Ever wonder where those banners and pop-up ads you see as you surf the internet come from? We did, too, until we met Scott Golas, VP at Centro and Transis MediaOps, which serves up millions of ad impressions every day.
Scott has developed a unique reputation in the sourcing industry over the years, having been a practice and strategy leader in his earlier career with the likes of PwC, Aon Consulting and, more recently, Booz Allen Hamilton. Hence, it is no surprise to us that he is now helping take the world of online advertising into smartly sourced business models.
What's caught our attention with Centro, has been the firm's creation of Transis, a self-described "digital platform surrounded by services", which forms the centerpiece of a revolutionary new outsourcing service for ad agencies' online media functions. Transis essentially streamlines the process of planning, negotiating, trafficking and billing so agencies can devote more resources to strategic thinking for their clients.
Centro is now taking the function of advertising-process sourcing to an entirely new level with a new managed services offering, called MediaOps, that will enable advertisers to outsource their entire digital media operations, which are typically onerous to run, and complex to get right. This will allow the ad agencies to focus their talents on creative and targeted ad campaign management.
HfS Research's Phil Fersht and Mark Reed-Edwards had the chance to catch up with Scott recently. Rather than diving right in to a discussion of Centro, we were interested in learning how Scott got where he is...
Scott Golas, MadMan of Outsourcing
HfS Research: Scott Golas, good morning to you and thank you very much for spending time with us today. Before we dive into talking about Centro and the work you’re doing there, you’ve had a very colorful career, Scott. You’ve worked for numerous different companies. Can you talk a little bit about how you got to where you are today?
Scott Golas: Sure. I won’t go back to the very beginning; you probably don’t have enough tape on your recorder. I began a consulting career prior to Y2K with PwC out on the West Coast around HR transformations and outsourcing large system implementation. I spent most of 2000 after making a foray into the dot-com land bubble with a VC incubator here in Chicago called divine Interventures. For the remainder of the decade, I was either with Aon which is a large insurance brokerage, consulting, and outsourcing firm bringing their offering to market or with an analyst researcher consulting firm. I landed here at Centro in early 2008 and that was really—as most good job interviews or good job offers come—over cocktails at a restaurant. One thing led to another and I joined Centro several months later.
HfS Research: Centro offers some proprietary technology in the media business. Can you tell us a little bit in broad terms what it is Centro does and what’s the core value proposition of the business?
Golas: Yeah, I’ll try not to use acronyms or specific industry technology, but you can think of Centro as basically an operations service provider to agencies, and occasionally directly with brands. It’s all around digital advertising. Anything from the pop-up or banner you see on your laptop to digital out of home (DOOH) to widget that scroll at the bottom of your mobile phone. Anything related to digital. We don’t currently do anything in traditional media, TV, radio, or print. At the end of the day, we facilitate massive amounts of transactions (from concept to cash) between advertisers and publishers.
In this case the publishers are online publishers. Because of the complexity of executing digital, it’s very difficult for agencies and brands to do that efficiently. If you think of an ad that you see for vodka or something like that, that same ad in print is going to be the same ad whether it’s in Forbes, Sports Illustrated, or Fortune. That same ad digitally, if you were to place that on 20 different publisher sites could require 20 different versions depending on the size of the ad, where it was placed, where it fits in the publisher’s rotations and on and on. Digital advertising is much more complex that traditional.
There was a study done not too long ago by the AAAA (American Association of Advertising Agencies) that said that executing digital advertising is three times more difficult than any traditional media. So it’s complicated and expensive to do. The buys are typically smaller and we help advertisers and agencies do that much more efficiently.
HfS Research: So MediaOps is almost like—in simplistic terms, almost like a human platform for digital media?
Golas: That is probably an easy way to explain it, yeah. It’s a digital platform surrounded by services. From one end of the spectrum you can—as an agency, do it all yourself, research, plan, buy, etc… with the publishing community without our involvement, just by utilizing Transis, or we can do it all for you, via Centro Media Service. The new offering, MediaOps, is a hybrid, once you have planned and bought advertising using Transis we’ll help execute, optimize, bill, and collect.
HfS Research: So if I’m trying to sell a product and I want to maximize awareness in advertising through the internet, if I were to use traditional means it would go to media buying agencies or an ad agency. Can you just talk about how much more cost effective and how much—how different it would be leveraging your platform versus a traditional model?
Golas: I guess the biggest distinction is that we focus on the entire spectrum of the advertising continuum, including the mid- to long-tail of the advertising world. So if you just want to buy a network, for example Yahoo or something that’s pretty easy for you as the agency media planner buyer to do, you can do that without us. With most networks, you’re not really sure where your ad is going to end up or when it’s going to run but it will be cheap and you’ll get the impressions (aka volume) that you’re looking for. However if you’re trying to target buyers, if you want to reach 18-34 year old males who bought a Chevy truck in the last year and eat pizza, in certain geographies—you’re going to have difficulty doing that as a media planner buyer. It’s especially difficult to do that for many clients in multiple markets with varying launch dates. This industry still relies heavily on email, faxes, and spreadsheets. If you try and do that with a few publishers you might be able to do that. You’re going to have to negotiate rates, you’re entering into a contract, and you exchange digital assets. Now if you extrapolate our example and want to target the example we just talked about but need to do it nationwide with 30 publishers…you would be hard pressed to do that. That’s where we come in and we help out.
HfS Research: How typically do you support clients when they engage with you and your technology platform (Transis)? Do you generally provide them with round the clock or is it very much the client has to figure it out for themselves? How does that work?
Golas: It’s a fully supported model. It’s a SaaS-based platform. We’ll go out on site and sit with your media planning and buying team for as long as it takes them. We transition them off their spreadsheets, faxes, and paper intensive processes. We’ll upload all their contacts that are sitting in their Outlook databases. We’ll spend days there or a week, whatever it takes to build a plan, get them comfortable with Transis, and eventually wean them off that until they’re more comfortable with it. You find the early adopters within an organization and work with them and they’re the evangelist for the new technology and services.
HfS Research: Okay, so is the idea eventually to have the media buyers access the SaaS platform (Transis) directly, with a license model, and then they essentially get what they need. Or is this normally like a custom approach? How is that model going to work in terms of how the use it on a day to day basis?
Golas: The technology that we launched in 2010 is in adoption by over 50 agencies right now. It’s the initial the beta version of the product. So we’re working very collaboratively to address any kinks and bugs. Right now Centro is involved in about 1 percent of all the digital transactions that happen in the US, that has historically been done through our full service model. We still think there’s a huge marketplace with that other 99 percent of the pie that we can help agencies research, plan, buy, and execute digital. Whether it is completely self-sufficient using the Transis technology or the hybrid model.
HfS Research: Scott, that 1% is not an insignificant number, is it?
Golas: No, it’s a huge dollar amount. There’s a huge advertising market and it’s coming at an ever increasing rate from traditional media to the on-line world. It doesn’t matter what analyst or research report you read it’s about a 90/10 split right now between traditional and digital. The gap between traditional and digital will close at an ever increasing pace.
HfS Research: Scott, what’s your biggest competition out there? Is it DIY, or are there other agencies doing this?
Golas: We’ve got a couple. When I say traditional business, it’s not like we’ve been around as long as Ford or GM. We just celebrated our ninth anniversary, so we haven’t been around that long. Our traditional business is that model I mentioned before; working with agencies who are our primary customers—and hammering out everything once they complete the creative.
Our biggest external competitors—we’re about ten times their size. For the sake of this conversation, a formidable competitor would be Cox Cross Media coming more so from the traditional world than digital. But your comment at the end is on target: our main competition is agencies wanting to do it themselves.
Assuming that they’re even doing digital, and it’s mind boggling how many agencies don’t offer that now, simply because it’s too difficult to do. As you can imagine, most agencies began with traditional roots, and they’re migrating over to learn the digital world. But they were hit hard during the recession we’re coming out of, and budgetary cutbacks, and all the new channels they have to learn, they need help figuring it out so they come to us.
HfS Research: So when you deal directly with a company do you also help them find people to do creative or will you take what another agency has created?
Golas: If it’s a brand directly, the creative work is more so cleaning it up so it works on all the different ad services and technologies on the publisher sites. We’ll get it, we’ll QA it, we’ll check it, we’ll make sure before we load it up, before the campaign is scheduled to go live, that it actually works on the publisher’s site. A lot of our creative work there is fixing it to match standard ad units and sizes. We do work with a lot of smaller and regional agencies that don’t have the creative capabilities, and we help them out as requested.
HfS Research: Okay. How is this platform going to change the traditional advertising model scope? Obviously it’s bringing technology and capability into play, but do you think this could eventually start to cut out the middle man and start so you could just work directly with the corporate buyers?
Golas: Here’s our hope: We’re big fans of advertising in general online and the creative world and what we think has sort of drained out of advertising in the last couple years is that creativity. We hope that by peeling off all the commoditized, very high transactional work that agencies spend time doing, they’ll be able to focus more on what their clients are trying to accomplish and build very cool, creative ads. By working with us, they enhance their capability to find the buyers of their products and have a lot more time to devote working on this strategy and creative with their clients. It’s not an area that we want to play in to be frankly honest with you. We know we do what we do really well and that’s operations and execution. Our bailiwick is anything from post creative to collection. Anything before that is the purview of an agency.
HfS Research: In terms of a lot of the broader outsourcing industry I’m thinking of here, you know I’m thinking of companies like Accenture or Infosys who invest a lot of money in their own—in their own sort of digital content and support services for clients, do you actually think that they might become a future channel for a company like Centro as clients need to get more savvy just around traffic on internet, understanding how to maximize awareness of products and things? Do you think that this at all is going to become bigger than just intelligence for placing advertising but something that can be used more broadly in terms of marketing for clients?
Golas: I would think after a period of time if you look through a genesis of most of outsourcing products or solutions, you know someone is going to make a foray into this arena and prove it can be done really well. It’s usually someone who comes from a strong operational background and marries that up with technology that’s been accelerated or that is going to garner attention. It’s either going to garner attention from the large consulting firms, existing outsourcers, or an existing technology company in the digital landscape who have a lot riding on this, like the Google’s of the world or Yahoo or Microsoft. They all have huge vested interests in search, display, and digital online. If they can make the dollars flow online, which is what we do, I would assume that would be attractive.
HfS Research: How can people actually leverage a tool like this to help them in very quick terms understand how to maximize their digital presence?
Golas: I think one thing to note about Centro—and Transis, which is the name of the technology—is that we’re agnostic. Compared to some of the other ad server or technologies that are out there I can think of—let’s use the biggest one: Google’s purchase of DoubleClick and their ad server a few years ago. There’s a pretty violent reaction from agencies to put their data and all their information on the DoubleClick ad server—just a fear of what Google could do with it. Likewise you hear a lot about demand-side platforms (DSP) and networks. Those are all items that are, I won’t say proprietary, but generally a demand-side platform is only as good as the access to inventory that you have. A DSP by nature is not going to get every publisher on a buying platform. They’re just not, well, one, physically able to do it and publishers are not going to give up that control. Where we fit in is—we don’t care. We plug into any of the back office applications that an agency or publisher works with.
Our SaaS tool Transis sits on the desktops of thousands of publishers right now to help manage these transactions. So if you’re an advertiser worried about rationalizing numbers between ad servers it is a huge task. But that’s how people get paid nowadays. You know, we take that pain out of the process and we try to make it work for both sides. We’ll rationalize the numbers between different servers and technologies so people feel comfortable about getting what they paid for and not over paying.
HfS Research: Okay, that’s interesting. So in terms of how the outsourcing model is going to work or where you think it’s going to play out in the medium term, do you think it’s mainly going to be a product which is going to be a product leveraged by the media agencies and clients will still go to the media agencies and the media agencies will talk with Centro or do you think it’s going to be a mixed model where you’ll have some clients directly with the buyers and others directly with the media agencies? Have you nailed down that strategy yet?
Golas: I haven’t nailed it down. I mean, you hit on really the two major components. The outsourcing solution that we’re bringing to market is called MediaOps and we have clients right now in both of those models so—we have a couple retailers that have Transis on their desktop and we’re handling the execution and likewise we’re working with agencies directly. So the plan as it looks right now is an agency (or brand) utilizing Transis will do all their research, planning, negotiating, and buying. Once an agency executes a contract (insertion order) with a publisher they will hand it off to us and we’ll take the creative assets and pretty much run it all the way through to billing and reconciliation.
HfS Research: Okay. When you look at the growth of the broader BPO market it’s interesting when you look at companies like Aditya Birla Minacs, for example, who do a lot of marketing operations already for some global clients. For example, they work with Apple on distributing iPods through certain networks. I can think of other service providers that are getting intimately involved in the marketing process. Do you think that could be a future channel as well? As these companies get more involved with their clients marketing process to start offering the management of your platform through that channel?
Golas: Yeah, I think that is a very good suggestion. One that we have frequent discussions about on where we should go—whether it’s new technologies to pursue or partner up with or new geographies to go into. This industry is the most dynamic one I’ve been involved in. In the near term it’s really focusing our attention on our full service platform, or Transis (self-service SaaS solution), or the MediaOps service. Getting them up, getting them ready, making sure we’re delivering on what we’re doing and now expanding the access to technologies or geographies. Both Transis and MediaOps are less than a year old. We want to make sure that we have them fully operational and that we’re doing what we’ve committed to before we get over our ski tips.
It’s an excellent suggestion, Phil, one that I’ve seen up on white board amongst many others. But we want to just stay focused though.
HfS Research: Okay. Where do you see the biggest growth potential in this short medium term for the company in terms of services versus the software based solution? I mean I’ll give you an analogy here of a couple of companies who did sales incentive management solutions for sales folks. There is one company called Callidus and another company and they’re called Cipher and it was interesting because Callidus decided they were going to do the one to many model and sell the product through IBM and they’d sell it at like five cents on the dollar and go purely for a licensed sale and have IBM manage all the clients and services rendered around that. Whereas this other company they realized that something like sales incentive management wasn’t something that you could put entirely in a software package without having some element of semi-customization to the client’s needs. They started to build like a support center with about 200 staff in it where they could actually support clients on a kind of subscription model as they leveraged the package. It’s interesting to see how both companies are growing in terms of revenues. Do you think that you’ll be moving more down the line of having a sort of services layer that sort of supports the products than just going straight for licensed sales down the road?
Golas: Right now I believe the later model you described is what we’re pursuing right now. I want to maintain ownership over the technology; we’ve got a large development staff here in Chicago. By nature of our agile development methodology, we roll out new product features every two weeks. So Transis is very dynamic, and we can adapt to handling changes being requested by clients, we can fix things very quickly. We’ll be out in the market really soon. There will be a dedicated software sales force and support organization and also someone selling outsourced services in the support organization.
HfS Research: This has been a fascinating story to hear this unfold and to hear a company that is moving into a broader sort of sourcing strategy with its technology. I mean, for you having spent so many years of your career in the traditional outsourcing business, having been out of it for a while would you ever want to go back to it?
Golas: I’m jumping back in with both feet. I think, unfortunately, outsourcing gets a bad rap at times. People automatically equate it with offshoring, they equate it with layoffs, which is just unfortunately a bad rap for outsourcing guys. I think it’s valuable to us look at how outsourcing has been around organizations back to the early days of payroll outsourcing. I’d be hard pressed to find an organization that doesn’t outsource some component of their operation. I think it’s just the next evolution. The advertising world has been a little slow to jump on the bandwagon but we know that they’ve outsourced IT operations, and some finance operations. So this is a huge component of their business. It’s a component that they frankly, if you could talk to anyone over a drink one night, they’ll tell you that they hate doing. They tell you that they love doing strategy and working with the clients. They love building creative—and solving problems for them, you know—how to get products off the shelf. And what we do is take all that operational, highly transactional, high volume work off their plate so they can focus on doing it.
It sounds repetitive or it sounds like it’s probably a mantra you’ve heard from other outsourcers, but that’s sort of the nature of the beast.
HfS Research: It’s almost comparable to what we’ve seen going on in the legal profession for the last couple of years with legal outsource processing. Where a lot of these little LPO firms have popped up which take on a lot of the administrative work. They can do a lot of discovery work, a lot of the really time consuming administrative tasks, and—which allows lawyers to spend more time with their clients and less time dealing with trivia so the client gets the benefit as well as the lawyer.
HfS Research: It’s interesting to hear these types of models developing in general and it’s great to hear the story that you’ve come out with so would you ever go back to the world of HR outsourcing?
Golas: Typically most companies have no idea where that money’s going, meaning their investment in human capital. So anything you can do to peel away the administrative transaction components of work and allow people to focus on what they’re coming to work to do, not HR—HR as the work that they’re involved in and HR as the functions. It typically comes with newer technology, newer programs, and access to people who are leaders in their areas of business. They are staying abreast of changes and new ideas and they know what’s going on and they can bring new plan designs and new technologies that you wouldn’t have access to. I’d hop back in it, sure. I still maintain that role and responsibility here at Centro. It’s one of our differentiators we believe in the marketplace, our focus on raving fan service is what we’re known for. We have great people, highly motivated, supported with some pretty bad ass technology. I think we’re going to be hard to beat.
HfS Research: Okay and one final question before we wind this up. If you could have your career all over again what would you do differently? Or would you do anything differently?
Golas: I think there’s very little I would do differently. I would have probably stayed working at the Grapevine Lounge, my first night there the Rolling Stones showed up after having played a concert downtown in Soldier Field (Chicago) and did their final set at 3:00 in the morning. Unfortunately I left two days later to take my first union job in the supermarket industry. So that sounds like a pretty cool place to hang out but I’m pretty happy in general. And I’ve learned a hell of a lot.
HfS Research: It’s definitely a matter of doing what you do best—and ad operations is not what agencies do best so it just seems to be an idea whose time has come.
Golas: There was a recent article in Forbes that I remember one interviewee saying the agency of the future’s is going to be ten really cool creative people, a lot of technology and they’re going to outsource everything else.
Our job is to help agencies be successful and I’m sort of paraphrasing our mission. But the way we can do that is to take what they would consider mundane and monotonous, transactional work off their plate. That makes us sound kind of masochistic but that’s what we do. We love it. Those are problems we love to solve and we solve it with great process and cool technology and just a great team here.
HfS Research: Scott - it's been great catching up after all these years, and seeing you having such an impact on your industry with your experience of the sourcing world. HfS readers will surely be intrigued with all the great work Centro is doing.
Scot Golas (picture above) leads the workforce development, administration, real estate and several business development efforts at Centro, an online media buying technology services company. Scott has been a pioneer in the sourcing world for nearly two decades, having been a practitioner, consultant and strategist with the likes of PwC, Aon Consulting, PA Consulting and Booz Allen Hamilton. He can be reach at scott dot golas at centro dot net.