Thank you very much. I'm here with Paul Richardson and Fran Butera. We did our call with the U.K. institutions and analysts this morning, and this is the afternoon call London time, morning call, New York time for U.S. institutions and analysts. So as -- our presentation is on our website.

Paul will kick off and take you through the first quarter details, and then I'll come back and talk a little bit about how we see the climate, the general climate and our strategy in that context. So Paul, go ahead. .

Thanks, Martin. I know there are slides on the website. So I will turn them. I think I'm in the same order. .

So I'm starting on Slide 4, which is first quarter highlights. Reported billings were up 9.2% at just over GBP 13 billion for the quarter. The reported revenues were up 16.9% at GBP 3,597,000,000, which was up 3.6% on a constant currency basis and up 0.2% on a like-for-like basis.

The net sales growth on a reported basis is up 18.5%, 4.8% on a constant currency basis and 0.8% on a like-for-like basis. On a constant currency, revenues, net sales and operating profits are well ahead of budget and ahead of last year.

And share buybacks, which totaled GBP 180 million, represented 0.8% of the share capital we purchased during the quarter, which compared to GBP 62 million in the same period in 2016. That is still in line with our full year target to buy back approximately between 2% and 3% of share capital in any 1 calendar year..

The average constant currency net debt was up GBP 453 million to GBP 4.5 billion. And on a point-to-point basis, net debt was up similarly, GBP 474 million on the same basis.

This reflected the strong acquisition activity and spend throughout 2016 and early 2017 and did include, with the merger with STW, the debt that they had that we took onto our balance sheet for approximately GBP 150 million in addition to -- obviously, to a high level of buyback spend.

On net new business, we had wins of just over GBP 2 billion in the quarter compared to GBP 1.8 billion on a constant currency basis for the same period in 2016 and had the resumption of net new business momentum with either first or second place in all net new business tables on a year-to-date basis..

So turning now to Slide 5, where we build out the revenues for you. So net sales on a like-for-like basis were up 0.8%. Acquisitions added 4%. Again, we still have 1 quarter of the STW merger acquisition, representing around 1/3 of that 4% and 2/3 from acquisitions, other acquisitions completed since April 2016 coming through in the numbers.

So therefore, on a constant currency basis, with acquisitions, the growth is 4.8%, and foreign exchange added 13.7%, so the reported sterling number for the year, which totaled 18.5%. If we were a dollar-reporting company, our reported net sales growth would have been plus 2.6%.

If we were a euro-reporting company, our reported net sales growth would be plus 6.3%. And if we were a yen-reporting company, our reported net sales growth would be minus 1.1%..

So on Slide 6, we show the effect how weak sterling has been compared to the rates a year ago. I think clearly, the U.S. dollar, which is approximately $1.43 a year ago is now 13% stronger and the pound is 13% weaker at $1.24.

And that's a similar story across all our major trading currencies, and in some cases, sterling is even weaker, the weakest being against actually Brazilian real, around 30%; or even the Russian ruble, around 32%..

On Slide 7, we show you the shape of the foreign exchange impact on 2017. Just a reminder, we have the benefit of 10% currency in 2016, the first quarter, as we've just gone through the benefit of 13%. The second quarter, we expect the benefit to be approximately 8%. And therefore, the first half benefit from currency should be around 11%.

As you can see, that tails off significantly in quarter 3 and even goes negative in quarter 4. So on a full year basis, the benefit from currency will be between 4% and 5% if currency rate stay at the -- similar to levels today..

On Slide 8, we go through the cumulative like-for-like growth both on the revenues and on a net sales basis. Again, just to sort of show you how the chart works -- so for example, on revenues, in quarter 1 2016, we grew at 5.1%. In quarter 1 2017, it is 0.2%. So the 2 years combined have a cumulative revenue growth of 5.3%.

Similarly, on a net sales basis, taking quarter 1 '16, adding to quarter 1 '17, we have a 4% net sales, combined basis over 2 years..

So on Slide 9, we show what the 2-year cumulative revenue trends are for ourselves and our competitors purely on a revenue basis, which is the only number that others report.

So in the last 2 quarters, our rate has been between 5% and 7%; Omnicom has been around the 8% level; Publicis has been between 0.3% and 1.7%; IPG has been between 9% and 10%; and Havas has been between 3.5% to just over 7%..

If I turn now to our own business and look at the revenues and net sales by sector. First, on Slide 10, the advertising and media investment management business, which represents 44% of our net sales, on a revenue basis was up 0.2% in the quarter on a like-for-like basis; and on a net sales basis, was down 0.3% on a like-for-like basis.

Our data investment management business, representing 16% of our net sales, was down 0.8% for net sales in the quarter, so a soft quarter for them. And in public relations and public affairs, which represent 9% of our business, we had a revenue growth of 4.4% and net sales growth of 3.9% and actually was the strongest discipline in the quarter.

Our branding and identity, health care and specialist communications category, representing 31% of the group's net sales, had a revenue growth of 1.4% and like-for-like net sales growth of 2.2%. So overall for the group, we had revenue growth of 0.2% and net sales growth of 0.8%.

If we cut across the whole business and just look at our digital net sales, as is footnoted here, we see on a group basis, we had revenue growth on a like-for-like basis for all our additional assets of around 4.1%; and on a net sales basis, around 4.5%..

So turning to some remarks about each of the disciplines. On advertising, media investment management, it was our strongest constant currency revenue growth at 7.1% and net sales growth of 7.7%. Obviously, that did include acquisitions. On a like-for-like revenue growth, we grew 0.2%; and on net sales basis, minus 0.3%..

Advertising remains challenged in the mature markets, particularly in the recent years in Western Continental Europe. And on media investment management, we were strong in all regions and subregions other than North America and the Middle East. Particularly in the U.K., Western Continental Europe, Latin America and Africa, we saw good growth.

Strong comparatives compared to the first quarter 2016 for our media investment management business was growing almost 8% on a revenue basis..

We concluded 5 acquisitions in the advertising creative space in the quarter, a digital agency in China, a creative agency in Croatia, a second digital agency this time in Ireland, and a Hispanic creative agency in the U.S.A.

We stepped up our ownership of Shanghai Ogilvy & Mather, which has both advertising and public relations, public affairs discipline in our Chinese business. And lastly, on the investment management, we stepped up our ownership of Mediacom in India..

one, Newsaccess in Ireland and a step-up of our Precise business in the U.K..

In public relations and public affairs, on Slide 13, we saw constant currency net sales growth of 6% and saw the strongest of all the sectors like-for-like net sales growth of 3.9%. All regions and subregions were up, particularly strong growth in the U.S.A., United Kingdom, Western Continental Europe and the Middle East.

And Cohn & Wolfe performed strongly, particularly in the U.S.A., driven by consumer and health care spending; together with H+K Strategies in Europe, Africa and Middle East; Ogilvy Public Relations in North America, Europe, Africa and Middle East; and in our specialist PR business, Glover Park, Hering Schuppener, Ogilvy Government Relations, Buchanan all performing well in the quarter.

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In terms of branding, identity and health care and specialist communications, we saw constant currency net sales growth of 3.7% and like-for-like growth of 2.2%, the second strongest sector.

All businesses in this sector grew, except parts of the group's specialist communication businesses, particularly strong growth we saw in branding and identity and digital, e-commerce and shopper marketing businesses..

So turning now just to digital across the group, in terms of revenues, it represents approximately GBP 1.8 billion or approximately 39% of the total revenue of the group for the quarter, up from 38% a year ago and on a constant currency revenue basis was up 6% and, on a like-for-like basis, was up over 4%.

On a net sales basis, the digital revenues now represented 40% of the group across that 40% barrier or threshold for the first time. .

one just very recently, Deeplocal in U.S.A.; and SubVRsive in the U.S.A., which is a virtual reality specialist company also acquired in the first quarter. We made further investment in some of our funds and media investments in -- as you saw, in China and in the U.S.A also in the quarter in relation to digital..

In terms of revenues and net sales by region, on Slide 16. In North America, which represented 39% of our sales, we saw revenues decline by 3%; and on net sales basis, like-for-like, we saw a decline of 1.1%. Again, this was driven by the account losses we did suffer in the second half of last year.

In the U.K, which is 13% of the net sales of the business, we saw like-for-like revenue growth of 3.2% and like-for-like net sales growth of 3.7%.

In Western Continental Europe, which is around 19% of the business, we saw revenue like-for-like growth of 5.3% and net sales growth of 4.3%; good growth and strong growth in a number of markets, including Germany, France, Italy, Sweden, Denmark, Belgium, Norway and Greece.

In Asia Pacific, Latin America, Africa, Middle East and Central and Eastern Europe, around 29% of the group's net sales, we were flat on the revenue line and basically flat on the net sales line. We did see good growth in a number of these markets apart from those markets of China, Singapore and Malaysia, which we called out in the press release..

So turning now to the net sales growth by subregion on Slide 17. You can see overall the mature markets, which includes obviously North America, where we were down 1.1%; United Kingdom, up 3.7%; and Western Continental Europe, where we're up 4.3%. Overall, mature markets represented growth of 1.1%.

And the faster growth markets overall were basically flat. So the group, therefore, was, in total, up 0.8%.

And you can see here that markets of Latin America, we continue to do well, growth of 3.6%; with difficulties in Africa and Middle East in the quarter; and Asia Pacific overall basically down 0.7%; with Central and Eastern Europe up 1% in the quarter..

So turning now to the top 6 markets, representing around 68% of the group. You see net sales in North America was down 1.3% in the quarter. We'll again give you some commentary later about each of the geographies in terms of which disciplines in particular were strong or find it challenging. U.K. continued to be good.

Having grown at 2.1% last year, net sales in the quarter were up 3.7%; in Germany, again, a very strong quarter for us, having followed 2 strong years with 10% growth in Germany in quarter 1. .

China was a disappointment, in Greater China in fact. Having been basically flat last year, we had disappointing quarter in quarter 1 at minus 7.1%, which is both part of the media investment management and data investment management pressures we saw in quarter 1.

As I mentioned on the call earlier, I do expect the media investment management business to perform considerably stronger in quarter 2 although the data investment management, I think, is -- would be a first half issue before we see some improvement in the second half in China..

ANZ. We do include the numbers in the whole of the Asia Pacific region figures we give you, but we can't break out the specifics for ANZ. Again, it's a listed company and they haven't issued a trading update since the year-end.

In France, we've had a good performance in the first quarter, with net sales up 3.5% after several years from which it wound up being flat or very close to flat in '15 and '16..

So turning now to BRIC markets, which represents around 11% of the revenues and net sales of the group.

Overall, they fell into the net sales by 0.9%, dragged down really by the poor performance in Greater China in quarter 1, which was minus 7.1%; however, very strong performance coming through, continuing in India, having grown at 13.8% last year, growing at 9.5% in quarter 1 this year; Brazil, which was negative on a full year basis in 2016, growing at 3.1% in 2017; and Russia, after a very tough year in 2015, continuing to grow steadily, albeit off a small base at 5% in 2016 and 8.4% in the first quarter 2017..

So in terms of the growth by region. In North America, where we saw constant currency net sales growth of 2.1%, a like-for-like decline of 1.1% was the weakest performing region.

Both advertising and media investment management and data investment management were weaker, partly offset by strong growth in public relations and public affairs, branding and identity and digital, e-commerce and shopper marketing. .

In the U.K., where we saw constant currency net sales growth of 5.6%, a like-for-like growth of 3.7%, was our second strongest region, particularly strong growth in media investment management, data investment management, public relations and public affairs, and specialist communications. .

In Western Continental Europe, constant currency net sales growth of 6.1%, a like-for-like -- sorry, 4.3%, was our strongest region; above-average growth in Belgium, Germany, Greece and Italy; and more challenging performances in Austria, Ireland, Netherlands, Spain and Turkey.

Advertising and media investment management, public relations and public affairs, branding and identity, health care, digital, e-commerce and shopper marketing were all strong; and data investment management was flat. .

And Asia Pacific, Latin America, Africa and Middle East, Central and Eastern Europe is our strongest constant currency net sales growth, which was due to the acquisitions, of 7.5%; on a like-for-like basis was minus 0.1%.

In Asia Pacific, all markets are strong except for Greater China, Singapore and Malaysia, with India over 9% despite strong comparatives last year. And in Latin America, we saw like-for-like net sales growth just under 4%, with Brazil recovering. .

So on Slide 21, a fairly accurate indication of how the individual countries have performed. So on a like-for-like net sales basis, we banded our sort of top 20 markets; so Argentina, which continue to be very strong, in part driven by inflation of growth of over 20%.

Markets growing between 10% and 20% on a like-for-like net sales basis included Germany, Indonesia and Philippines; markets growing between 5% and 10% organically on a like-for-like basis, including Belgium, India, Italy, South Korea, Russia and Sweden. And obviously, there's a number of other identified here on the chart [indiscernible].

You can see there those growing, where we had more challenging markets, including Greater China, Japan, Mexico, Holland, Poland, Singapore, Spain, Turkey, et cetera..

In terms of categories, this was in part driven by our new business successes last year. So in terms of the categories growing at more than 5%, in each case, is represented or explained by a significant win in that category. For example, electronics, there was the win with Electrolux. In government, there was the win of the U.S. Census and the U.S. Navy.

Pleasingly, in terms of the major categories, 3 of the big 4 were growing in the 0.5% to 5%. That includes financial services, food and personal care and drugs. And those that are growing less than 0.8% were automotive and telecom, obviously impacted by the losses we suffered last year..

one, the return of Mercedes-Benz, having briefly lost it some time ago; likewise in China, the return of the Volkswagen business, having previously retained the Audi business; so again, a very pleasing performance for our media business in China; and likewise, 2 other wins, 1 in the U.K. and 1 in the U.S.

in relation to the food categories, food and retail in particular..

So in terms of losses in the first quarter, we had already identified that we weren't prepared to stand for the review or the repitch in the Coty business that was passed on from P&G's Grey as a result of the change of ownership. We have 1 loss in the U.S.A. for an advertising business, a part of Kellogg's..

In terms of net new business wins, year-to-date, you see that we're basically 18% higher or just over GBP 2 billion or GBP 2.1 billion of net new business wins, slightly stronger on the media category.

New business wins recorded about GBP 1.2 billion compared to GBP 854 million a year ago, and a similar level of last year on the creative wins of GBP 844 million..

In terms of our estimates or trade estimates of major new business wins or losses since the 1st of April. Now the biggest win has really been in the media side, where we have 3 global wins coming through; in some cases, having some of the business before in the case of Kingfisher.

But otherwise, it's brand-new business coming through on either a global -- at all services or just media element of the wins; likewise, 2 other wins, 1 in creative, 1 in media in the U.S.A., 1 is Applebee's and 1 is the Whole Food Market; a number of losses we have incurred also listed down below, 2 in media and 2 in creative..

In terms of the cash flow and net debt. On the March year-to-date average, net debt was up GBP 453 million to $4.54 billion compared to just over GBP 4 billion in 2016 at constant 2017 exchange rates. That included net acquisitions throughout the period, GBP 129 million spent in quarter 1.

This compared to GBP 144 million in quarter 1 2016; and share buybacks, which were significantly higher this quarter at GBP 180 million, compared to GBP 62 million a year ago..

When you look at the last 12 months cash generation, it totals around GBP 1.6 billion. And the last 12 months cash spend totals around GBP 1.8 billion.

in addition to the outflow of the last 12 months, the impact on the net debt point to point, which is up GBP 474 million at GBP 5 billion, includes a debt from the merger with STW, which added around GBP 150 million to our balance sheet, obviously not in our cash flow but our balance sheet, which we have to record currently.

So that, plus the additional share buybacks, more than offset the improvements in working capital we've seen both in the second half of last year, which was strong and will modestly still improvement in the first quarter of this year.

The average net debt to headline EBITDA for the 12 months at 31st of March remains within our target range of 1.5 to 2x. .

Within the quarter, we made 14 acquisitions. 7 of those acquisitions are in new markets. Again -- and one is outside the circles of either faster growing or quantitative and digital, and that was the Hispanic advertising business acquired in the U.S.A. .

In terms of uses of free cash flow, on Slide 29, really not much new to report. Obviously, last year, the acquisition spend was strong at around GBP 605 million. We're still targeting between GBP 300 million to GBP 400 million this year.

Our share buybacks, which were 2% last year, we've had a strong start with 0.8% but still remain committed to our range of 2% to 3% on a full year basis.

The dividend increase, which was strong last year at 27% on a full year, reached our targeted payout ratio of 50%; our headroom from facilities, which are shown here on Slide 29, approximately GBP 3.1 billion. .

We've identified in detail on Slide 30, where we show you the maturity profile on the various bonds evenly spread between now and 2046, then average maturity of just under 10 years and average coupon of just under 3.5%. .

And with that, I'll hand over to Martin. .

Okay. Thank you, Paul. So just on Slide 31, we list in a slightly different way the macro and micro features that we see going on. We've ticked to show positive in green and negative in cross and where there's a mixture of the 2 together. So if I look at worldwide GDP, there is mixed news.

There's -- there are some forecasters forecasting an increase in nominal or, indeed, real GDP for '17 over '16, and others saying stable. I think a few of them saying down, but basically, people -- similar to '16 in terms of GDP. .

Trumponomics, the Trump economics, we see basically as being positive in a U.S. sense but negative probably on a worldwide sense. They -- certainly, as far as the U.S.

is concerned, the proposed changes, not obviously now health care, although that might come back, but certainly, the tax changes we saw announced yesterday plus the regulatory changes, plus the trade changes certainly as far as the U.S.

is concerned, probably stimulative as long as they can be implemented within a reasonable period of time; already delays. The Secretary of the Treasury indicated August for tax for that, seems to be putting -- be put back.

And clearly, the outline arrangements yesterday are in the context of negotiating in agreement with Congress given the budget constraints. .

IMF forecast for the U.K. slightly up, about, I think, 50 basis points. Elections in Europe are probably a bit of a damper.

There was this relief about what happened in the Netherlands and in France in the first round but it has to go through the second round, and it's a question about whether Macron will be able to make change in France, whether he has the lead party apparatus to do that. And there are other elections sculling around, obviously like Germany.

And then the suggestion that we might -- the elephant in the room might well be an Italian election or a Greek election. More likely, the Italian election will be a difficult one, where Renzi, with the help of Berlusconi, will probably go up against the Five Stars Movement [indiscernible] populist movement..

Interest rates look as though they're on the way up, although it will take some time for them to get anywhere near the levels that we've seen historically, and that drives a lot of some of the activity that we see going on the moment. .

Geopolitical trends, really negative, middle East, Korean Peninsula, and the relations perhaps between the U.S. and other parts of the world under some pressure, although they do seem to be easing, for example, in the case of Mexico. .

Traditional media, some questions being raised not only about the future of newspapers or the future of linear TV.

And on the flip side, digital and digital growth, despite some of the issues I'll come on to in relation to things like fake news and brand safety, digital offering more potentially -- you see that in our own case, digital in Q1 was up 4%, 4.5% like-for-like, and net sales now across the 40% level for the first time. .

The BRICs and Next Eleven offer more hope; Brazil beginning to stabilize; Russia, a little bit of growth; India, still a star despite demonetization; China, in our own case, have been more challenging and I think for multinationals generally been more challenging.

But maybe after the People's Party Congress in November later this year, we'll see a clearer policy in the second 5 years of the President's term or maybe even if he goes beyond that. .

At a micro level, the new normal, which I'll come on to, is low growth, tepid growth, low inflation although we are seeing a little bit more inflation in the U.K. because of the weakness of the pound and perhaps in the U.S.

because of the Trump stimulus -- or potential Trump stimulus, but basically, very little pricing power as a result and a focus on cost. .

The disruptors are not just the Airbnbs in the hospitality or Ubers in transportation or Amazon in retail and other areas. The disruptors could also be said to be -- include the consultants. I think this is more observers, analysts, media making the observation than reality.

We do see some of the consultants, Deloitte and Accenture, for example, in pitches rarely but we do see them. Some of our competitors say that they don't see them, and I think that might reflect the narrowness or the difference in their offerings, but we do see them and compete effectively against them.

And I think the irony in some -- to some extent or the paradox is that we see the consultancy companies acquiring traditional inverted companies, digital agencies, many of which have not -- have been challenged. And the irony, as I say, is that they're bringing those agencies, smaller, medium-sized agencies into the fold. .

In terms of capital return, we still see companies returning in the form of dividends and buybacks in excess of 100% of retained earnings. In 5 of the last 8 quarters, the S&P 500 has returned more to shareholders than -- so effectively shrinking.

But there are some signs as share prices reach these heights in the last quarter or so that buybacks are being lessened. But basically, capital return and aggregating responsibility for reinvestment remains, I think, the rule. Risk aversion and focus on cost remains the rule..

On a more positive note, e-commerce, I think, provides significant opportunities. We had a question this morning about what's been happening in China in e-commerce, but I think that's not a negative. What we see is an Alibaba or a JD.com, particularly the latter, in focus on brands and competitive -- is positive.

And that will spread throughout activities. Talking to one of our clients last night, the total focus -- 1 of our top 10 clients. The total focus is on digital and e-commerce. .

Fragmentation. The fragmentation of media, particularly online media, gives us an opportunity as an adviser as things become more complex. Just like the investment world, the media investment world becomes more and more complex and more reliant on outside or third-party advisers. .

Efficiency and effectiveness, good and bad. Efficiency obviously puts pressure on cost and structure. Effectiveness drives integration. What we're seeing, well known that one of our clients still has 2,400 agencies around the world; another one, not public who it is, has 700 agencies apparently just in China.

So there is -- at the time when clients are looking for ZBB-type efficiencies, consolidation offers a way forward.

And as we mentioned on previous calls, we do -- we have put together ZBB-type offers with different structures and different approaches and have been running 1 or 2 agencies around the world in that area who have developed a lean and agile cost structures with, at the same time, extremely good margins..

Related to that, the issues that have surfaced particularly in recent months around fake news, brand safety, viewability and measurement, one of our clients, Keith Weed, talks about value, validation and viewability, the 3 Vs. And these issues have come to the fore particularly in the last few weeks with the brand safety issue started in the U.K.

Unlike others, we've not basically taken a boycott position. We think that's very difficult to do given the fact that Google is the largest channel for media investment last year, a little under $5 billion out of $75 billion, up again in the first quarter this year, although Facebook was up even more strongly in the first quarter this year.

But the brand safety issues have not had time to find a way through in terms of our numbers yet. They really started at the end of Q3, although there may be some impact on digital spending, not a major level but at the periphery in Q2 we're yet to see. But the issues of brand safety and fake news and fraud and validation are really critical issues.

Measurement on Facebook, we've seen 3 or 4x recently, statistics of data being challenged.

And therefore, it's really important to sort this through, and that's the position we take on the brand safety issue with Google, working with Google on what we call white sites and black sites to make sure that the exposure, whilst it's probably, to be fair, impossible to get 100% security on brand safety and that's the same for traditional media, too, because that issue, brand safety, applies to newspapers and televisions.

And historically, we've had similar situations where inappropriate placement has caused angst amongst clients and amongst the population. So those issues are important. The fundamental issue is Google and Facebook accepting that they are media companies and should be run and deregulated in the same way that other media companies are. .

Third forces, negative in some senses -- in the sense that it's difficult for them to make traction. But having said that, those third forces are becoming more and more important. The possibility that Snap might well be asked -- Snap spending is projected this year at $200 million versus just under $100 million last year.

And that's $100 million last year or $96 million out of $404 million, I think it was, for the company as a whole. We'll see what happens this year. And then the last -- and then of course, Yahoo! and AOL, which we understand will be going through -- will offer an opportunity for offers.

It's now going to be called to offer an alternative to the Google and Facebook duopoly. .

The last but not least, there is a significant degree of price cutting going on inside the industry, and we've seen that in various forms. It was interesting that one of the calls this quarter, one of the analysts asked about the working capital outflow.

And there have been 1 or 2 cases, being very significant capital outflow, reflecting working capital outflow particularly in the last 2 or 3 years, as much as $1 billion, $1.5 billion depending on what period you take at 1 -- just 1 case.

And that seems to indicate that some in the industry are using, although they deny being bankers, are using payment terms as a means of winning business. And we think that, in the longer term, is -- will not be helpful, to put it mildly, to the industry. And it's storing up problems for future management generation..

On 32, we just outline the projections for GDP. And you can see GDP coming off in recent quarters. We show here the -- our like-for-like revenue and like-for-like net sales growth compared to forecasted GDP. GDP is picking up slightly in most of the forecast, as I indicated, but not as rapidly if you adjust WPP's GDP.

And that's the reason because our U.S. and European operations -- whilst our Asia, Latin America, Africa and Middle East, and Central and Eastern European operations are very strong competitively, in fact leading competitively. What we see in terms of distribution is a skew towards the mature markets, and you can see that reflected in the projections.

And on the right-hand side, we have the forecast for nominal GDP against some of the other forecast that we see from Goldman and the IMF. .

But generally, as on Slide 33, we're seeing low GDP growth, tepid growth, low or no inflation, little pricing power and therefore a focus on cost. .

And on 34, we just talk about what we call the trifecta of forces, the disruption that we see from an Airbnb, an Uber or Amazon in various categories; activist investors like Bill Ackman and Daniel Loeb and Nelson Peltz who recently took a stake, for example, in Procter & Gamble; and zero-based budgeters, 3G Capital, obviously Vienna with Kraft Heinz with its offer, 48-hour offer then withdrawn for Unilever; Coty; Reckitt Benckiser; and of course, in the pharmaceutical space, Valeant and Endo, whose models are probably now discredited more, but still did have a significant psychological impact on the -- not just the FMCG industry but the pharmaceutical industry as well.

And I think when a company like Kraft Heinz with a market cap of $100 billion or so bids $140 billion for a company bigger than itself, that obviously sends a signal which very few, if any, companies can ignore..

35, we just outline that, that focus on the short term as the result of this trifecta of 3 forces is sort of reinforced by the fact that CEOs tend to last in that positions for about 6 to 7 years; CFOs, 4 to 5 years; and CMOs, a little bit longer than we've seen historically, 2 to 3 years.

And that produces, as you see on Slide 36, the phenomenon that -- particularly post-Lehman in an era of cheap money, which is the critical determinant of all this.

Warren Buffett pointed out many years ago at a Microsoft conference that if you buy baked beans and ketchup, which are staples, and grow pretty solidly over periods of time, if you can fund that with a 30-year money at very low rates, sort of quasi equity rates, that's a good business to be in.

And you see the impact of that as we see the march of dividends and buybacks actually going over 100% of operating earnings at the beginning of really '15, 2015.

It's come off a bit recently because share prices have hit highs, but you can see the same phenomenon reflected on Slide 37 not in the same way against retained earnings but dividend payout ratios in the U.K. Our own is the blue line, which has gone from about 1/3 to 50% and probably subject to the board's decision.

But given the fact that we do see attractive opportunities for investment in our own business, doubtful that we would go beyond 50%. But the FTSE 100, while that has come down a bit, it's still around 60%, 65%, having peaked at 70%.

EPS actually having fallen has now started to trend up with largely because of sterling devaluation, I think, but payout ratios are very high. .

And the sort of reverse of that, in the sense, is on that Slide 38, where the Federal Reserve economic data for total investment as a percentage of GDP clearly shows what's been happening to investment in the U.S.

economy since the 1980s, peaked again around 2005, fell sharply to Lehman in 2009 -- 2008, '09, has come back a bit but not to the previously seen levels. And the animal spirits, clearly, it's still [ dull ] in relation to capital investment..

On 39, obviously, we do tend to talk our own book, not ashamed of that, and we do believe that long-term investment is critically important.

And if you look at our brand valuation on 39, of the top 10 brands, if we all invested in the top 10 brands in the last 10 years, our portfolio -- invested equally, our portfolio will be up 125% versus an S&P 500, up 82%, and an MSCI at 35%.

And the point here is really that there are very few, if any, fund managers, active or passive, that can point to that sort of performance. So investing in innovation and brands where the biggest determinant to TSR, or one of the biggest determinants to TSR is top line growth.

And of course, companies, when they look at ZBB, tend to follow a focus on cost, and their objectives are also about top line growth. .

And you see that on Slide 40. We've just analyzed -- not all our top 20 clients have reported, but those that have, which I think about a little bit more than 1/2 for Q1 of '17, is showing like-for-like revenue growth of around 1%. This compares with 2% for Q4 of '16, so a slight deceleration. .

And pricing led -- that growth is pricing led as volumes ramp remain weak. And the U.S. growth, interestingly, is behind international, which mirrors what we see in the agency group because most of the -- well, all of the agencies actually have shown slower U.S.

growth, which is somewhat puzzling given the increased, the heightened optimism that we see at institutions, such as Business Roundtable, Business Council to the Trump administration, which is much more pro-business and more engaged with business and people by people in business than the previous Obama administration.

But generally, what we see, if we look at our clients -- and it's not just packaged good clients or the pharmaceutical but across the board, it's a slow start to the year and a deceleration from the fourth quarter of 2016. .

On 41, we just reiterate our strategy, Horizontality, integrating our efforts to make sure the best people are available to our clients. Faster growth markets, which are now about 1/3 of our business, and the objective remains 40% to 45% of our business. New media crossing our bottom range of that target, 40% for the first time in Q1.

And over the next 3 to 4 years, I would expect this to be revising that target upwards, if it still remains valid to distinguish between analog and digital. And then, finally, data investment management and quantitative disciplines, about half of our business. .

On 42, we just highlight, in the area of horizontality, we're now working with 48 clients horizontally in terms of integration. .

On 43, you can see that our new markets, the fast growth markets of Asia, Latin America, Latvia, Middle East and Central & Eastern Europe are about 30%, almost 1/3 of our business. And new media, as you see, has crossed in Q1 the 40% level, not at revenues but at net sales. .

And on 45, we maintain our target of over 50% in quantitative disciplines. .

So to summarize on 46 the first quarter of 2017. Strong reported revenue growth, almost 17%, and net sales growth of over 18%. Like-for-like, net sales growth of just under 1% or 0.8%. On a constant currency basis, net sales and operating profit are well ahead of budget and last year.

And severance costs, very similar first quarter to first quarter year-to-year comparison, but incentives have increased this year which obviously gives an indication about what's happening to profitability compared to the first quarter last year. .

Net new business wins, a healthy return to growth after the disappointments of Q4 last year. Net new business wins of over $2 billion, which compares to $1.8 billion the previous year, and the resumption of the momentum with first or second position in the net new business tables. .

On 47, we just reiterate our long-term financial model, so that everybody's clear about what we're saying. Whilst we reduced the guidance from 3% to around 2%, organic revenue and net sales growth of 0% to 5% is the model, in line with market growth.

A margin improvement of 30 basis points which we've confirmed, and we -- and reviewing -- and we'd do our Q1 review -- revised forecast in great detail starting tomorrow. But the overall numbers indicate that 30 basis points of margin using -- and the long-term target of 19.7%.

So if we -- just so we're clear, we're 17.3% last year and we're going for 17.6%. That means another 200 basis points of growth we're looking for over the longer term at 30 basis points a year, and remembering that about 50% of that 100 basis points is due to come from back office and IT consolidations.

Using our substantial cash flow to enhance EPS through a mixture of -- a pretty equal mixture of acquisitions, share buybacks and debt reduction. Acquisitions, GBP 300 million to GBP 400 million. Buybacks, 2% to 3%. We've done 0.8% in the first quarter, so a slightly accelerated rate of buybacks in the first quarter.

Payout ratio at 50%, with the board having to opine as to whether we go any further. And then just to make a point, share buybacks of 1% to 2% are greater than what we historically used to do, it's equivalent to an impact on EPS of about 20 basis points of margin. .

Putting all that together means that we would be delivering, as we have done, 10% to 15% of EPS growth. .

Finally, on Slide 48, just the outlook. Post the first quarter 2017, our forecast indicate like-for-like revenue and net sales growth of around 2%. That's in line with the budget, a stronger second half reflecting the comparatively weaker second half of '16.

In '16, just to remind you, like-for-like growth in the first half was around 4%, 2% in the second half. Overall, just over 3%. .

Margin improvement in line with the target of 30 basis points, 0.3 margin points, excluding currency, off a constant currency base margin of 17.3%; and acquisitions to add around 2% to 3% to both revenue and net sales. And at current exchange rates, the currency tailwind this year will be about 4% to 5% in terms of benefit to revenue and net sales. .

Staff costs and headcount remain very well controlled. And to deliver that margin target, you will have seen from our analysis that the headcount was actually slightly down in the first quarter. So our operating businesses are balancing the revenue growth, net sales growth against headcount, which is critical.

And our operational effectiveness and efficiency programs will support that future margin goal. So our guidance for the year remains the same. .

Okay. So that's the presentation. We will now, operator, open it up for questions, please. .

[Operator Instructions] We will now take the first question from James Dix from Wedbush Securities. .

I guess, 3 questions I had, 2 on growth and then 1 on margins. So the first quarter came in well above budget on net sales. And yet, the outlook for the year is -- oh, sorry, your prior replay is now coming back on. And yet, your full year outlook is similar to budget.

So I'm just wondering whether there is any incremental caution which has come in for the final 3 quarters of the year or if I'm reading that wrong? And if there is any incremental caution, where specifically it's coming from? Is it in the timing of new business wins or what have you?.

Yes, we'll just do - answer that one first if we can. I don't think so. I think we're just -- once bitten, twice shy. We took down our guidance from 3% to 2%. I think at the time, people were surprised that we were doing it.

But I think in the fullness of time, I don't know whether it's because the scale of our business and its diversity gives us more access to what's going on. But if you look at the first quarter results from all, let's say, the big 5 -- but we haven't seen the Dentsu results I think yet, but the other 4, the big 6, they follow a very similar pattern.

I mean, there are some idiosyncrasies to -- or differences to each of them. But broadly, they follow a pattern. And if you look at the earnings of the multinationals that are reported or our top 20 as we call it, or those that have reported, they are 20, they follow that pattern remarkably consistently, i.e.

low growth, 1%, for the lot of it, price rather than volume; and U.S., the delta being better around -- in international versus U.S. So I think, James, it's just -- it is the first quarter. As others have said, it is the smallest quarter of the year, and it's -- I think given what's happening in the environment, I think we're just being cautious.

On the new business front, which you touched on, we have seen a sea change in the first quarter. We're 1 and 2 in the net new business tables. There's a fair amount out there. Sanofi, the results of the Sanofi creative review, which we expect some good news from, is -- will be coming shortly. There's a media review there as well.

There's the Sprint media review, and there's Peugeot PSA media review also. And there's a short list that has been developed for that. So I would say there's a fair bit going on in terms of new business which may or may not add.

There's a couple of things we -- nobody picked it up in the language, but there are a couple of things that have not been announced where we have won a couple of good pieces of business in the Middle East, being one; and then a nice piece of technology business in the U.S., neither of which have been announced.

So I think the new business momentum is certainly better than we saw in Q4 of last year, and we're sort of getting our mojo back a bit in relation to that. .

Great. Yes, you touched -- actually touched on my second question. Did you see any more deceleration in your review of your top clients in the fourth versus the first quarter growth in the U.S.? So overall, it went from 2 to 1. Did you see the U.S. growth coming down more as you went from the fourth to the first? Or was it simply that the U.S.

growth outlook was lower than the international in the first?.

No, I think it has come back. I mean, it's a little bit puzzling, to be honest, because all the qualitative sort of the quasi-focus group chat that you have with clients is they are very much more optimistic about the U.S.

And I think it's because of the nature of the relationship between the new administration and business which is much closer, much more open and welcoming, obviously, because of the nature, whether it'd be a Wilbur Ross or a Gary Cohn or Mnuchin, whoever.

It happens to be these are all people that are well aware from the opportunities and challenges in business, and they want to change it. And the President himself is -- obviously, with the tax cuts, is trying to address these issues. The issues about implementation. So it's a little bit puzzling as to why.

And with the markets sort of clearly signaling that they're anticipating that as well, the question is implementation. On the international side, it's also a bit puzzling because you would think the spinoffs from the administration in relation to the trade issues that those would be unhelpful. Western Europe, you see from our numbers in the U.K., U.K.

has not been hit by Brexit as yet. It's slightly slower in Q4 of last year, in Q1 of this year than Q3 of last year. But Q1 of this year to Q4 of last year in the U.K. is pretty good. And the same thing for Western Continental Europe led by Germany. So we are seeing -- it is sort of counterintuitive, maybe the markets front run what's happening.

But at the moment, I would say U.S. remains, again, somewhat puzzling. The other thing I would say -- and I -- this is not something that we like to touch on but I mean it is a fact of life, the discounting, the payment term issues and the like, I think probably are the most acute in the U.S. And the competition, given the size of the U.S.

market, is probably the fiercest. And that's where people put their efforts, if that's the right word in putting it, in relation to discounting. So I think that's part of it, too. .

Great. And then my last one, just on costs. I think, Paul, you mentioned that you had renewed and extended, perhaps, your agreement with IBM.

But just more broadly, could you refresh us with where you stand in terms of the timing of the savings you're expecting from the IT and the shared services initiatives? I think I had a general assumption that they would account for roughly half of your margin improvement this year, but I don't know whether that's as fine-tuned as you could give it. .

That may be a bit optimistic. I think rather than give you a decision about when the benefits come, let me sort of tell you where I am on the journey to a certain degree. So I think it's been fairly tough, if I'm honest, 2.5 years as we worked in our sort of current mode of operations. It was a very testing 2016, to be honest with you.

But we've reconciled and structured a new 7-year deal, with improvements or efficiency gains of up to 25% coming in within 2 years of signing. The scale of the business is probably slightly less than we had originally anticipated, which is the infrastructure costs of our total IT is a bit smaller than we first thought.

But we have added a second phase to that which is the maintenance and development of our finance systems. So the good news is I think we've really dealt with all the headwinds. We've made the one-off investments. We dealt with the headwinds. We are sort of set ready to get the benefits coming through.

Although I think there is still, if I'm honest -- the low point in terms of as we transition from the old way of doing thing to the new thing, there's a lot of handholding required.

It is quite still labor-intensive to get physically the servers move from their current locations to the 4 main data centers, over 16 total data centers from the 2,000 sites we are trying to save. There's quite a bit of labor involved. But I think the journey is well proceeding.

The benefits are baked in, but I think I'm not banking on them in great detail or to a great magnum in 2017. I think that the real benefits will come in '18, '19. I think the other part of the journey, if I could just broaden out my answer, is really on the sort of back offices finance systems.

So again, we do have a very large number of finance systems which we inherited through legacy acquisitions. We struggled with developing one single ERP for the whole world, to be quite frank with you. And having gone down that route and have done a very successful outsourcing of financial processes to a company called Genpact in India for our U.S.

businesses. However, with a new team, recently hired sort of the last couple of years from a competitor who's done this very successfully. And we have a renewed confidence in how we're approaching our back office systems and integration. We have developed now an ERP from one of our existing platforms.

It's a standard fit to all our businesses internationally, outside the U.S.A., and we're currently rolling it out in 2 test markets, as we speak, in Spain and Malaysia. The benefits of this are, initially, much better control in the management of our working capital.

And it goes not just the collections but the billing process; improvements in governance; and to a certain degree, a reduction of the costs around the governance of finance; and then, finally, the efficiencies from scale. And I think we are seeing some really good models of our own businesses work here the U.K., India, which is benefiting us overall.

So financially, as yet, no great significant benefits to numbers, but they are -- they're reducing the drag of the cost of finance within our business and improving our working capital. So I think the journey is well advanced, the benefits are tangible. But at the moment, I haven't booked in any considerable amount to 2017.

But on the IT side, it's probably coming in '18 and '19, to start to help on the margin improvement. .

We will now take the next question from Brian Wieser from Pivotal Research. .

We describe marketing procurement as often optimizing trees rather than forests, for example, looking to reduce individual costs like agency services, which is still often call nonworking and then, separately, optimizing media costs rather than doing some combination.

And it just -- first of all, do you agree that that's occurring in general? It seems that if marketers were optimizing more holistically that, that actually might be more favorable for agencies. So just curious about your thoughts on that.

Separately, curious for an update on your feelings on positions in minority interest in comScore, AppNexus and Globant at the present time.

Do you feel like your exposures to these companies are at the right levels presently?.

revenue growth, margins and everything else in comparison to, let's say, the traditional model. It's not different, much difference with our copy testing which the criticism was that it became too long in the tooth, it took a month to get an answer. And so we did Link Express, which was overnight, online at 1/10 of the cost.

But when you actually started to generate the volumes, the clients would use it much more effectively, much more quickly. And our margins actually improved over time. So I think the problem that we face is that we are being benchmarked and, therefore, we become a cost, not value-added.

And that's where I think the industry is shooting itself in the foot. And far be it from me to make this point, I mean we just have to shift the conversation away from payment terms. One of our competitors said they weren't a banker and they -- there's been an outflow.

You look -- just look at their accounts, it's something like -- I think it was $1 billion over 10 years, maybe even $1.5 billion over the last 3 or 4 years. And it's quite clear that they're buying business in the sense of offering payment terms, which is being a bank, although they deny being a bank. So I think that's where the problem lies.

How you change it is by focusing on what we try to focus on which is -- and the other point here, Brian, is that top line -- it remains the objective of clients to reduce their costs, fine, I understood that. More for less, we understand that. But at the same time, they're saying they want to increase their top line growth.

And you're only going to do that if you invest in innovation and invest in brand. On comScore, AppNexus and Globant, different situations. comScore seem to be getting it till the end, famous last words, but of their accounting saga.

And if you wanted a demonstration of the opportunity, you saw it with the Nielsen results in the first quarter where there was a big surprise not on the watch segment but on the buy segment.

And this morning, we just outlined some of the data that we've seen on the buy side in packaged goods for January and February where all categories were meant to be down 3.5%, and the Hispanics down 9.5%. And if you -- InfoScout, we own, I think 25% of InfoScout.

And their data is not a Nielsen-type panel data but scanning data, and they're on mobile applications.

And that's showing, if you listen to what they say, not a downdraft because of the election or because of Hispanics being worried about immigration and worried of sending more money home, but it's principally because Nielsen fails on its buy side to measure online. Just like on the watch side, it fails to measure adequately the online stuff.

So I think comScore has a massive opportunity. I would say that, wouldn't I, because we have a vested interest in making sure that happens. But I do think they have a massive opportunity to compete and come up with a better mousetrap. On AppNexus, I think we're well positioned there.

AppNexus works very closely with Xaxis, the Triad and our programmatic offer. I think there have been suggestions they might IPO at some point in time. Globant is fully out there. We have a 20% interest in Globant. We're very happy with the way they've grown the business.

I think they're up -- the forecast from analysts are around $400 million of revenue. So it's about half the size of Sapient, excluding the banking and financial and government segments of Sapient before it disappeared into Publicis. We don't know what Sapient is now. So -- and I think they're doing a very good job.

I'd like to see us do more with Globant from a business point of view. I'm not talking about from an investment point of view necessarily. But from a business point of view, I think there's more that we can do with clients in terms of building tech platforms.

It's clearly a vehicle, a relatively riskless vehicle for us to penetrate the area that you're fascinated by and a number of your colleagues are fascinated by, i.e. what's going to happen on the tech space with consultants. And Globant, I think, is the nearest that we come to that.

Although, one, Danone, AKQA, possible; Mirum or VML do come somewhere near, I suppose. But I think -- happy with it. The same thing applies to Vice and Imagina. Imagina is looking at whether they should take an offer because one of their minority shareholders wants to sell out.

My own view is that's probably unlikely to happen, but we'll see what happens there. But I think, generally, these associate interests we have are doing pretty well. Vice, you've -- you may have seen the data, that's an investment, we have 8.4%, I think, it is.

And there were -- there's been some newspaper comment about a private equity house making an investment there, so we'll see how that goes. But generally, I think it's moving in the right direction. .

We will now take the next question from Douglas Arthur from Huber Research. .

Two questions. The first, going back to the first quarter. I think when you released your fourth quarter results, you said net sales were up 1.2% in January.

So I'm just curious, in terms of February, March, was it -- were there any particular tough comps with '16 that brought things down? And -- I mean we're not trying to analyze it month-to-month but I'm assuming -- and you've talked about easier comps as the year goes on. So I'm wondering if there's anything in the second quarter to think about.

And then, secondly, on -- in terms of the heightened sensitivity of clients on ad placement, has that slowed the programmatic train at all?.

So let me deal with the second one, and Paul will deal with the first one. No, I don't think it's slowed programmatic. I think programmatic is going faster internationally. And I think you saw that in the Omnicom numbers. Clearly, U.S. was more challenged in the Omnicom numbers with the Q.

And then the international -- I think it's one of the explanations as to why international was stronger there. The programmatic -- as they rolled out programmatic around the world, that gained traction, and we've seen the same phenomenon. I would say it's too early to say of what the impact of the ad placement issue is.

Certainly, spending in the first quarter of this year, we got the final numbers on Facebook, was up sharply, much more significantly sharper actually than on Google, but that wasn't to do -- some of it's to do with currency translation because of the strength of the dollar where Google is more exposed internationally.

But it's not to do with the ad placement because that really won't hit -- if it does hit, it won't hit -- and it's mainly in the U.K. -- until the second quarter. So I think it's too early to tell.

I would expect -- we were talking to our colleagues at GroupM about this before we made the first quarter announcement, I think their view is the impact -- there will be minor impact, probably mostly in the U.K., and it will affect second quarter spending or April, May spending.

I have to say that Google have been very responsive as they should be, not so much on admitting that they're a media company or Facebook admitting to it but trying to help out clients instead of boycott and deny access to what is the biggest media channel currently because that's where we, and indeed our competition, spend the largest amount of their media budgets with their clients.

Not so much from boycotts, but trying to work with Google to get -- to sort the problem out. And Google has been responsive, I think, for whatever reasons. I think the one stage that we're left to get to is to get Google and Facebook to step up to the fact they are media companies or publishers, which they haven't as yet been prepared to do.

They do have the resources, they do have the margin, they do have human and machine resources to do it just like any other media owner.

So do you want to say anything about Q1?.

Yes. So Doug, just to give sort of some color. I mean, the first month that we did report was 1.2%. The comparison in January 2016 was 2.2%. The quarter in '16 was 3.1%. And it was pretty highly correlated to how we performed in February, March.

But what I would say, our February number was slightly weaker than we expected, and our March number was slightly stronger. So it kind of came in where we thought it would do. In terms of quarter 2, overall, the quarter last year was slightly stronger at 4.3%. Not desperately strong in April and May, but very strong in June.

So our budgets for the second quarter '17 show sort of the toughest challenge against the month of June itself, sort of consistent sort of performance versus where we expect to be in April and May compared to prior year. That gives you some sort of shape and flavor about how we'll go through our first 6 months of this year, so... .

And just the comparison last year, it was 4% in the first half and 2% in the second half.

So the easiest -- easier compared to some -- as we've indicated, we think 1% in the first half and 3% in the second half is the way that it will pan out, remembering also that we own, what is it, 2/3 of our profit in the second half of the year, 1/3 in the first half, and it's 40%, if I remember rightly. .

We will now take the next question from Alexia Quadrani from JPMorgan. .

Just to circle back, if I may, on the U.S. organic growth. Martin, I know you've discussed in your opening comments and highlighted the disconnect between the sort of Trump-related optimism and the underlying growth. I guess I'm wondering if you have any more color? I know new business is impacting that a little bit at least right now.

I'd love to know if you find it really isolated to one vertical, kind of a universal issue in the U.S.

and, specifically, when your new business sort of comp, will cycle through and get easier in the United States?.

Well, if you -- I think we said on this morning's call, AT&T started, I think, in November to switch there, and VW from the beginning of this year, so from January 1 because the VW-FITCH process was something like 18 months, started in the middle of '16 -- sorry, middle of '15 and ended at the -- ended about the middle of '16 and was effective the beginning of January.

I mean I think a large part of the explanation of what's happened in the U.S. as far as we're concerned is -- we've said to you, Alexia, that as far as we're concerned, the total revenues associated with the 2 accounts that I'd mentioned -- and of course, VW was international whereas AT&T was U.S.

only, there was a bit in Mexico, but it basically was U.S. -- it was about $175 million. Now we don't know what that transferred as or be -- or the basis on which it transferred. But the interesting thing is, if you look at where it went, it doesn't seem to compensate it certainly in a U.S. context.

So I must say, coming back to the previous comments and your question, I find it a little bit puzzling that given -- I'm going to use the word euphoria, it's not euphoria -- but submarket is being pretty euphoric. But the commentary from the people we talked to, the clients we talk to, is very much more positive.

It's changed a bit maybe in the last 30 to 60 days after the health care decision or lack of decision a little bit because people are worried about implementation. But clearly, there is a much greater degree of optimism.

And I think that's justified because -- and if half of the stuff that's being floated or being talked about actually happens, it must be stimulative for the U.S. domestic economy. A question mark on what happens abroad, but it must be helpful and, therefore, must help the U.S. base. But the things against it, just to -- and this is tough stuff.

I mean the ZBB stuff is -- and again, I don't think you underestimate the impact that the Kraft Heinz bid had psychologically across not just packaged goods but elsewhere because -- if Unilever -- a bid is made for Unilever, people would just say nobody is safe or nobody is immune from anything like that. So there's concerns about that.

And I think that feeds through to, obviously, spending, coming back to the procurement question that Brian raised, and how agencies respond because agencies are very competitive with one another and are seeking to gain market share in the best way possible. .

I guess one follow-up. I mean, nobody in the industry probably has so much insight as you do in this sector with your perspective.

Would it be too simplistic or would it be fair to say that this seems like more of a cyclical issue and eventually will filter through one way or the other or there are some structural concerns you're generally seeing?.

Well, I mean if it doesn't, there's going to be some casualties. It goes -- it is -- I think, it is shooting yourself in the foot. You're not going to be -- I'm just giving you an example that I just went through.

I mean, if you make a pricing guarantee, saying that -- in the case I was just looking at a few minutes ago, for 3 years, we're going to guarantee you against inflation.

And then the premise on which you made the spend, that -- if you didn't know what the pricing was, but you made -- you offered a discount and you price-proofed it, you inflation-proofed it, and then the client, in this particular case, cut their spend, to be precise, by 23%, which is a different volume, then you must -- it must come out in the wash at some point in time.

And I think, to some extent, that's what we're seeing. It's not all of what we're seeing in the -- I'm talking about in the industry. It is coming out in the wash. You can see it in the results.

I mean it -- the giveaway, Alexia, would be if somebody was -- if everybody was prepared to put the net sales figures out there, then you would see it in spades. But until they do that, there's so much noise in the numbers.

And [ Brian ] wrote, I think, a really good note on that either yesterday or today, I saw it, where he explored the differences between revenue and net sales. Now people say they don't act to the principal. We know in certain markets that, that is not true.

We know that principal buying goes -- and I'm not talking about online, I'm talking about offline, we know in certain markets this happens. We've seen it direct. So there are -- and there is some -- IPG does talk about, as you know, the variances that it sees occasionally between revenue and net sales, for example, in [indiscernible] business.

But we also know that there are a large part of businesses, a very significant size in the U.S., where there must be some difference between revenue and net sales. And you get distorted margins.

[ Brian's ] made this point, I think he said 300 basis points potentially, but distorted -- not distorted margin, it's margin delta, if you look at it on a net sales basis. And I don't know why people are not willing to give the net sales figures. It's -- maybe it's fear about being smaller than they indicated they were, I don't know.

But it's a strange, strange phenomenon. And you've seen that in the packaged goods sector, we've seen margins on gross sales and net sales. So it's a bit puzzling, a bit puzzling. .

We will now take the next question from Dan Salmon from BMO. .

Sir Martin, there's lots of crosscurrents it seems in the CPG sector lately. You've discussed many of them already this morning.

One thing that I think you've been pointing to are some of the overlooked opportunities here that as large marketers chop down their list of agencies, it's an opportunity for you to consolidate business that many of your digital agencies have expanded e-commerce capabilities to help them make that transition.

I was curious about how you feel the opportunity around trade promotion may change over time. And of course, the agencies have always been involved with shopper marketing.

But trade promotion, there's a big chunk of money there that is really direct subsidies to retailers in the forms of price reductions, in slotting fees, not so much the end cap and things like that, but those straight subsidies.

As that business moves to e-commerce, isn't that budget that you can then be optimizing for them similar that -- as you would their digital ad budget?.

Yes, I totally agree. And the interesting thing about that point is that shopper, as we call it, and we've renamed segments of our business digital shopper and e-commerce for exactly the reason that you said. The amounts of money that are invested in embedded commerce, in trade promotion often exceed above the line budget.

Certainly that was true historically, and I think it's true now. And of course, when volumes are light, the temptation is to discount -- not just agencies discounting but clients will discount.

I mean, part of this maybe -- I remember on CNBC in the U.K., they talked about this, that part of the issue maybe that the clients and retail -- I mean, I've heard that packaged goods clients and retail in Europe, there's been a significant amount of delisting and arguments about listing and positions in stores if clients are not prepared to pay appropriate discounts.

I mean that's sort of a pricing war -- a pricing thing. And if that can shift to e-commerce activity or shift to investment in e-commerce activities or shopper activities, that can be very potent. And it plays to the heart of the matter, this contradiction between let's cut costs but drive the top line.

So one of the areas where clients can see immediate return is when we -- when they start to shift with us an investment into, let's call it, shopper, for want of a better designation, we do that in North America for a number of clients.

Take the Nielsen data that we talked about on this morning's call, where 9.5% of it is Hispanics, 3.5% across all categories, packaged goods categories in January and February, what's the way of dealing with that? Well, part of the reason it showed such a sharp decline and the surprising time which is they didn't measure the right things and weren't measuring the online channels.

But if you start to spend money on those online channels, if you start to invest in shopper at retail level, in traditional BRICs, more effectively, you're going to benefit. And you won't have to discount and be in a discount war, you'll be in a distribution mode to get better distribution and concentration. So I'd agree 150%.

This whole thing when we talk about A&P being up and you know that the clients don't distribute or don't distinguish between advertising and promotion. And if A&P rises, and it's because promotion rises, that's not necessarily good for us.

If A&P falls, and it's because promotion falls, that would be good for us, even though on the surface it looks as though it's bad for us. So the data, there are a very few companies that actually give the break. I think Danone gave the break historically, I don't know whether they still do, between A&P, but they were one of the only ones.

I know we used to discuss this with analysts 2 or 3 years ago. And you just don't get the break between the 2. And they are, as you point out, very importantly different. .

And then maybe just 1 quick follow-up. I don't normally ask about some of your smaller acquisitions, but Deeplocal looks like an interesting one.

Could you just maybe give us 60 seconds on expanded thoughts on that one in particular?.

Yes. I mean, it's interesting because it's not a big company. I think the revenues are around $13 million or $14 million. It's based in Pittsburgh. It's really, I'm going to say a bunch -- inappropriate to call people a bunch of -- it's not -- or a flock or a gaggle or a tribe of engineers, basically out of Carnegie Mellon.

And it's really interesting because what they do is devise products. So for example, Netflix have socks that if you wear them and you fall asleep will pause your screen. I think it's Lyft, they devised the thumb that you strap to your hand which will order you a Lyft car.

And when the Lyft car is in close proximity, it will signal to you by -- I think the thumb rises as a thumbs-up that the car is there. So what they use is technology in a -- working with companies like Netflix and Lyft, they use technology to devise innovative products. And I think it takes us into an interesting era. It's small.

The management is extremely dynamic, very young, very smart based, as I said, in Pittsburgh, and really an excellent group of engineers, software engineers, with some very interesting thinking. And means of differentiator, they would tend to compete with an [indiscernible] or a [ prog ] or whatever more on the product side. .

Got it. It sounds fun. .

Definitely fun. .

Thank you. As there are no further questions in the queue at this time, I would now like to turn the call back to Sir Martin Sorrell for any additional or closing remarks. .

Okay, thank you very much, operator. Thank you, everybody, for joining us this morning -- it feels like this afternoon -- and this afternoon in London. And Fran is here, Lisa is in London, and Paul and I are here in New York as well to answer any other questions, you know where to get us. So thank you, and we'll see you in a few months' time.

Thank you, operator..