Mark Penn: Look, I think ultimately the most traction will be in developing AI applications for our clients. I think you have to look at every website and say, is it doing the best job that it can do, given AI. Look at some of the things we’re doing, where people are going to say something like, well, I want to hold an office party or I want to hold an earnings call, tell me all the things I need. So rather than having to go specify everything, AI is going to figure that out for you. It’s going to transform the shopping and communication experience that people have. I think that is going to be the biggest area and our biggest area of weakness over this year, which has been the digital transformation. I mean — by the way, digital transformation industry saw weakness across the board in a lot of the players here.
I think that’s going to fill up with these kinds of assignments. Obviously, we’re incorporating it in our products, profit, Quest AI, and obviously, we are looking to simplify our own internal procedures, even down to like the reading of all the hundreds of thousands of builds that come in using AI. So it is at all levels. But I think the biggest thing is that, out there virtually every company is going to get organized now to figure out how is it going to apply AI, particularly to the last mile, how you communicate with your consumer.
Ben Allanson: Great. Just pivoting to advocacy for a second. A question about advocacy spend, last week a TV broadcast talked about the Trump campaign using funds for legal fees versus advertising. Do you see 2024 political ad spend at risk versus prior cycles?
Mark Penn: No. I think that if anything, you can be sure, this is going to be an all-out slugfest of the highest possible dimensions and proportions. The closer the country is, and this is a very close country, the more political spending goes to infinity, because that very last vote determines the fate of the nation, literally. So I think all indications are and our early indications are that this is going to be the strongest political cycle in history.
Ben Allanson: Maybe a question for Frank here just a little bit. How should we think about Q1 seasonality relative to a year ago as baited to the guidance?
Frank Lanuto: I think the overall pattern remains the same. I think the actions, though, that we have taken, particularly on the cost side, put us in a better position than perhaps last year, entering the first, which is generally the softest quarter of the year.
Ben Allanson: And maybe on the cost as well, Laura Martin at Needham says, great year-over-year cost-cutting in Q4. How much more cost-cutting do you think you can achieve in 2024?
Frank Lanuto: I think we’ll see more cost-cutting. Mark talked about the $35 million initiative that we have out there. So we’re pursuing that. I mentioned in my script that we nearly completed the rollout of the ERP systems and the big platform systems. Now we’re going to start to move the organizations onto the Shared Service Platform, which we expect to realize incremental savings from. So I think there is room for more savings here.
Mark Penn: But I don’t think you have to look at savings just in terms of kind of standard cutbacks. I think you look at the kind of inventive things that we’re doing to save. The application of AI internally, the creation of a new central production group that will greatly reduce internal production costs, the creation of a new survey panel. We spend $50 million on outside survey. So the ability to in-house and produce more of those basic costs of goods is really going to, I think, be very much behind the next phase of cost reduction, as well as the kind of offshoring that we’re doing for simplified tasks. If people aren’t in the office, they might as well be in the office a long, long way to lower cost jurisdiction. So I think that we’re going to apply all of those things to continue to drive costs down and what I believe is the cost-declining industry.
Ben Allanson: A couple more questions just to wrap it up. First, from an investor. Can management comment on any other non-core assets that might be for sale and what would be an approximate range of value for these assets?
Mark Penn: I think we’re looking at a sale that I thought might take place by the end of the year, that I think is going to be later in the year, probably something about a half or a little bit more than half the size of the last disposition. I have one or two others, I do think that we’re going to continue to look at our portfolio and say, look at those things that are non-core and somewhere between $100 million and $200 million a year, say, maybe we can better invest at a lower multiple in the areas that are core to us, and also take advantage of the fact that we have an incredible platform and we’ve grown some amazing companies over time here that have spectacular values that aren’t fully realized in the marketplace yet.
Ben Allanson: Great. And final question, and this is on guidance. We’ve had it from a few people from Barton over at Rosenblatt and from Steve at Wells Fargo. Can we just talk a little bit about some of your learnings from the guidance process last year and tell us what makes this year’s guidance sufficiently de-risked in your view?
