With the rise of new technologies, digital marketing is going through some big changes, and that includes the impact of advancements in Artificial Intelligence. These shifts in the digital landscape pose a real challenge for digital agencies, as they have to quickly adapt. We sat down with Andrey Novikov, the co-founder and Chief Executive Officer of the Affect Group agency, to discuss how to navigate a company's operations in a rapidly changing world. Novikov has led his team through multiple crises and managed to significantly expand the business across several countries.
With 18 years of business development expertise and an internationally award-winning agency, acknowledged by prestigious awards like Effie, Shorty, and Clio, could you share how you've structured your business operations to successfully accomplish goals?
"I am a self-taught CEO. I have read all the management classics-'The Toyota Way,' 'Lean Production,' and many by Peter Drucker. It can be a challenging career; without anyone to consult with, nothing seems clear. If you misunderstand your readings, you may try to apply theoretical knowledge to real business and lose a lot of money. But then you read another book and try again-that's how you learn. It's a long road of development.
Ultimately, I lead all key aspects of the business, from strategic planning to operational management. I seek market fit, refine the business model, and establish the right positioning. I have also mastered financial accounting and forecasting. I was able to develop and implement our own financial system called ANDY, which is specifically tailored to the needs of our agency.
I enjoy automating and transforming business processes into a digital format-it greatly simplifies many aspects of my business. But the most crucial aspect is working with people directly. One of my key tasks is motivating team members, which provides much-needed flexibility for the company. It makes crisis management much more practical. For example, I restructured the business and shifted the entire agency to remote work during the pandemic. As a result, we grew together as a team."
Which projects stand out to you, where you effectively showcased Affect potential?
"We worked with LEGO to launch the Nexo Knight product line. We proposed a strategy and a platform that got approved in 18 countries, so handled all communication and development for the project. It was a visually stunning project with 3D graphics-quite innovative at that time. This is when we began to realize that our expertise had moved beyond the local level and into the international one. Our strategy was evaluated higher than proposals from colleagues from other countries. We started by implementing the strategy in Germany, and it turned out to be much stronger than what local specialists had suggested.
We collaborated with Coca-Cola, creating a digital activation toolkit for all Coca-Cola activities in Eastern and Western Europe for the Cappy brand.
Speaking of Europe, all markets on the continent have been using the social media marketing (SMM) content that we've created for Ballantine's for several years afterward.
With Lipton, we've created a phygital project-a massive crowdfunding platform where people donate money for social initiatives.
We've executed multiple projects in the event space sphere; for example, an Olmeca event for over 5000 people.
For Kozel, the beer brand, we launched a massive 'Trojan goat' down the Moscow river, causing a media frenzy and resulting in widespread PR coverage.
In 2021, we won the "Creative use of Technology Award" at the International Shorty Awards for our Tele2 project where users turned their voice messages into hip-hop tracks.
Additionally, in 2021, we won a tender to become the sole SMM agency servicing TikTok, surpassing 30 other agencies."
Over the years, we've created a tremendous number of projects for major brands, utilizing perhaps every tool and platform available in digital marketing.
Now we're continuing to progress, following the revolutionary Social First approach: we firmly believe that social networks should be the primary channel for product and brand communication, with traditional channels like television being secondary. And in order to create unique and creative content that can win recognition from both the audience and international festival juries, we utilize a comprehensive range of expertise within a single agency. We have social media communication strategists and specialists, a team dedicated to working with bloggers, a sizable department for complex content creation, and all these divisions are capable of working synergistically to deliver outstanding results. This sets us apart from competitors in the market.
What challenges have you faced when entering new markets?
"A recent challenge we've faced is 'the 8 follow-ups,' meaning that a company needs to remind new and existing clients about its business at least eight times. As it turned out, we were not accustomed to selling ourselves: we originated in the CIS market, where we were so well-known that clients approached us voluntarily. So when conquering the US market, a business needs more than just high-quality service and expertise.
Another challenge was that we brought a slightly different product to the US market. While our main business is '360-digital', here in the US we are solely focused on performance marketing and lead generation, so we've spent a lot of time to find the market fit.
Successfully overcoming all these challenges and establishing ourselves in a new and highly competitive market was made possible by understanding that when providing a service, the most important aspect is the people. When communicating with clients, we emphasize human qualities: generosity, diligence, patience, and mindfulness. This approach helps us better understand the clients needs, comprehend the market, negotiate with partners, and retain the most talented employees. We network and establish trusting and respectful relationships with our counterparts. As a result, within just a year, our revenue in the US market has grown from zero to a forecasted almost $1 million by the end of 2023."
How have you been able to adapt in times of multiple crises?
"We faced a growth crisis. Our team had 40 people and we needed to grow to 100. Making this quantum leap was extremely challenging. There are a couple approaches, with the first being rapid team expansion-where new, untrained individuals with different values join and disrupt the culture and processes, leading to a decline in service quality and loss of clients. The second approach is slow team growth-but in this case, existing employees become overloaded and burnt out, eventually saying, 'I can't work like this anymore. I haven't had a day off in three months. I quit.' They leave, and you regress, losing clients in the process. Negative word-of-mouth spreads about you, and new clients stop coming in. In both of these cases, you fail to achieve that quantum leap.
We made the difficult decision to hire a top manager with a higher salary than the CEO has at that time. It was a bold move and an investment in growth. Many entrepreneurs are afraid to do this, not believing it will pay off. However, because we invested in a strong leader, the team grew under their leadership. We realized that we needed to scale this approach, so we hired another strong leader, leading to further growth, and helping us overcome the crisis within a couple of years.
Another crisis occurred when one of the partners exited the business. As our business grew, one of the owners could no longer handle the operational tasks, so we decided to hire a specialist. Looking back, we may have acted too hastily and abruptly. This decision led to a complex process of dividing shares, and it was overall an unpleasant situation. However, as a result, we have gained insight and can even advise others on how to avoid similar situations.
Another crisis was that of the COVID-19 pandemic, and restructuring the entire business for remote work. We needed to clean up all the processes and move them online. We had to create a remote onboarding process so that team members would still feel that they were working at a company with values, culture, a mission, and to feel a sense of belonging. Thanks to ANDY, our innovative financial accounting system, financial flows were already being controlled remotely at that time. From this perspective, we didn't notice any crisis, while many competitors struggled to understand how much money they had in their 'cash register.'
Now, we are thinking about how to further unite our team. I am currently considering the implementation of group masterminds, where teams of seven people from different departments come together to pitch solutions to each others' issues. Secondly, we are thinking about implementing a chatbot called 'Random Coffee,' which will introduce people from different departments and provide discussion topics-something of our own internal Tinder."
What qualities are necessary for a business to achieve opportunities in crisis?
"During a crisis, opportunities arise for those who have established flexible business management systems: everyone listens to each other, employees have a voice, processes are quickly implemented without getting bogged down in bureaucratic procedures. We have consistently fostered equal relationships within the team, and transparency has been a guiding principle. Implementing the OKR approach allows the team to comprehend goals and propose adaptable solutions. Flexibility, efficiency in processes, and speed-having these attributes will create opportunity from crisis."
What digital marketing trends do you believe will take place in the coming years? What can one do to adapt to them?
"I believe Artificial Intelligence will transform the performance industry, reducing it to a single button; a company comes to the platform, clicks 'Sell,' transfers the money, and the system itself provides insights and segments, creates media plans, and comes up with creatives and offers-all the tasks currently performed by numerous people. All of this will become a reality in the next year or two, especially concerning the performance product.
However, as for creative products such as SMM, human creativity will remain at the forefront for some time. AI can assist here too, but a specialist must see the big picture and understand how to articulate a prompt to achieve a high result. The industry will become more efficient as AI speeds up and improves the work, much like how machines assist factory workers. It will be used as an intellectual machine.
As for VR and metaverse-they are still expensive and time-consuming, and less comfortable than using a smartphone. Many people find it physically challenging to become completely immersed in virtual reality. I predict this industry will develop slightly slower than Artificial Intelligence."
What strategies have you found work best with customers?
"Customers, as always, want quality, speed, and efficiency. And they are most interested in sales-based marketing. We can increase loyalty and recognition, but in the end, those who promote sales will gain the advantage."
