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Good morning, and welcome to the Interpublic Group Fourth Quarter and Full Year 2023 Conference Call. [Operator Instructions]. This conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Mr. Jerry Leshne, Senior Vice President of Investor Relations. Sir, you may begin.

Good morning. Thank you for joining us. This morning, we are joined by our CEO, Philippe Krakowsky and by Ellen Johnson, our CFO. We have posted our earnings release and our slide presentation on our website, interpublic.com. We will begin with prepared remarks to be followed by Q&A. We plan to conclude before market open at 9:30 Eastern time. During this call, we will refer to forward-looking statements about our company. These are subject to the uncertainties in the cautionary statement that are included in our earnings release and the slide presentation. These are further detailed in our 10-Q, 10-K and other filings with the SEC. We will also refer to certain non-GAAP measures. We believe that these measures provide useful supplemental data that, while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance. At this point, it is my pleasure to turn things over to Philippe Krakowsky.

Thank you, Jerry. Thank you all for joining us this morning. As usual, I'm going to start with a high-level view of our performance in the quarter and for the full year as well as our outlook for the year ahead. Ellen will then provide additional detail and I'll conclude with updates on key developments at the agencies to be followed by Q&A. We're pleased to share our fourth quarter highlighted by our strongest growth of the year, which exceeded expectations during our seasonally largest quarter. Organic growth in the quarter was 1.7% on top of 3.8% a year ago. Underneath that number, the quarter continued to reflect the cross currency at work in the economy at large and within our portfolio of services and our client roster. Those include the headwinds that we've called out and discussed throughout the year, most notably the austerity among clients in the tech and telecom sector which was evident across our competitive set and the challenges faced by our digital specialist agencies. These factors continue to weigh significantly on our overall growth. In October, we also called out the impact of the tragic developments in the Middle East. First and foremost, it needs to be said that the war and geopolitical turmoil continue to put huge numbers of people in Israel, Gaza and increasingly across the region in harm's way, and that includes many of our colleagues. Understandably, this has also had an impact on economic activity in that part of the world, and therefore, in our results. Notwithstanding those factors, our growth in Q4 showed acceleration from earlier in the year. New business wins onboarded in steadily greater size. And here, it's also worth noting sustained strong performance in media, which was our growth leader throughout 2023, and stronger growth in the healthcare sector as well. Our U.S. organic revenue performance improved from Q3 into Q4 and the overall sequential improvement was helped also by our European and Latin American markets, and both of those regions compounded strong performance in the fourth quarter a year ago. We saw solid levels of variable year-end client investment or the so-called fourth quarter project spend. Given that the macroeconomic backdrop remains somewhat cautious, this seems to have largely been a function of seasonal activity in the quarter. Growth in the fourth quarter brings our organic revenue change for the full year 2023 to a decrease of 10 basis points. That follows a strong 7% growth organically in 2022. Looking at sectors, performance was mixed in Q4. six of our eight client sectors saw revenue increases. Growth was led by clients in the healthcare sector, as mentioned earlier, followed by the consumer goods and food and beverage sectors. Auto and transportation was down slightly, though against double-digit growth in Q4 2022. Between budget reductions and loss assignments, our tech and telecom sector weighed on our consolidated organic growth by approximately negative 2.5% in the quarter. Each of our operating segments grew organically during the quarter. In Media, Data & Engagement Solutions. Organic growth was 1.1% led by continuing very strong growth at IPG Mediabrands, decreases at our digital specialists weighed significantly on this segment. Our Integrated Advertising & Creativity Led Solutions segment grew 2% organically, paced by strong growth at IPG Health and FCB partially offset by some of our more traditional offerings. Our segment of Specialized Communications & Experiential Solutions grew 2.9% organically in the quarter. We saw balanced growth across the full range of disciplines including public relations, experiential and sports marketing. Turning to profitability and expenses in the quarter. Our teams continued to excel operationally. We effectively use the levers of our flexible business model to navigate a complicated economic environment and a challenging year while simultaneously investing in the growth of our most modern and sophisticated capabilities. The result is the strong fourth quarter and full-year margin performance we are reporting today. Adjusted EBITDA margin on net revenue was 24.3% in the quarter an increase of 200 basis points from a year ago. We drove operating leverage on our expense for base payroll, benefits and tax, our performance-based incentive compensation and our expense for occupancy. With that performance, full-year margin was 16.7%, which delivers against the target we set at the beginning of 2023 and further consolidates significant margin improvement over the recent past. Fourth quarter net income as reported was $463.2 million. Our adjusted EBITDA was $628.5 million, an increase of 11% from a year ago. Fourth quarter diluted earnings per share was $1.21 as reported and $1.18 as adjusted for intangibles, amortization and the nonoperating impact of the disposition of small nonstrategic businesses. Full-year adjusted diluted EPS was $2.99 and as an important reminder, our EPS in the year's second quarter both as reported and adjusted, included the benefit of $0.17 per share related to the resolution of routine federal income tax audits of previous years for which we did not adjust. During the quarter, our share repurchases totaled $131 million, which brought our share repurchases in 2023 to $350 million. Over the course of the year, total capital returns to shareholders between dividends and share repurchases were $829 million. As you've seen today, given the continued confidence of our Board and our operating strength and financial position as well as our long-term strategic trajectory, we've once again raised IPG's quarterly dividend by 6% to $0.33 per share. This marks our 12th consecutive year of increased dividends, and our Board also authorized an additional $320 million of share repurchase on top of the $80 million remaining on our previous authorization. Turning our discussion to 2024, we continue to see economic and geopolitical uncertainty inform many of our clients' thinking. Despite signs that the consumer economy is improving, there remains a disparity of views regarding overall macro growth prospects. This is leading to some client conservatism, largely consistent with what we noted over much of the past year. We're seeing a measure of quarter-to-quarter stability in the tech and telco sector, previously discussed budget reductions at our major technology industry clients have been a consequence of broader enterprise cost-cutting programs within those companies. And while it's still not possible to call the timing with a significant upturn in tech spending and marketing activity, we've noted a more recent stabilization in that spend. However, a return to growth for us in this sector has not been factored into our plan for 2024. With respect to our specialty digital offerings, we've taken several steps to strengthen their performance. This includes new leadership, co-location of global headquarters in a common innovation hub as well as comprehensively lowering and aligning their operating cost base in line with revenue. We continue to focus on a broad range of strategic as well as market-facing solutions over the near term, and that includes M&A to address the need for greater scale and digital transformation. As we look ahead, we remain confident in the fundamental strength of our company. We're focused on building on significant new business success during the past year as well as on our longer-term record of growth. We also anticipate that the strongest and most consistent growth areas of our business, which is our data and tech-driven media offering, healthcare marketing expertise, PR and experiential marketing capabilities will continue to perform well in the year ahead. In addition, our proven operational discipline will stay in effect. The net of these moving parts with certain areas of very strong performance within the portfolio, continued client caution and a focus on addressing challenges in some of our legacy and digital specialists, leads us to an expected organic net revenue growth for 2024 in a range of 1% to 2%. At that level of growth, we expect 2024 full-year adjusted EBITDA margin of 16.6%. This reflects a number of investments including in further development of our contemporary addressable capabilities, which is the data-powered tools that inform and drive integration and decision-making across IPG, Retail Media, Artificial Intelligence as well as building new buying models within media brands. We'll also continue to focus on streamlining operations and processes across the group. We're confident that our investment in growth, combined with continued operational excellence on the part of our teams means that our margins will resume their upward trajectory over the years ahead, consistent with our record in this area. In 2024, delivering on our goals, along with integrating our services in ways that help clients build their business and their brands. will be essential in creating value for all of our stakeholders. At this point, I'll hand things over to Ellen for a more in-depth view of our results.

Thank you. I hope that everyone is well. As a reminder, my remarks will track to the presentation slides that accompany our webcast. Beginning on Slide 2 of the presentation. Fourth quarter net revenue increased 1.4% from a year ago with organic growth of 1.7%. That brings our organic revenue decrease for the year to 10 basis points. Our four-year cumulative growth rate is 13.9% which is through the volatility of the COVID period and now, hopefully, the post-COVID period. Adjusted EBITDA in the quarter was $628.5 million, and margin on net revenue was 24.3%. Our diluted earnings per share in the quarter was $1.21 as reported and $1.18 as adjusted. So, excluding amortization of acquired intangibles, a nonoperating gain from the sale of a few non-strategic businesses. Our adjusted diluted EPS was $2.99 for the full-year, but that includes the benefit of $0.17 per share in the second quarter related to the resolution of routine federal income tax audits of previous years, of which we are not permitted to adjust. We concluded the year in a strong financial position with $2.39 billion of cash on the balance sheet and with 1.8 times gross financial debt to EBITDA as defined in our credit facility. The latter metric includes our double carry of $250 million of gross debt due to having prefunded our upcoming April maturities. We repurchased 4.3 million shares in the fourth quarter bringing our full-year repurchases to 10.4 million shares, which returned a total of $350 million to our shareholders in 2023. Our Board increased our quarterly dividend by 6% to $0.33 and authorized another $320 million repurchase program in addition to the $80 million remaining under our prior authorization. Turning to Slide 3, you'll see our P&L for the quarter. I'll cover revenue and operating expenses in detail in the slides that follow. Turning to the fourth quarter and continue our revenue on Slide 4. Our net revenue in the quarter was $2.59 billion, an increase of 1.4% from a year ago. Compared to Q4 '22, the impact of the change in exchange rates was positive 50 basis points. Net dispositions were 80 basis points. Our organic net revenue increase was 1.7%, which brings us to a slight organic decrease for the full year of 10 basis points. Further down the slide, we break out our segment net revenue performance. Our Media Data & Engagement Solutions segment grew 1.1% organically on top of 5.2% in the fourth quarter of 2022. The quarter was driven by strong growth in IPG Mediabrands on top of double-digit growth a year ago. Our challenges are our specialty digital agencies continue to significantly weigh on our overall segment growth. The organic decrease of this segment was 10 basis points for the full year. Organic growth at our Integrated Advertising & Creativity Led Solutions segment was 2%, which is on top of 2.2% a year ago. Our growth in the quarter was led by IPG Health and FCB partially offset by some of our more traditional offerings. For the year, the segment decreased 1.7% organically after 6.2% growth in 2022. At our Specialized Communications & Experiential Solutions segment, organic growth was 2.9% on top of 3.6% a year ago. We had growth across all major segment disciplines: public relations, experiential and sports marketing. For the year, the SC&E segment grew 4.1% organically compounding 8.6% organic growth in 2022. Moving on to Slide 5, our revenue growth by region in the quarter. The U.S., which was 62% of our fourth quarter net revenue grew organically by 10 basis points. We had notably strong growth at IPG Health, IPG Mediabrands and FCB. These increases in others were largely offset by decreases at our digital specialist agencies and by the loss of a client in the telecom sector at McCann. In addition, the impact of macro uncertainty was felt broadly across a more traditional consumer-facing offering. International markets were 38% of our net revenue in the quarter and increased 4.3% organically, which is on top of 6.1% in the fourth quarter of 2022. In the U.K., which was 8% of our net revenue in the quarter organic growth was 40 basis points. We had very strong growth declines in the automotive and retail sectors. Those increases were largely offset by decreased revenue in the tech and telecom and healthcare sectors. Continental Europe was 10% of our net revenue in the quarter and grew 11.7% organically on top of 5.7% a year ago. We grew across most national markets and had notably strong performances by IPG Mediabrands and McCann. We saw strong growth in consumer, food and beverage and healthcare sectors. In Asia Pac, which is 8% of net revenue, our organic decrease was 1.5%. While we had strong growth in India and Australia, that was more than offset by decreases in Japan and China. In LatAm, we grew 15% organically in the quarter on top of 5.8% a year ago. Our growth was across all major national markets with notable strength in Mexico, Brazil and Argentina. LatAm was 6% of our net revenue in the quarter. Our other international markets group which consists of Canada, the Middle East and Africa, decreased 1.4% organically against 6.9% growth a year ago. Performance was due to a double-digit decrease in Israel. Other international markets were 6% of our net revenue in the quarter. Moving on to Slide 6 and the operating expenses in the quarter. Our fully adjusted EBITDA margin in the quarter was 24.3% compared to 22.3% in 2022, an increase of 200 basis points. Underneath that improvement, our ratio of total salaries and related expenses as a percentage of net revenue was 59.4% compared with 61% in last year's fourth quarter. We have leverage on our expense for base payroll, benefits and tax and on our expense for performance-based incentive compensation. We ended the year with a headcount of 57,400 compared with 58,400 a year ago, a decrease of 1.7%. Our office and other direct expense increased as a percent of net revenue by 10 basis points to 13.6%. Occupancy expense decreased as a percent of net revenue by all other office and other direct expense increased mainly due to investments in the branding and positioning of our media offerings and in cloud computing technology. Our SG&A expense was 0.9% of net revenue a decrease of 30 basis points. Turning to Slide 7, we present detail on adjustments to our reported fourth quarter results in order to give you better transparency and a picture of comparable performance. This begins on the left-hand side with our reported results and steps through to adjusted EBITDA and our adjusted diluted EPS. Our expense for the amortization of acquired intangibles in the second column was $20.9 million. The small adjustments to previous restructuring actions was $0.8 million. Below operating expenses, our net gain from the sales of nonstrategic businesses was $36.8 million and $29.4 million after tax, which is shown in Column 4. At the foot of the slide, you can see the after-tax impact per diluted share of each of these adjustments, which bridges fourth quarter diluted EPS as reported at $1.21 and adjusted earnings of $1.18 per diluted share. Slide 8 similarly depicts adjustments for the full year, again, for continuity and comparability. Our amortization expense was $84 million. Dispositions over the course of the year resulted in the net gain of $16.4 million and $13 million after tax. The result is a full-year adjusted EBITDA of $1.57 billion and adjusted diluted EPS of $2.99, including, again, $0.17 from our tax item earlier in the year. Our adjusted effective tax rate for the full year was 20.6%, so that includes the $64.2 million tax benefit in our second quarter. On Slide 9, we turn to cash flow for the full year. Cash from operations was $554.7 million and was $1.23 billion before the changes in working capital. As we have pointed out in the past, working capital is volatile. Over the last five years, we have generated a total of $738 million from changes in working capital. It's worth highlighting that our operating cash flow also includes a contribution of $46 million to our U.K. pension fund in the fourth quarter in order to derisk and close out our obligations to the fund. We are taking advantage of the interest rate environment to secure buy-in with a third party under terms that are attractive and will both ensure benefits for our planned participants and put the U.K. plan on course for a buyout. The buyout will transfer IPG's obligations and commitments to the third party, thereby eliminating IPG's future risks. We anticipate a required process will be completed in 10 months to 18 months. At that time, we estimate we would incur a noncash charge in the range of $180 million to $200 million net of tax, representing the end of our involvement with the plan. Our investing activities used $85.4 million that mainly reflects CapEx of $179.3 million, offset by cash proceeds of $58.7 million from the sale of nonstrategic businesses, and $35.1 million of net proceeds from investments. Our financing activities was $634.3 million, which is mainly dividends on our common stock, and repurchases of our shares, partially offset by the $296.3 million, we raised through the issuance of new debt to prefund our upcoming April maturity. Our net decrease in cash for the year was $158 million. Slide 10 is the current portion of our balance sheet. We ended the year with $2.39 billion of cash and equivalents. Slide 11 depicts the maturities of our outstanding debt and our diversified maturity schedule. Total debt at year-end was $3.2 billion including the upcoming $250 million maturity. Thereafter, our next scheduled maturity is not until 2028. In summary, on Slide 12, financial discipline continues. Our balance sheet and liquidity give us a strong foundation to build on for success. And with that, I'll turn it back to Philippe.

Thanks, Ellen. During the course of 2023, both our industry and our company faced an elevated degree of volatility. And while the top line improved measurably through the fourth quarter, for the year, we did not perform up to our expectations or the standards we set over the long term. We've covered the ins and outs of this performance as it relates to our asset and client mix. To address the needs of modern marketers in recent years, you've seen us create centralized skill sets and resources in areas such as audience definition and identity resolution and more recently, commerce and production. We're connecting more of our traditional offerings to these capabilities, and in order to activate these services fully across the group. During 2023, we also brought in a number of key functional leaders at the corporate group level. Our strategy, talent and culture continue to drive innovation, creativity and integrated services, which come together in ways that help our clients succeed. Another key to our long-term growth has been our expertise in first-party data management and accountable marketing solutions. These continue to be areas of core relevance to marketers looking to build their brands and simultaneously deliver business outcomes in an increasingly digital economy. More recently, we have focused on 4 strategic areas to further our data and technology strategy. First is a suite of identity resolution tools built by Acxiom to help clients navigate a cookie-less world. Second, our unified retail media network solution and IPG Mediabrands which ensures brands have a holistic view of their performance across the fast-growth ecosystem of retail platforms. This, in turn, integrates with our commerce offerings across the company, which extends to all core marketing functions, whether that's media, creative, experiential or earned impressions in PR. And fourth, our investment in performance marketing at KINESSO moving powerful addressable solutions closer to our end users, which is helping brands follow the movement of customers throughout their purchasing journey and then activate accordingly. Analytics teams as well as modeling and decisioning tools are core to all these efforts. These are also areas where we continue to make investments in Artificial Intelligence. It's important to note that AI is not new. Machine learning has been an ongoing part of our media and data business for many years. Combined with the latest advances in generative AI, we're now adding the same level of intelligence for the creation of personalized content across the marketing spectrum. We believe our current and prospective investment in AI continues to be at rates commensurate with competitors relative to the scale of our respective organizations. IPG has enterprise-level agreements in place with a range of key AI vendors, including Amazon, Adobe, Microsoft, Google, Getty and OpenAI as well as with innovative and emerging partners in this space. Our programs with these leading technology partners have resulted in products that are already being used by marketers, including Mediabrands where our client-facing brand voice and brand portrait capabilities help us activate campaigns on behalf of clients. IPG Mediabrands also launched a new AI chat assistant to optimize internal workplace productivity and enhance employee work styles through the use of Gen AI. At Huge, clients are using the agency's AI powered culture decoder and creative capital index tools to help clients on their transformation journeys, and R/GA is using Gen AI across practice areas and include creative concepting, research and analytics. Weber Shandwick has a group called the AI accelerator. It's both the team and a product set that help our clients with technical and cultural issues related to generative AI, training marketers on the technology and ensuring that they're using the tools as effectively and ethically as possible. Across a number of markets, both domestically and internationally. And with clients in a range of industries, we are in market with campaigns that feature thousands of variations of content all made possible by this expanding use of Gen AI and enabling our capabilities with the technology. As I mentioned earlier, we've also enhanced our senior team at IPG to ensure that our centralized resources in key areas like audience and identity, commerce and production are being used across the group, and this includes a Chief Client and Business Officer, who will drive collaboration and integrated service delivery for our clients. Chief Commerce Strategy Officer, who is connecting the existing channel and platform expertise across the portfolio. The Chief Solutions Architect, who's orchestrating our approach to marketing tech solutions that combine data and platform capabilities with partners such as Adobe and Salesforce. And just this week, we announced that one of the industry's top creative leaders will come across and join the team at IPG to focusing on championing talent and delivering innovative ideas and creative platforms across the company. I'll turn now briefly to the highlights of agency-level performance in Q4. As mentioned, Mediabrands performed well, closing out another very strong year. And a noteworthy development was the announcement at IPG Mediabrands and Amazon Ads had entered into a three-year agreement to help brands reach audiences through Prime Video ads. It's made us the first holding company to partner with Amazon Ads on this exciting new offering, which we believe will be significant in the evolution of the media marketplace. The recently streamlined and integrated KINESSO offering at a standout quarter and Media Post named Media Agency of the Year for 2023. At UM, we saw a global win with Boeing in partnership with FCB as well as the promotion of two internal leaders to be both the global and U.S. CEO. An initiative was named Media Network of the Year by the Festival of Media over North America and won that same honor for the sixth consecutive year in Latin America. At Acxiom, on the platform side, the company was spotlighted as an identity and onboarding leader in Snowflake marketing data stack report. Acxiom has also launched a new data offering in the healthcare space and the Acxiom Health data set is going to enable our healthcare clients to significantly increase campaign conversions and improve the success of display and video advertising. As we've mentioned, IPG Health had a strong quarter, leveraging tailwinds from both new business wins and its long-standing leadership in the category in terms of industry recognition, the unit dominated at the Medical Marketing and Media Awards being named Network of the Year for the second consecutive year. FCB's performance was strong as it has been consistently over the course of 2023. Clorox consolidated all of its U.S. creative duties with the agency during Q4. And at year-end, the network continued to garner top industry accolades creatively with Global Network of the Year honors at the one show and similar honors for its North America operations. Our earned and experiential agencies momentum worldwide became the first agency to secure AI patents diffuse machine learning and AI to create smarter and more targeted experiences for consumers and Octagon brought on a range of new clients in the fourth quarter, notably Subway as well as significantly expanding its work with clients such as SNICKERS in the Premier League. Our PR network showed solid growth during the quarter. We saw this across geographies. The healthcare sector was a strong contributor, driven by a key AOR appointment at Walgreens and new assignment with existing clients, Vertex, Weber one AOR duties for Eventbrite and also created the biggest earned media campaign ever on the part of CeloNova [ph], one of our important clients as part of their college football bowl sponsorship and Golan was appointed to lead Fidelity's U.S. PR efforts including external newsroom operations earned media relations, crisis management as well as content and measurement. On the ESG front, we announced our inclusion in three key corporate ratings. The Dow Jones Sustainability Index for North America, the Human Rights Campaign's Corporate Equality Index and a best place to work on the disability equality index. We see earning recognition from these leading organizations as further validation of our efforts to create a fair and inclusive culture across the organization. Now stepping back, I think we know that the world in which we live is increasingly digital, that more than ever, clients need help from us in using audience-led thinking powered by data and AI to solve for a widening set of business problems and opportunities. As always, we're going to continue to invest behind the growth of businesses by developing our own people and continuing to differentiate our offerings. This includes investment in upskilling, training and recruitment, particularly around AI, but also marketing platforms and cloud computing. Our plans also include a disciplined approach to M&A, which will focus on opportunities that are consistent with strategic growth areas, notably increasing our scale and capabilities in digital transformation, and our total commerce offerings. As stated earlier, despite the continued uncertainty we're seeing in some key client sectors, we are targeting growth in 2024 in the range of 1% to 2%. Consistent with that level of growth and the investment needs that we've discussed with you this morning, we foresee adjusted EBITDA margin of 16.6%. Based on our long-term track record, we're confident that margins will resume their upward trajectory in the year ahead. Of course, another key area of value creation remains a very strong balance sheet and liquidity. And our ongoing commitment to capital returns is evident in the actions announced by our board today, which also speaks to confidence in our strategic trajectory and our future prospects. Now that commitment to capital returns is in addition to meeting the M&A priorities mentioned earlier. I would just like to close by thanking our clients, our people around the world. Of course, those for you on this call for your continued interest and support. And with that, let's open the floor to your questions.

[Operator Instructions]. Our first question is from Adrien de Saint Hilaire with Bank of America. You may go ahead.

I've got a couple, if you don't mind. First of all, Philippe and Ellen, can you help us with the cadence of growth that you expect for 2024. Some of your competitors have been talking about Q1 being in line with the full year. Some others have talked about the year being more second half weighted. Where do you shake out? And the second question is what impact from net new business? Are you assuming in the 1% to 2%? Because on the one hand, you've had some decent success, of course, with GEICO, Pfizer, but then you have some other accounts which are under review like Amazon, some others like GM which may be under review. So curious if you've assumed any benefits or any loss or something neutral in there? Thank you, very much.

I'll try to do it just unpack and give you the component parts of that 1% to 2%. I think that would sort of be two ways to consider it. Whether you think mix and/or balance of assets in the group, right? So relative size of maybe some of those more traditional assets. We've talked about the impact that the digital agencies, though a small part of revenue we're having to our overall growth. But what we factored into our thinking was strong continued performance from segments of the portfolio that have either more precision or more accountability or technical expertise baked in. So clearly, media, long leader, accretive top and bottom line, healthcare. And then marketing services like experiential and earn for any number of reasons, I think, are very relevant and making an impact with clients given how hard it is to connect with consumers. We factored in the expectation that tech and telco will continue to pressure growth less so than last year. And that's, as we said, stabilization, broadly speaking, among that client set. But for us, clearly, we're carrying a sizable loss in telco that will be felt through most of the year. On the digital specialists I think the plan has similar expectations. They do lean more heavily into the tech space. But as I also mentioned, I think we're thinking a lot about whether we've got the scale there that we require, specifically around skill sets like digital transformation. So not likely positive but less of a drag than last year. And then with respect to new business, as you said, we had quite a number of large wins, some of which we began to feel the benefit of in the back half of last year and more so in Q4 regrettably, we then had two sizable losses, different flavors, different reasons behind that. But we're going to basically be carrying the headwinds on both those losses all year this year. So, if we think about new business as we head into the year for the totality of '23, that's taken a lot of the wind out of our sales. So, we figure we're broadly speaking, flat. And those are all the moving parts. I mean I don't know that Ellen if there's anything to add, and we don't usually sort of walk folks through the phasing of the quarter. But hopefully, that is point by point, all of the ways that we got to how we see '24 and what informs that range that we're guiding to.

Our next question is from David Karnovsky with JPMorgan. You may go ahead.

Maybe a follow-up on a prior one. Believe you noted stabilization broadly for...

There's only been one. You're following up on a prior question, the second question.

Well, I follow up on the first part of the prior question. You noted a stabilization broadly for tech and telecom outside of the new business impact. I just wanted to see if you could expand on what you're seeing in the vertical right now? Are there any kind of renewed indications of Project Broker brand spend? And then on margins, in the past, you've spoken to the company's ability to expand profitability in almost any environment. And I think we can appreciate there are unique factors in '24 like incentives resetting or investment in certain areas. But I wanted to get you to speak a little bit longer term? And would you expect to kind of continue to convert organic growth into margin gains as you have in the past?

Absolutely. Well, look, I don't think any of us is -- the way in which we demonstrated in '23 that you can run a business this scale and this complexity and see margin improvement, notwithstanding no growth is not our -- any number of us have talked about it over time. And we've always said that the flexible cost model does give us the ability to do that. Looking forward, I think that we tried to call out for you where we see the need for and we're pretty specific about areas where there'll be organic investment in the business. And I think that's part of why we're essentially in a sort of flat-ish down 10 basis points in terms of where the margin target is. But nothing has changed that in the underlying with growth we convert to improvement in margin. And then as you know as well, there is the degree to which we're going to continue to think about and look at our own processes and reengineering our business AI will actually play a part in that as well. It's not a '24 event, but the additional dimension to our media offering. So, media buying model that kind of adds the ability to take that principle to generate efficiency because I think we've been a media buyer where value has been about effectiveness. I think there'll be opportunity there. So, I would not conclude that this year is indicative. I think we tried to be as clear as we could in the prepared remarks that we still see upside on the margin. And then the first part of your question, I don't -- again, I think what we shared in the past is that it did feel to us as if during the fourth quarter, tech and telco was stabilizing. And I would say that that's still the case. It doesn't feel like we are seeing meaningful upside there. And to Adrien's question, we've not factored that into our thinking for '24.

The next question is from Tim Nollen with Macquarie. You may go ahead.

Philippe, I'd just like to ask about some of the reorganizations that you've done, you've had some management turnover you've had some account losses but I'm focused actually on the data and media segment, and you mentioned KINESSO in your prepared remarks. Just wondering if you could help us understand how that data and media organization is more simplified, how it presumably should be better and help clients drive better returns on spending, hopefully win some more business. And relatedly, I think you mentioned also in your prepared remarks about focusing some M&A activity on scale and digital transformation activities. I wonder if that's a particular call out or just -- and if there's anything more to add to that? Or if this is just kind of a standard thing that you would be investing in?

That's both good questions. I mean the KINESSO decision was sort of an evolution. I think you know us and have followed us long enough to know that post-Acxiom, we built engineering capability that allowed the data to be accessed by and put to use, again, by as many of our agencies as possible, concentration still being largely of our media business that then led to the creation of an addressable unit. And what we were observing there was just that there started to be a bit too much complexity. There were just too many places that you had to stop along the way to get that kind of work done. So, we have both recombined and integrated what was matter kind KINESSO reprise all of those units performance, kind of holistic, addressable and then the folks who build the tech that drives that into one unit. We've also aligned that into Mediabrands. And as I mentioned, their performance was actually very strong last year, specifically called it out for the quarter. And it's just meant just a more streamlined way to get all the way through that value chain. And we still have work to do to activate Acxiom across more of the group. So, I think that will also help because it's likely that, that will become the tech node from which we do that for the entirety of IPG. And the second question you asked, I think, goes to when I look at or when we look at what we've run into with very, very -- with premium digital agencies that are in the portfolio that for many years, we're very, very strong performers is a sense that coming out of pandemic scale in that space matters and you're sort of looking at where some of that business is going and the nature of how a lot of those RFPs come across. And so, I think it's an area we're interested in and would have been interested regardless, but it's definitely an area of particular focus at the moment.

The next question is from Steven Cahall with Wells Fargo. You may go ahead.

So, we've seen one of your peers that media has been strong and accelerating and creative has been softer. I think you've called out some similar trends with creative a bit softer and Mediabrands performing well. I'm just wondering, as you speak to clients, do you think that this change in the way that advertising is evolving means that brands are going to increasingly shift dollars into paid media and take dollars out of creative? Is that a long-term change to the industry? And if so, what does it mean for Interpublic? And then just to pick up on the margin topic. So, I think it was about eight years ago, every agency had to invest in capabilities like programmatic, and it did take some margin expansion out of the industry kind of until about the COVID era. And I think now we're seeing some of that in both media and AI. So how do you think about this investment cycle in terms of how long it might last before that longer-term margin expansion plan comes back? Thank you.

That's a lot in two very quick questions. So, I guess on the latter, I would say to you that, obviously, if you look at our margins four years ago today -- five years ago today. So, I think that the AI piece, to begin with, it will likely be helpful from a margin perspective. But I think that you have to kind of unpack the spend. There's been a lot of noise around who's spending what or what those commitments are. And I'm not sure that even for the folks who put some numbers out there, it's necessarily been apples-to-apples. But I think from where we sit, the investments across the group that would classify as AI-related are quite significant. So, if we look at '24, I assume that, that number is $80 million range in berry. And that is tech, software, including licenses and the partnerships, many of which I called out to you. And then development, which can happen in-house and then a great deal of training that is required. And so, AI has been a part of the business for many years, particularly data, on the media, sort of more tech-leaning offerings. So, the spend has been growing over time, and that '24 number I throw out there is not all incremental, right? So, you think about the annual budgets we've got for tech, for development, for training portion of that now, an increased portion of that is going to be directed to AI. And as we rethink core components of our business, Ellen talks a lot about how we are kind of looking for more efficient processes. We're going to basically, I think, fund that incremental spend internally. So, I don't know that I would conclude that it's going to be a significant drain on our profitability prospects. And I'm thinking about programmatic, did that happen faster. I mean, AI has definitely been part of the business for a while or certain parts of AI. And then the first question, I would say, it's not a trend that we haven't observed for some time. So, I would say that on the creative side of the business, things have become, in many cases, more project driven than a very, very kind of traditional model that would have existed years ago around kind of AOR. And there's still significant value and creativity, but I think you want to focus on where you've got very, very strong players in that space. And I think, as you called out, many of the large holding companies index heavily into some of those traditional assets. And so, in a fragmented media ecosystem, creative ideas matter a lot. I look at the success we're having with FCB, which is a traditional agency, but it's a very forward-thinking management team, and they have figured out a way to plug into the data layer for insights and to get very precise in setting goals for what they're trying to accomplish with their clients, and then it's integrated with other disciplines, in their case, very strong production. So, if you've got great content and it's part of a bigger system, and then you've got smart delivery, that works pretty well. So, I think these days, clients want both. They're sort of asking for brand and performance which doesn't quite get to the question that you asked for the suggestion, which is, is there a point at which people abandon that because I think that's a dangerous thing as well.

Our next question is from Julien Roch with Barclays. You may go ahead.

Just one question. Omnicom's guided to 3.5% to 5% provision is 4% to 5%, you 1% to 2%, so let's call that a 3-point difference. Can you unpack that difference between the digital specialist those tech and telco net account wins and anything else I did not think about? So, you said flat on account wins, but provision and Omnicom will benefit from account wins. So, I don't know, 50 basis point or 100 basis point on that. But what about the drag from digital specialist exposure to tech and anything else I didn't think about? Thank you.

I can't tell you what is in their numbers. And obviously, we're comparing things that are not exactly alike based on the accounting. I think the media buying capability that we're talking about adding mail, so account for some of that delta but if I look at the entirety of '23, I can tell you that tech and telco cost us 2.2% of organic growth and the digital specialist cost us about 1.2%. And if you deduplicate that so that you're not double counting, that cost us 3 percentage points of growth, right? So again, I can't go into what is in their numbers, and I don't think that they're exactly comparable. I took to the point of the very first question, I wanted to be very sort of direct and transparent and pull apart for you all how we built our view to the year. And then to your question, I think that is it like-for-like? Is a question? We have a terrific media offering, but we were perhaps a different approach and a focus on efficiency means that there's an opportunity there for us because that may be part of the gap. And then hopefully, the numbers I just shared with you fill the rest of the gap.

And that was our last question. I'll now turn it back to Philippe for any final thoughts.

Thank you. Well, thank you, Sue. Thank you all for your time, and we will stay focused on the work that needs to get done here because to the point of a number of the questions, we definitely have to get back to things that have been the norm for us for a long time. And I think this is going to be a year where we can finish some of the transformations that are required to do that. So, I appreciate the interest and the time.