POV: Interview with Charlie Thomas, EVP at Centro

Welcome to The Agency Post. Tell us about yourself.

I’m Charlie Thomas, executive vice president of sales for Centro. Prior to Centro, I had my own consulting firm for four years and did long stints at Yahoo and Time Inc. Those two companies were the main influences in shaping my professional values and standards.

Tell us more about Centro and the work you do there.

Centro is a media logistics company, which means that we provide operational efficiencies for ad agencies and publishers so they can contain costs and be more profitable.

We achieve this goal through a blend of technology, data and services. These pieces come together in different ways depending on the customer’s needs.

My job is to work specifically with agencies and help them understand the solution we offer. Most don’t realize that this kind of option is available, and that if properly applied, it can reduce one of their biggest barriers to health and growth.

How has the relationship between a brand and an agency changed over the past five to 10 years? How has technology complicated this?

The most important thing to realize is that our environment is expanding. It’s a time of abundance, but our business models, strategies and processes haven’t kept pace, so it often feels like scarcity. This is normal when powerful new cycles are in their early stages.

The data says that brand/agency relationships are more troubled and stressed than ever before. This is largely because the relationship is being pulled in two different directions. As the environment expands at increasingly faster rates, the potential for strategic innovation greatly increases. At the same time, the work is becoming more complex and there’s tremendous pressure to contain costs.

So agencies are being asked to elevate their thinking while also doing more work and increasing cost efficiency. You have these really smart agency people who don’t have time to think deeply about ideas because they’re caught up in operations and trying to solve new problems using old methods and tools.

Technology contributes to this problem by adding to the load without taking anything away. This just makes the situation more costly and complex. For example, the average brand now has something like 20 different agencies, many of which are based on new types of technology (search, social, mobile, etc.).

The next wave of industry innovation has to be about finding new ideas to create operational efficiency. Once this happens, it will unleash a tremendous wave of creativity and growth. This has occurred before in our industry. The 1960s are full of great examples involving TV.

How does Centro work to address some of these pain points?

I mentioned that we combine technology, data and service to create operational solutions. We believe it’s critical to combine all three, as no single component is strong or flexible enough to do the full job.

Here are two examples of how we help:

Mid-size agencies face the same challenge as big ones — the expanding media environment. Their CEOs look at the growing number of media options and meeting requests and wonder how to keep pace. Meanwhile, their clients are asking for more digital work.

The CEOs could throw bodies at the problem, but it’s hard to find enough talent — especially if they’re in smaller cities. Regardless of the city size, hiring more people will only increase fixed costs and isn’t a good long-term solution.

Agencies in this situation will contact Centro and ask us to augment their planning, buying and operations. We take strategic direction from them but are able to execute most digital tasks far faster and with less error. We can also augment their strategic capabilities by helping them understand new trends and technology. Essentially, we provide a flexible solution so they can avoid increasing their fixed costs

As these relationships mature, we’ve had customers add significant amounts of new business without greatly increasing their cost base, thus becoming a lot more profitable.

For very large agencies, the problems are the same, but the solutions differ. Most holding company agencies have as many as 3,000 qualified media properties calling on them. That’s far more than ever before, and the number keeps growing. The more sites you add to a plan, the more costly it becomes for an agency because of the work involved. In addition, most agencies think they can only work strategically with about 100 media companies or fewer.

The way we help solve this problem is by handling the “mid-tail” sites. This enables big agencies to focus on strategic partnerships, make smart use of the many great smaller sites and contain their fixed costs.

How is the compensation model of advertising agencies broken? How have time sheets and billable hours damaged the industry?

Speed and health come from alignment. This is a natural law and provides a high degree of strategic certainty when applied to business plans and partnerships. Therefore, it makes a lot of sense for clients and agencies to have the same goals and be compensated for the same achievements.

If agencies and clients kept score the same way, we’d see much better collaboration and creativity. Our current environment has enormous untapped potential for strategy and growth. Time sheets and billable hours are probably the worst possible method for unlocking this potential.

The best talent likes to take on big challenges, become fully engaged and lose track of time. It makes no sense to create a compensation system that inhibits this behavior and turns away these kinds of people.

Should agency compensation be based on achieving a client’s business objectives?

Absolutely! I think that everybody — clients, agencies and media companies — need the courage, creativity and patience to accept this challenge. It’s hard to imagine how we’re going to create long-term growth without this goal alignment.

How should agencies be working to develop new relationships and business opportunities?

I can think of two ideas:

First, start developing a new relationship with your current customers — a relationship where you’re providing more strategic value and performing less tactical/operational tasks (the kind that make sense for a time sheet). Start sharing the risk and rewards.

To get started, each side would have to remove the worst-case scenario for the other. For instance, the agency’s worst-case is that they work hard and get nothing for their time and effort for reasons they couldn’t control. The client, on the other hand, fears that the campaign could be so successful that agency compensation exceeds what they can afford to pay.

You can remove these fears by setting initial floors and ceilings that guarantee both sides some level of success. This would free people to be aggressive, collaborative and creative. It would also create a situation where each side is working to protect the other and thus increase trust.

The second is to look ahead and imagine the most valuable roles in this new environment. In the 20th century, the most valuable roles were creating and buying TV ads. In the 21st century, it’s the roles of content marketer and experience designer. Essentially, it’s the same roles of creative and media, only reimagined for the new environment.

What used to be the big money makers — creating and placing paid media — are now tactics that fall under these two more sophisticated roles. As far as I know, nobody has claimed this new ground, yet the tools are widely available for doing the work.

What role do digital tools play in new business development?

I imagine they play an important role at every stage. You need them just to be in the game.

Technology becomes magical when it enables you to do things that were previously impossible. Agencies don’t create digital technologies, but they can combine them in ways that essentially create the same kind of magic. This is the best way to win new business and keep it.

Why should agencies focus on strategic partnerships in the future? How can this help to build strong relationships and increase the “trust” between an agency and its clients?

The ability to form strategic partnerships will be a big differentiator going forward, not just for agencies, but for clients and media companies as well. This talent and skill will be far more valued than media buying as technology is flattening the field in that area.

This is a time of enormous change and potential. It’s also a time of lean staffs and budgets. Clients need great partners like never before, but they have less time and people to devote to these relationships. This means they’re looking for fewer partners who can create more value.

Agencies that have the talent and skill to create strategic partnerships with the right companies and organize them to achieve client goals will have a huge advantage. It’s a big style shift for most. It requires sharing, patience, flexibility and collaboration — quite different from a transactional style.

Strong, trusting strategic relationships form over time and are a combination of good intentions, consistently high achievement and doing what you say you’re going to do. If agencies can create these relationships with others, they’re more likely to do the same with their clients.

What emerging trends in advertising are you most excited about and why?

I’m most excited about the expansion from paid to owned and earned media. This may seem like old news to some, but I think we’ve barely scratched the surface.

In many ways, paid, owned and earned media describes the new end game, which is creating the best integrated strategies. This macro trend encapsulates and gives meaning to pretty much all the other trends, which is important since it can focus thinking and language.

We can’t go on transforming forever. At some point the caterpillar becomes a butterfly. Perhaps the butterfly for our industry is this new form of integration. I see it like a game: The team that can best integrate paid, owned and earned media will win far more than it loses. There are strategies and tactics waiting to be invented to play the new game. It should be a lot of fun and will be once people aren’t anchored by old ideas, systems and processes.

One reason you love what you do: I love helping the industry grow. This has become extremely important at this stage of my life and career.

This industry has been very good to me. It’s been absolutely fascinating, incredibly inspiring and full of fun and adventure. My father, brothers, sister, wife and daughter have all been in the business. And I’ve made so many great friends.

Favorite ad of all time: I have to go all the way back to the Marshmallow Fluff ads and the Fluffernutter jingle from the 1960s. I can still sing that song. It described the product, invented a fun new sandwich that increased consumption and created an army of singing elementary school advocates. That’s a hard-working ad!

Mentor: Dave Long from Time Inc. I’ve had many terrific mentors, but he stands out for one particular instance.

Time Inc. in the ’80s and ’90s was a great place to be — wonderful products, culture, people and very high standards. I was their first Internet ad sales person and reached an inflection point where I had to decide whether to stay at Time as an Internet guy or take a big risk — (or what seemed like a big risk at the time) — and go to a startup.

Dave was the president of all Time Inc. sales, and he encouraged me to go out and take my chances. This is early 1998, and he says something like, “You’re really passionate about the Internet. You understand it, and your enthusiasm is contagious and convincing. I believe you’ll be making a big mistake if you don’t follow your passion and interests. My only request is that you talk with me before you make any final decisions so you don’t end up at the wrong place.”

I ended up going to broadcast.com where I reported to two brilliant and colorful leaders, Todd Wagner and Mark Cuban. The company had a very successful IPO and was then bought by Yahoo, where I had another great experience. My whole life changed in unimaginable ways in just 18 months, and I’m not sure it would have happened without Dave.

There are so many great lessons to learn from how he handled the situation. I think the most important, however, is that the highest level of leadership is creating great futures for other people. I think about that all the time at home and at work.

Must read book: “Where Good Ideas Come From: The Natural History of Innovation” by Steven Johnson.

http://www.youtube.com/watch?v=NugRZGDbPFU

The book’s hypothesis is that innovation occurs within very specific environments, which the author describes in detail. We, as individuals, can create those environments in our companies, families and other areas. The book offers great practical advice for an industry where new environments and fresh, good ideas are so critical.

The complementary read is: “The Tyranny of Dead Ideas” by Matt Miller. The title says it all.

You can learn more about Centro by visiting their website or connect with Charlie on LinkedIn.