Advantage Solutions Inc. (ADV) Earnings Call Transcript & Summary

Good afternoon, and welcome to Advantage Solutions Talent Spotlight Call with Corey Weiner of Jun Group. As a reminder, today's call is being recorded, and we have allocated 1 hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Dan Riff, Chief Strategy and Investor Relations Officer for Advantage. Thank you. You may begin.

Thank you. Good morning and good afternoon, everyone. I'm Dan Riff, Chief Investor Relations and Strategy Officer of Advantage Solutions and the moderator for today's inaugural Talent Spotlight Call. We appreciate you joining us. Over the next hour, we'll discuss Advantage Solutions' broader digital services footprint and spotlight Jun Group, a fast-growing subsidiary of Advantage that uses proprietary technology to serve advertising to consumers in hundreds of mobile applications on Apple and Google devices. With us are Corey Weiner, CEO of Jun Group; and Tanya Domier, the CEO of Advantage Solutions. Corey cofounded Jun Group in 2005 and became CEO in August of 2019. During his tenure at Jun Group, he received his MBA at the Wharton School. We're excited to have Corey here today to share his Insights and unique perspective on Jun Group's history, growth, strategy and culture. From the Advantage Solutions side, we couldn't ask for broader and deeper perspective than Tanya Domier's. Tanya has been with Advantage since 1990, leading in sales, marketing and operations roles, forming our award-winning marketing division in 2000, joining our Board in 2006, becoming President and COO in 2010 and assuming the CEO role in 2013. As CEO of Advantage, Tanya has reinforced a nimble, performance-driven culture and invested aggressively in digital solutions to help clients face challenges in an omnichannel world.

With that, let's dive in and hear some wisdom and insight from our 2 guests. Tanya, it might be helpful if we start off by framing how Advantage creates value and how digital services and solutions fit in that story to help those newer to ADV. Could we kick off there?

Absolutely. Well, thank you, Dan, for the introduction. And I'm so excited to be doing the spotlight today. Talent and digital services are fundamental to everything that we do at Advantage. And it's just so exciting to have Corey on the phone today. Corey is one of our brightest and best founders and executives at Advantage, so important to what we're building and the exciting story that we've talked to you about, for example, having 25% of our EBITDA now in digital services. So I'm just really excited for you to meet a person who is really instrumental in driving that value for us and helping you to understand how we think about digital, how we find talent and then how we build and grow from there. But certainly, Dan, I will do as you say, and I will answer the first question exactly as you asked it. So I'll start by Advantage, what do we do? We're the leading provider of outsourced sales and marketing solutions to consumer goods and retailers. And as you know, we've got a very strong platform of competitively advantaged services like headquarter sales and retail merchandising, in-store sampling, shopper marketing and digital commerce, the exciting topic that we're going to talk about today. And we do this work, importantly for brands and retailers of every size. Our job is to help them get the right product on the shelf, whether it's physical or whether it's digital and into the hands of consumers however they shop. I like to talk about it is our role is to turn shoppers into buyers. And creating value on this platform is very simple, but it is not easy. At the most fundamental level, we sit at the nexus of consumer goods companies and retailers and they trust us. We're a trusted partner and problem solver, which is very important for both. We work to be efficient. We help our clients sell more while spending less. And not only do we make them more efficient. We make them more effective too. And we win by winners, we win actually by playing with winners and by providing them best-in-class service every single day and by innovating on a nimble platform and then using that to help them succeed. We operate very efficiently, providing fuel for reinvestment and growth. We redeploy that capital at attractive returns through tuck-in acquisitions and organic reinvestment. You're going to hear about exactly how we use that fuel for reinvestment today, as Corey talks to you about Jun Group and as we deliver value to clients by being faster and better and cheaper, our platform compounds over time. So if I move to the second part of Dan's question, which is a little bit about our digital solutions and services, digital services at Advantage had $500 million of revenue run rate exiting 2020 and grew about 20% on the top line in 2021, and that's a number that we're very proud of. The collection of services and solutions span across our sales and marketing segment and it's collectively higher growth, as you can imagine, higher margin and higher return than our core business. Together, these services have grown from 10% of our profits pre-COVID to nearly 25% of our profits in 2021, and we're very excited about that. And our growth here has compounded above that of the e-commerce end market. So as you think about our services at a high level, Advantage has been able to replicate our core suite of sales and marketing services from the bricks and mortar realm into e-commerce and omnichannel settings. And these services and these solutions operate at or near the point of purchase, which is very different because they're able to drive high ROI outcomes in an increasingly omnichannel world. We also support digital commerce with first-party and third-party solutions, tailoring data and analytics to these growth channels, evolving shopper marketing for the digital era, providing agency support that's very outcome-oriented and again, tied to the point of purchase to support a winning solution all the way to mobile advertising through the Jun Group. So as we look outward across our digital efforts, we're going to continue to use artificial intelligence and machine learning to drive our technology-enabled services, including our recently announced acquisition of strong analytics, which we're very, very excited about. It's a very important part of our value proposition today and in the future. We'll also continue heavy investment in retail media. This kicked off with our acquisition of GIG, a leading multinational consultancy dedicated to retail media that's jump-started our efforts here, and we're already providing services from consulting with the retail media platforms on products to guiding our brand clients as we manage already more than $1 billion of media investment across this space. That was a lot, but I hope that answered your question, Dan.

Absolutely. Great context, both on the broader business and the fast-growing digital component. I'd love to pivot over to Corey and drill into sort of the hidden gem within there in Jun Group. Corey, if we could start by going back in time a bit, can you take us back to Jun Group's founding and what the original vision was?

Of course. And hello, everyone. Thank you, Dan. I co-founded Jun Group back with my partner, Mitchell Reichgut, when I was around 17 years old. And at the time, I was doing some antipiracy work for one of the major music labels. And the main project I worked on there was developing an alert system. And that alert system would tell them the minute a piece of content leaked on the Internet that was their proprietary intellectual property. I have been obsessed with technology since I was 5. I learned how to type by standing over my older brother as he did it, and I started my first business when I was as young as 5 years old. As a tech person, I have to admit I was a little skeptical about moving into the advertising industry. But the thing that really convinced me to start the business 15-plus years ago was a very simple principle, and that principle is what Jun was founded on. Consumers hate advertising, and they are increasingly empowered to avoid it with the Internet. So at advertising's core, it just needs to change, and it has to move away from being an interruptive channel and instead empower consumers. And that's the principle that I founded the company on. And Jun literally means truth in Mandarin and the focus is building a technology company in advertising that is truthful, honest and transparent about everything we do. Over time, as the company develops, we served ads in various forms. Today, our focus is on using our technology that we built in-house to serve ads in mobile applications, on your favorite Apple, Google and Amazon devices. Along the way for me personally, I received my undergraduate degree, and I actually pursued my masters, while working full time at Jun Group at the Wharton School.

Excellent. So a couple of fun facts for the audience. Obviously, this is nestled inside of digital services that we don't currently report separately, but some things worth sharing about what Corey and the team have built. In the 3 years since acquisition, Jun Group has become a high-single-digit share of our overall profits and profits in Corey's unit nearly doubled last year. Basic introduction was great. Corey, maybe in modestly, but not seriously technical terms, can you talk about exactly what Jun Group does? And how you differentiate yourself in market to drive that kind of growth and profitability?

Of course. And part of me as I get a little bit technical, hopefully not too technical, Dan. Our differentiation is using a unique piece of software. And that software is called an SDK. SDK stands for software development kit. From a layperson's perspective, think of it as a tiny piece of code, and we integrate that code into apps on iOS and Android. And that code, that powerful code that lives in the pockets of all these consumers, allows us to serve ads directly to consumers. We are literally in the pocket of tens of millions of people and the platform to serve all these ads has taken nearly a decade to build to what it is today. Once we're integrated into an app, we can serve ads directly to consumers. And the overwhelming majority of our revenue and profit comes from our bread-and-butter format, and that format is called value exchange. As consumers, we've actually all interacted with advertisements like this, even if we don't know it by the name value exchange. So let me give you an example. Imagine you're in a casual mobile game and you run out of lives. Most games today offer you the opportunity to pay and a tiny single-digit percentage of people actually take that option to swipe their credit card in the game. So what a lot of games do is they offer an alternate means, and that's by watching an advertisement. So when you watch that ad, you unlock the extra life or whatever the digital currency is that, that application use. The cool thing about that experience is, again, going back to the philosophy of founding Jun Group in the first place is, it flips the advertising paradigm on its head. Normally, consumers hate advertising. It's this interruption that just gets in their way throughout the day. And instead, this form of advertising value exchange makes the brand effectively a hero of the experience. Consumers are even willing to tell us a little bit about themselves before they watch an ad, and that allows us to serve that ad in a more targeted way. And the general mindset of the consumer is, if you give me something that I want, that's important to me, I'll share my time with you and pay attention to your ad. We've applied this concept and now partner with leading brands, agencies and premium publishers because it works, and it works consistently.

Got it. Even I understood that. So that was definitely on the simple deck. I like it. Tanya, building on that quick snapshot, can you talk about how Jun Group fits in the digital strategy that you outlined at the beginning? And how it sort of supports our playbook?

Yes, absolutely. So I think Corey find it out, but Jun Group really enhances the advantaged value proposition in a handful of key ways. First, it provides a platform for brands to reach targeted consumers in a way that brands can be proud of, which Corey just talked about being the hero, using data that the consumers choose to allow us to collect, so that's very, very important. And we present it to clients as highly complementary and a high return on investment tool for digital engagement. And this solution addresses an acute pain point and an opportunity for our clients that we can serve up ads for them and to the consumers when and how they're willing to engage with them, which we think is important. And very importantly, it provides clear and measurable ROI when they do it. And I think from a broader strategic perspective, we've asked Corey to help us pivot the entire business from projects and services to technology-led solutions and Corey and his team have made great strides in a really short period of time in this.

Excellent. Tanya, maybe if we step back, so we bought this business in September of 2018, got Corey and the rest of his talented folks on board. What was the thesis then and sort of the main attraction here? It's obviously probably unfolded as good as or better than our bouquet scenario. But what were we thinking then that got us to buy into this exciting space?

Yes. Well, we were really looking to accelerate our strategy to expand our access and our reach into mobile-first, data-driven advertising. And we knew that our clients were looking to connect directly with consumers to meet their ideal profile. And with the Jun Group, we found that platform that enabled them to leverage proprietary data to deliver efficient advertising and to help them grow their sales. And you always look at the landscape and what is available, and we saw Corey and the Jun Group as best-in-class, first, a leader in the space, something that we always look for. And Jun has a compelling value proposition of highly targeted in-app video ad campaigns like Corey talked about. And importantly, they operate a brand-safe and data safe environment, which is very important to us. And they invested for many years prior to our acquisition to build their network and their processes and their teams, so we had trust in that. And of course, we look for favorable industry trends and in-app advertising is almost a $6 billion market, and it's driving at 15%, and the value exchange segment is $700 million with 17% growth. So we like that. Then as you go through our decision tree, leadership, leadership, leadership, talent, talent, talent all very critical in a service business, where people are a primary product. And we looked at Corey, and he's an amazing leader and started a business early and really understood this segment, brilliant at tech and had pivoted more times to build success and execute it in the real world. So we saw this amazing founder with this amazing technology in a high-growth space, and we said, not only is there this, but there's synergy with Advantage. So we immediately coupled Jun with our media division, Advantage Media, and then we leveraged Jun's media as our preferred solution for clients and increase the efficiency of their spend. And finally, the last thing that we always look for is a very attractive financial profile, and there was consistent top line growth and strong margins, and we saw consistent and high EBITDA compounding and believe that we could turbocharge that in our system with Corey as part of our team.

Got it. Very robust business case. And obviously, as we highlighted with some of the metrics pretty impressive delivery. Corey, on the way to this bootstraps itself for a decade, sold only a little portion of private equity in 2015, what convince you to sell outright and to choose Advantage?

It's good question. Thank you. So we ran a formal process to sell the business, and we were incredibly fortunate. We still are. We're a highly profitable technology business. So we had a number of folks at the table. We had private equity firms, strategics, et cetera. Although when it became time to choose the winner of the process, to me, it was a no-brainer to choose Advantage. And let me just take you through my thought process. The first thing I thought about is I wanted to find a firm that would allow us to operate autonomously, benefiting from a much larger footprint and access to capital in pre-existing relationships and at the same time, allowing us to do what we had done for years successfully with that larger platform. Number two, I wanted a company that would protect our talent and allowed Jun Group to become a platform that other businesses could come into. We could buy other businesses to unlock synergies, and we could build a bigger, faster and stronger business over time. Number three, I wanted a deal that would incentivize our early employees. When we were successful growing the business over a multiyear period in a new corporate parent, I wanted to make sure that they were incentivized to do that. And lastly, I'd say, actually, most importantly, I was looking to partner with the leadership team at the ultimate corporate parent that I could trust. And fortunately, as I met Tanya and Jill Griffin and Gary Colen and Brian Stevens and many others, they prove that they're ethical and honest and truthful in everything that they say, which per the foundation of what Jun was founded on, it's a great cultural ethos match.

Got it. Very helpful. So 3 years since you sold, suppose I had a business as compelling as yours that I need as a reference as I considered Advantage as a bidder. What would you say about your experience? And you highlighted some of this, but anything more to add there?

I have the incredible benefit to do that every day, Dan. I talk to entrepreneurs about partnering with Advantage, either commercially or strategically every week, maybe even every day. And I always get the same question from them. Corey, you're the entrepreneur. If you were to run a process again, knowing everything you know now, would you still pick Advantage? Would you still sell to Advantage? And I always say the same thing, and I'll repeat it now, which is I would do it over and over again. There are very few places, and I have spoken to many strategics in the space, where this kind of platform for an entrepreneur is possible. Advantage is happy to change and bend to support entrepreneurs and enable their success and my success. And it's a huge part of why Jun Group has grown tremendously since the acquisition.

Tanya, I think it's underappreciated by investors that Advantage does attract and retain entrepreneurs like Corey and teams like Jun Group. How do you think about effective integration, goal setting and collaboration for these much higher growth, much higher margin, much higher return enterprises that we've brought into the fold?

Yes. I think that's an important question. And Corey, it was fun hearing you reflect on the journey, and I think about how we added value together. And I think it's aligning on the plan at the very beginning to understand how you are going to create value. So we start with guiding principles like how do we partner with businesses in complementary spaces and how do we find founders just like Corey with the capacity to take on more, and we've talked about how he's done this. And how do we help these businesses grow by building a bridge to our thousands of brand and retailer clients and connection, how do you take the exponential power of what Advantage has to help these businesses that wouldn't have access to clients and customers grow, and then how do we provide infrastructure and resources and fuel for further scale both organically and inorganically build the business. And probably a finer part that more arts than science is how do you allow the unique attributes of culture and process and style to remain, and the stronger a founder is, like in Corey's case, I can tell you, we had multiple meetings back and forth of us telling him how Jun group could be better, but him very transparently telling me how Advantage could be better. And I think that is a very important point. And I think that kind of leads into how M&A fits into our talent strategy. We built -- we worked hard to build with creative innovators and external idea generators even if it came with a particular business, how do we build on that. And then we really value challenging and candid outside perspectives that help us to think differently and get better. And we value equally a founder who will tell us, hey, here's what I think is going right in the organization and is fantastic and here is where you need to think more entrepreneurial to really get the best out of your very large organization. And Corey has been uniquely fantastic, and we've built a relationship that started from an acquisition of a digital media company to one where Corey has insight and thoughts and impact on many areas of the business. And for me, that's the ultimate success story of the compounding effect, not only financially, but in talent and generating new and exciting ideas for Advantage.

Indeed, I think we've all heard Corey's voice quite focal internally. Corey, one of the areas you have been vocal publicly as well, social media posts authored articles is your unique approach to culture and team building. Can you talk a bit about that operating philosophy and what makes it unique at Jun?

I'd be happy to. But first, thank you for all of that, Tanya. As I've shared with you many times, your support and the organization support is a huge part of the success we've had thus far. So thank you. Back to your question, Dan. To me, leadership is straightforward. And everything I do from a leadership perspective is focused on one word, and that word is empathy. To me, empathy is taking the time and energy to understand your employees and figure out what makes them tick. It means taking the time to understand what's going on in their lives in and outside of work and do everything you possibly can to support them. It's about understanding to me a simple principle, which is that ambitious people, they need to be continuously challenged. Boredom is death is what I always say, and I am a firm believer that boredom leads to retention issues. So I spend a ton of time meeting one-on-one even as CEO with every single person who works at Jun, we talk about what they want to do a year from now, 2 years from now, et cetera. And I even push them to take the next big challenge before they need one. Because the moment you master something, my perspective is that's when you get bored. And for that reason, our leaders at Jun have been at the company 5, 6, 7, and most recently, we actually celebrated a 10-year anniversary for one of our employees. I still have her original business card at my now work-from-home desk. She went from account coordinator all the way to vice president. And that's important to me. It really is. And as I coach hiring managers as the business scales, I make sure it's important to them, too, and that we invest in our people consistently. It sounds straightforward when I say it like that. There's no magic to it. But I wish more organizations replicated it. I think when you lose your empathy, when the CEO has lost touch with that, you've lost the script. And what ends up happening is retention challenges are inevitable.

Indeed, highly resonate in this -- particularly this labor environment today. If we zoom out for a second, Corey and again, try to keep this in terms that consumer investors and generalists can understand, but there have been a lot of headlines around changes to third-party data, Apple's privacy standards and big data privacy laws in the US like CCPA. Can you help us make sense of those and how Jun navigates those ships?

Of course. The laws have been a big boon for our business, fortunately, and it's because of the way we collect data. So we're firm believers of what we call consent-based advertising. So when we serve an ad and I described how the ad serving actually works, when we serve an ad through our technology, we ask people questions about themselves that we use to target the advertisement. So we might ask someone, do you cook with organic ingredients? Are you in the market to purchase a car, et cetera? And we only have the answer to that question if the customer chooses to tell us the answer. So unlike a lot of other technology companies, we just do not believe in collecting data without the opt-in consent from consumers. And it's great to see bluntly the industry and loss catch up with that concept. So I guess in short, I'd say I'm a big fan of these changes from both a business standpoint and -- but more importantly, from a father of 3 young kids consumer perspective. I'm happy that these laws are protecting consumers.

Got it. And as investors digest those changes, but also try to make sense of pending disruptive change in mobile advertising. What do you think comes next in your space?

To me, it's going to be all about automation and machine learning. I know that those are buzzwords that get thrown around a lot, but in our case, they're critical to our business. We have been building a machine learning platform, and we call it Vera for years. And it's all about removing the little human-based interfaces from our campaigns. And I think about it from a philosophical perspective, which is we're answering an important question, how do we remove human interaction from low-value tasks? Automate those tasks, optimize those tasks and instead refocus those interactions to high-value tasks that are difficult or maybe even impossible to automate with computers. And over time, that's what we're working on. And from a staffing perspective, we've been hiring as many data scientists and engineers as we can find to help us answer that philosophical question in a comprehensive way. One, because it optimizes to minimize tedious tasks, but it also levels up our campaign performance even beyond their levels today. In a simple way, it's just reality. Anything a human does will happen once a day or once a week, et cetera. And for a computer, it can happen every second or every minute for 365 days in a quarter, a year without paid time off. So it's important to move those tasks away from humans and on to computers.

Exciting, very exciting. Tanya, maybe -- before we wrap up, can you share what's exciting about Jun's road map and forecasts from Advantage's perspective?

Yes. Well, there's so much, I'll try to focus on just a couple of things. I think we all know it's a brave new world and mobile advertising, following all of those changes to third-party privacy data and all of the changes with Apple's privacy and privacy laws in the US that Corey highlighted and is really on top of mind for everyone. And Jun Group helps our clients pull for that in an end-to-end way, which we think is critically important. And I guess what's most exciting to me is we're just here to support Corey and his team as they think about what's next. And as they think about and guide, how does Advantage reinvest in game-changing innovation to continue the compound growth well ahead of mobile advertising and e-commerce and end markets, that's what's most exciting to me.

Definitely. And I think to investors. Maybe I'll wrap up with a jump off before audience Q&A for both of you. Corey first and then Tanya. This is a question I definitely get from some investors. So assets like Jun, Jun in particular has publicly traded comparables that trade at 25x to 30x EBITDA, but it sits in an undervalued platform than Advantage that trades at 8x or less of EBITDA. What's the path to get Jun's value and broader Advantage fair value recognized? Corey?

So I guess I'll put it simply. I believe the entire company is undervalued based on what it does and the unique value that it provides. There -- of course, there are very few companies in the world that can do what Jun does, and that's a big part of why we're performing so well. But I would say exactly the same thing about most of Advantage's largest businesses. From an investor perspective, I'm a buyer of Advantage at these levels. And when I negotiate my compensation, I spend a lot of time ensuring that a big part of it is tied to the stock price because I'm a big believer that over time, as awareness spreads about the breadth and depth of Advantage's offerings, the stock price will catch up.

Certainly on board with your view. Tanya?

Well, Dan, as you know, because you're -- no one is closer to it than the 2 of us, but we're just trying to focus on the controllables. And from our perspective, valuation and fundamentals do not stay disconnected forever, they just can't. We're confident that we've got the right strategies, the right delivery, the right story. We've proven over time, we evolved in advance of the market. And we're just going to continue to deliver as the market builds its understanding and hopefully, appreciation of us. Those are the things that we're really going to focus on.

Got it. So now pivot over to some questions that came in from investors. Definitely an audience that's focused and curious here. I'll start with one for Corey. How have you been able to tap into the Rolodex of Advantage's thousands of clients to help Jun grow?

It's been a huge part of what we're doing. So I think, Tanya, along the way mentioned that the Advantage Media business was brought into Jun Group post acquisition. That business was fully connected with all of Advantage's large customers, especially through the agencies, and that has been a big part of the growth story.

Very good. Maybe this is somewhat related more an operational question. How tightly integrated is Jun into the marketing business in which it sits? You mentioned some of the sort of talent sharing and broadening responsibilities. And maybe some anecdotes about collaboration internally with the rest of the marketing team and units.

I'd say in the beginning, post-acquisition, there was little connectivity and that connectivity has increased every year that I've been at the company. And I will say that the connectivity has led to synergies that we didn't expect, a client that we didn't even know is interested in digital media or an opportunity to pitch a piece of business that we may have turned away prior to the acquisition. So I would say the more we lean in, the more we tend to get out of the relationship with the larger holding company. So the team has been pushing me and pushing Tanya and others to give us even more opportunities to lean into opportunities in the organization.

Excellent. A couple here that are sort of broader digital strategies. So maybe, Tanya can lead up and then Corey can chime in. So someone asks or someone points out, our legacy in-store offerings might have a bit less growth than rapidly growing digitals, but they tend to be fairly predictable annuity businesses. Jun sounds a bit more to this investor like a traditional agency business where revenue may be more episodic. Is that fair or unfair? Maybe so I guess maybe best to start with Corey there, but then zoom out to overall digital, and is it more project and service-based versus annuity base compared to the core business?

It's a good question.

Corey?

Yes. So it's a good question. And my perspective on it is that the tail is really in the numbers. If you look at the retention rates that we have from our largest clients and the growth rate of those clients year-over-year, I would say that they have transitioned from our relationship with them 5, 6, 7 years ago, which was, as you describe it, episodic to a strategic relationship where we are just part of what they consider when they run their marketing strategy. And this is especially true for our largest clients, our publisher clients and our brand clients who rely on us to deliver on the key performance indicators that their brands and publishers are looking for.

Excellent. And maybe more broadly across digital, again, this is now we're highlighting kind of a $600 million revenue run rate, nearly a quarter of our profits across sales and marketing, definitely drilled into a key piece of that in Jun Group today. But -- and Tanya described how we go about replicating bricks-and-mortar services online. But if we -- one of you maybe could address broadly how digital is as sticky or not as sticky as traditional bricks-and-mortar services for Advantage?

Well, I think Corey can give you the stats, but I think it's an and. Our job is to be able to serve consumers wherever they shop and turn them into buyers. And it's not an either/or. So everything that we're doing in digital replicates bricks and mortar not to take its place, but to make sure that we have solutions for however brands and retailers want to spend, it's ever if it is sticky. It's as advantaged and it's higher margin business. But we're there with solutions to solve their problems, and that's for brands and retailers, whether the strategy is physical or digital, we must have it all, and we must be the leader in all.

I think about it the same way, Tanya. When I'm training the sales team, I always tell them to listen more than they speak. And I always tell them the clients will tell them what we need to do for them. And that has led to some of our largest clients and has led to our biggest product innovations. And when I think about it broadly across the whole marketing side of the business, that's the way I think about it. We find problems, and we turn them into opportunities and they either result in businesses that we grow in-house or acquisitions that we make.

Maybe just on that acquisition point. Obviously, M&A has been broadly for Advantage, highly value accretive. So I come from the CPG end of things where people buy growth to replace declining franchises and they tend to pay prices that never produce economic value add, much of what Advantage buys has -- is EVA positive out of the gate and just compounds from there. But as we look at higher growth, more tech-driven opportunities, are multiples of private assets as elevated as they seem to be in public? And where are we looking to most ad tech capability? Maybe Corey, first?

Absolutely. So the way that I think about it is that Advantage has a long track record of acquiring businesses and then having them grow within the Holding Co. So we look at businesses in a very specific prism. We look at businesses that we believe are growing and can continue to grow if we inject the synergies and power of the larger Holding Co. And I'd say that Jun Group is a perfect example of it. We were growing quite fine as an independent company. But when we were acquired, 3 years later, we're dramatically larger and our profits nearly doubled last year. And I just do not believe that, that would have been possible that as an independent company. So when I'm talking to entrepreneurs on a regular basis, I articulate that vision to them. I say this is what your business looks like today. Here's what it would look like if I add the following capabilities to it. Here are the people I can add to it. Here are the structures or processes, CRM, salespeople, technology, machine learning, whatever I need to do to inject that business to make it more automated and more performant and look at what it can do to the business. And there are very few places in the world that can compete with Advantage on that kind of vision for an entrepreneur.

I agree. And I think just adding to that, it's the multiplier effect on talent, right? So a founder like Corey comes in with one solution and then applies his thinking after learning about all of the tools in the Advantage tool kit more importantly, about the broader problems that retailers and brands need to solve -- and then we applied his great mind and his data scientists and his process and how he solved for problems in his specific area and then take that as a multiplier effect as he works on bigger problems in our business. And more importantly, solutions. So what are the industry pain point, how do we find unique solutions, how do we do it in a physical world and how do we do it in a digital world.

Got it. This is within the digital realm from an investor, folks are very curious about retail media and retail media networks, Walmart has obviously highlighted as a big source of growth in profits. Some of our clients have highlighted being asked to pay Walmart and others for data that they don't necessarily have data scientists in hand to study and get the most value from. But clearly, it's scaling, we've highlighted a presence there. This investor question is a little more specific, though. Where does the money come from? Obviously, you think of marketing prize as more fixed than expandable and slow growth industries like CPG? Do we have a view on where it's sourced from or where it's likely to be, Tanya?

Well, you can imagine every company approaches this differently. And fundamentally, the marketing teams are spending dollars in marketing tactics and the sales team whether they're connected or not are spending dollars now on both digital and physical marketing tactics. So it really depends on the company. But I would say, first, trade funds, some from marketing and other activities that are seen as not as good of an ROI and some from linear ads. So it's really coming from a multitude of places. But every company, whether small, medium or large, all have put dollars to this really important area and are mostly testing and learning to understand where the greatest ROI will be and whether there's an ROI in this growing and everyday area that we're hearing more and more about and getting more requests for spending.

Definitely. I think our perspective on what phase this is actually at is a little different than some folks who are earning quite well from it today, but maybe not in a fully mature sense. So that's helpful.

I think really true. We see this as a very early innings for proving out what part of the marketing mix it deserves to be.

Yes. One last pretty pointed question about digital from an investor. So we have digital services and some solutions, but admittedly much like what the rest of what we do, it's service oriented. So do linear media agencies. They have things like Razorfish and other branded digital offerings. As a whole, those businesses trade where we trade today. So why is digital for us to be better valued? What's different or special about our digital? I think Tanya, you opened with some of this, but this question seems to be wanting that to be reinforced.

Well, I'll start, and then Corey can give his perspective, but we sit at the ecosystem with brands and retailers that are trying to really figure out what is the solution to build my brand or my banner in a physical store, what is my solution to build my brand or my banner digitally, and we are uniquely positioned to see where the dollars are spent, where the problems are across sales and marketing and technology. And if you look at the businesses that we've been building and growing, you can see by how fast those digital services have grown as a percentage of EBITDA, that shows the great need for connecting the [end], the physical and the digital. So we see it as a very important part of the value creation strategy. And we also see it as nobody is more uniquely positioned and more qualified to do both. We're a trusted provider in physical services. We've shown that we can build and scale digital services that are critically important to the point where it's now 25% of our profitability. So obviously, brands and retailers see it and it just puts us in a fantastic position to continue to solve brand and retailers problems, whether they're trying to get consumers physically or virtually.

Absolutely. And I'll think about it from a slightly different perspective, which is type of a technology perspective. I'm a big believer once we go where Tanya just win, we identify an opportunity because we see so many opportunities out in the market from our conversations and our existing relationships and the trust that our retailers and brands have put in us, that we need to build a piece of technology that gives us a moat around that solution. And Jun Group is a good example of it. When we run advertising for brand advertisers and shopper advertisers and publishers, we're one of the few places that they can buy this kind of advertising and deliver these kinds of results. And I want to apply that principle to every aspect of the larger business, find an opportunity, solve it with technology and build a moat around it much in the same way we have at Jun.

Excellent. That's it for investor questions. Any concluding thoughts? I think this is a great exchange for folks. And it will be available, by the way, in both the recording and a transcript over the next few days. Any closing comments, Tanya or Corey?

For me, I just really hope that this highlights a couple of key things that it's really hard to bring the life without hearing it from the Talent Spotlight, which happens to be Corey today. This is the multiplier effect in Advantage. This is how we grow our business. This is just a perfect way to understand how we use tuck-in M&A to solve problems, provide solutions and then take the great talent, take the technology, take the solutions, take the team and then go apply it to the next important industry issue that needs a solution. So I'm really excited that everybody got to hear in practicality exactly how we did that with Jun Group, how the margins and the growth in this kind of business are so additive to our portfolio and how talent like Corey's is transformational in an organization like ours looking to grow with the future of retail, which is, again, solving problems for brands and retailers, whether they're trying to do it physically or digitally. So I think it's just a great way to illustrate our value proposition and really appreciate everybody coming and listening today. I have a great time working with Corey. He's been a great partner, and I'm just glad that all of you got to see a glimpse of his talent and the way that he thinks and how we think at Advantage. So thank you so much for coming.

Excellent. Thank you, all. And reach out with any further questions to me on the investor class. Enjoy the weekend. Bye-bye.

Thanks, Dan.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.