in our space? You know, to our mind, the evolution, the investments that we've made and the way in which we've made ourselves more valuable as an advisor to clients, seems to kind of continue to be to bear itself out when in the platform space now you're actually beginning to see perhaps them being disrupted, perhaps, you know, share shifts precisely because of some of what you know, talked about, whether it's, you know, the pandemic bringing, you know, digital transformation work forward or the fact that retail media help a marketer go direct to a consumer or drive more accountable kinds of engagements. I don't know that you've got steady state over there in the sense that, you know, there clearly will be, you know, folks on the, on the media owner side that adopt a strategic approach that is about, you know, having a point of view and clarity about identity, being audience-led. I think there, you know, some folks in that world will begin to grow again, and they're not really analogous businesses in that those truly are, you know, software businesses where ours is a professional service plus tech, you know, business now. Yeah. Is some of what we're seeing just the complexity element of media accruing to your benefit as a business? Absolutely. Yeah. Yeah. I mean, if you think about it, obviously, you know, the magnitude of the investments that marketers make in media, I mean, you know, that's a very significant line item for them. Then that does put you in a huge information flow. Right. How would you not, you know, look to turn that into actionable intelligence, you know, kind of business decisioning off of that data? Makes sense. One of the things you and I have talked about over the years also has been the privacy changes as well, which it seems to have had a pretty big impact on media in particular. You've made some big investments in and around data, you know, helping clients manage their data. Is that still a sort of an important factor in sort of account wins, but also sort of where your clients are focused in terms of spending money? Sure. I mean, I guess the way that I would put it is, everything is very case by case in our, in our sector, right? Because, you know, client opportunity or issue comes along, a business problem comes along, and there is nothing kind of cookie cutter, we're gonna solve it in a, in a... Privacy has definitely, and sort of first-party data in general, has definitely become much more, front burner conversations with clients. I think what I would say is that there's more of an appreciation that it's not just a question of the quantity of the data that you have available to you to activate, but qualitatively, that matters a lot too. Sure. There's reputational risk. There are other risks if ultimately what you have is not, you know, at a, at a certain level. I think the privacy landscape is still evolving. You know, who's to say that if the, if the macro were to get, you know, meaningfully challenging, people might not, they might defer that, but it's definitely coming. Every business. Yeah. Has to sort for that. Yeah. You mentioned earlier some of the headwinds to the year around your digital specialty agencies. It's come up on a couple earnings calls where growth has been soft. Has your view on these value-added services changed at all from, you know, the past, and is this still an area you guys are investing in? Well, I think, you know, we've called out two premium digital agencies. Yeah. I think it's become a more crowded field over time. I think the nature of those businesses is that they do require kind of reinvention every four to five years. There's a sort of phasing or a timing issue for us where, you know, that's happening right now in the midst of the uncertainty that we're seeing kind of. I think clients. The caution, and I've said this before, I think the caution is less about what's happening right now. It's about either what a day like yesterday can be or the, you know, there's an air pocket coming in the economy kind of comment. I think it's sort of incumbent upon us to get them more focused. I mean, you've seen, you know, we made a leadership change at one of them, and it's meaningfully further along in what its sort of next value prop is gonna be and how it's gonna go to market with less of a people-hours approach and more of a product and solutions approach. Then the second one, we actually, you know, just in the last week announced that there's also kind of a leadership change going on there. I don't think it's intrinsic or indicative of an issue with that space. It just comes with... You know, if you're gonna be sort of at the leading edge of innovation. Right. Is some of this just that they are servicing technology clients, and that is a vertical that has not acted well? No, I think it's fair. I think they do. Their client mix does skew meaningfully heavier to the one client sector where, you know, things are sort of up in the air and/or, you know, where what the news that you're seeing coming out of the Valley around cutting jobs, cutting costs, clearly impacts, you know, some of the kind of work we would do with those clients, and a lot of that happens at those agencies. The year of efficiency. Well, look, I'm, I think you're probably right, and I think what's interesting is that the last few years, we've been successful in working with clients to define value as being much more precise and much more effective. If it goes to efficiency, then, you know, people will, maybe in the current environment, at least for a minute or two, they will go with, you know, "Can I just not do that, or can I just get quality matters less, can I just get it cheaper? Yeah. Yeah, yeah. another area that IPG has a lot of exposure to that has been a nice part of the business over the years has been healthcare. We've grown that a lot, yep. Yeah. How is that business today in terms of trending, and are you as enthusiastic about the outlook in healthcare as you've been in the past? I mean, one of the things that, you know, we did in the last 18 months or so is, you know, what you had as a, as an area of specialization, sorry about that grew up kind of as a bit of a, you know, I wouldn't say stepchild, but I mean, it grew up inside of the larger integrated groups in our world. I think what we realized was that the nature of the skill sets that you need in order to help a client where the product is pretty complex, so there's a lot of science to it, there's a regulatory piece to it as well. So we put all of that together in one vertical. We do a lot of healthcare inside of media as well. We do a bit inside of some of our project businesses like PR. You know, as we called out, that's now a scale business for us. It's been growing kind of high single digits for the last couple of years. We believe that unless there's something dramatic that happens to pharma as a sector where our clients all of a sudden are in a place that, you know, they might have been in 15 years ago, we continue to believe we'll see that kind of performance. Got it. it. Great. I wanna pivot to sort of the cost side of the business, but also give the audience a chance to ask a question if they have one for Philippe. Please raise your hand and wait for the microphone. Where would you say the biggest opportunities are for you as a company in terms of efficiencies? Just talk a little bit about the sort of salary inflation and sort of the wage inflation pressures that the business has had to navigate and where you are with that today. I mean, Alan, who's right here, I mean, we've been To our mind, the head start of a three or four-year period during which we were looking for more technology forward skill sets and, you know, data science and any number of those things, we were not going to win by looking for that talent in direct competition with, you know, the folks who are hiring, you know, in the Valley. Where and how we've been resourceful in that regard, I think, has helped us. We've been clear that, you know, even as we went through the last couple years where, you know, inflation, macro and wage inflation was at levels we hadn't seen before, we thought that was manageable and that was baked in. As I said earlier, we've seen dramatic margin improvement in the business notwithstanding that. We've seen that attenuate some. Mm-hmm. We continue to believe it's manageable. Less churn, less, you know, gotta counter because. More talent that's widely available now in some of those kind of high-skill areas in, you know, in tech in particular, because of what's happening. Yeah ... sort of to that sector. Interesting. Yeah. Okay. Any questions for Philippe? Otherwise, you have to hear my voice rambling on longer. How about on the capital allocation front? The salted tones of Benjamin Swinburne. Yeah, exactly. on the acquisition front, I mean, you guys obviously did Acxiom years ago. It was one of the biggest acquisitions the company's done probably in many, many years. I think ever. Ever. Maybe. delevered nicely on the back of that. Where are you focused? You guys have continued to be, you know, somewhat active last year. Well, I mean, again, you know as well as we were going through this transformation or as we were trying to basically evolve our model, when and wherever possible, we did think that building it made more sense than, you know. The multiples that, you know, we're seeing are still, you know, pretty frothy. Acxiom was a moment in time, I think, just because as we were saying earlier, you know, first-party data management at scale, the credibility and then the privacy by design, you know, all of those were things that I think would have been really challenging for us to build ourselves. That was. Right now, I think that what we did last year, you know, with RafterOne is probably indicative of what we are thinking, which is businesses that are hybrids of agency plus some technology skill set or something that is proprietary in that regard. You know, in the past, we were filling out an agency offering where we were addressing a client need or maybe something geographic, whereas now, to our mind, it is in and around kind of the commerce space, skill sets that'll help on the digital transformation work that we do with clients. You know, there's more... You know, we're a much bigger company. You know, I think range and bearing, we're not gonna do anything really large or transformational, but we're looking for a couple of things along the lines of what RafterOne was last year. Right. In a 12-month period. Yeah. RafterOne, which I will sort of try to explain, is sort of a systems integration consulting. Very focused on. Software- Salesforce or Salesforce only. Yeah. Because we built, an Adobe practice inside of the digital piece of one of our large networks, with expertise both on the B2B and the B2C side. Mm-hmm. Just, you know, a lot of folks who have the certifications and then, you know, some of their own kind of proprietary tools. Like I said earlier, it's like how do we build on what we've done with data and tech in media to now address media and tech in somebody like a RafterOne, to then sort of sell that through to large clients, you know, as they're doing kind of their implementations of a Salesforce solution. Got it. For example. maybe just to wrap up, you guys, bought back over $300 million in stock last year. Balance sheet's in a good spot. How do you guys think about prioritization between buybacks, dividend growth, and sort of managing the balance sheet? I mean, like, you know, Like you said, we delevered and, you know, we obviously... Our finance folks, you know, when you think about kind of our debt maturity profile given kind of what's going on with interest rates now, we're really well-positioned. To our mind, it'll be more of same, where we feel like all three components of that are important. As I said, we're not, you know, thinking that there's a need for transformational M&A. It would be continuing to grow the dividend, which has been growing now for, you know, 11 years, even as we move through the pandemic. Now that we've, you know, reinstituted share repurchase, that will be a part of it. kind of, you know, a third, a third, a third-ish, you know, being opportunistic maybe, you know, if and as needed on M&A. Okay. Well, we're basically out of time. Hopefully you don't have seven meetings now to go after this. You've had 14 I hear. The fact that you know, you've got me by a bunch. Right. Philippe, thanks so much for being here. Pleasure. Thank you. Thanks, everybody. Thank you.