International e-marketing expert Bas Godska: “Digital marketing in Russia is hotter than ever before, and young professionals are craving for knowledge”

Dutch online marketing expert Bas Godska came to Russia in 2008, when the Russian e-marketing and e-commerce markets were still embryonic. He helped a range of international and Russian players – from Ozon, to Lamoda, to KupiVIP, to Enter.ru – reach major positions on the market and optimize their budget. Lesser known, but prolific, has been Godska’s activity as a business angel: with more than 30 portfolio companies so far, he became the number one foreign business angel on the Russian startup scene.

Godska, CEO of digital marketing and e-commerce consulting firm Acrobator and a lead contributor to EWDN’s research studies on Russian e-commerce, shares here his vision of the market, its maturation over the past few years and development prospects in today’s troubled times.

You started working in Russia in 2008; what was the landscape at that time? (Comparisons with the Western situation are welcome)

When I came to Russia, I noticed companies were behind in comparison to Europe; behind by approximately five years in technology, the marketing ROI mindset and other important issues. The lack of high-quality management resources was evident. Marketing budgets were lower than in Western companies and money was spent carelessly on customer acquisition – with a focus on gross demand, not profitability.

What have been the most important changes/trends since then? And how do you think the picture will evolve in the foreseeable future?

Here is my top 10 of the most important changes and current trends:

1. E-commerce has evolved significantly since 2008, although even now it’s still only 1-2% of all retail sales, so a lot is still ahead.
2. Affiliate marketing is a nice example of a mature (yet fragmented) acquisition channel that hardly existed in 2008.
3. Retargeting and DSPs have become a widespread technology since early 2011, when Mythings was launched in Russia.
4. The data-driven marketing ROI mindset has evolved well: a lot of analytical and tracking tools are used, maybe we’ll even see proper next-gen attribution tracking become mainstream in the coming year!
5. E-commerce as a sector is experiencing its second wave; more and more offline companies are embracing the Omni channel business model where a few years ago it was more a case of ticking a box for senior management. They all know that the digital world has become an integral and unavoidable part of our lives and consultancy firms are thriving.
6. Venture funds have found their way to the Internet shops and many have also abandoned the arena, or have at least become more reluctant to accept high company valuations. One thing that hasn’t changed much is the venture climate – it’s still maturing. I haven’t seen many successful exits here, especially if you compare Russia to Silicon Valley.
7. More foreign companies have begun to operate in Russia/CIS – eBay, Amazon, ASOS, PayPal, AliExpress, Rocket Internet.
8. Cross-border sales are here to stay and the competition is intense.
9. Russian young professionals are craving for knowledge as ever, more than their Western colleagues. Russians’ professional skills have improved. Digital marketing is hotter than ever before: marketing master classes, seminars, conferences and webinars can be attended pretty much daily if one wants.
10. The government has become much more aware of the digital scene. Things have become more regulated. Still – there was more paperwork a few years ago, now some processes have become easier.

You have served both Western and Russian companies and worked with professionals from both sides. Did you notice significant differences in their approach?

Russians are ready to risk and react faster than, for example, their Dutch counterparts. The speed of business is higher here in general. The gap in knowledge and competences has become much narrower than compared to five years ago. I no longer feel big differences between the Western and Russian management competence level in e-commerce, yet the operational part and the focus on customer satisfaction is often at a lower level than in the West.

Has corruption spared the Russian online marketing industry?

As the sector is digital there is a lot of transparency, everything is measurable. In e-commerce, ROI-dominated performance marketing is king. So the corruption level seems not overly high for Russian standards. In digital brand marketing, however, there is more room for shady deals, as ROI is less relevant.

I remember how a marketing manager of a large firm approached the sales manager of one of my projects at the first meeting with a very professionally outlined corruption offer. We were required to wire funds to an offshore account prior to getting the budget approved. Needless to say, we declined the offer. Certainly such cases are not overwhelming, but may happen.

Besides your online marketing consulting activity as founder of Acrobator, you have become an important, though discrete, figure on the Russian/CIS business angel scene. What attracts you to Russian startups? Do you still consider investing in this country?

I like helping companies and startups to grow faster. The Russian market is interesting because it is still developing. There are bigger opportunities for startups to grow full-fledged businesses here than in saturated markets in the West. In the beginning, I invested only time on some advisory boards but then I started using a hybrid model, investing both money and time as an active investor. The companies need not only money, but also experience in how to spend it on product development and customer acquisition. So I advise companies, and luckily over 90% of my venture portfolio companies are successful.

If I see a really interesting idea or business, I wouldn’t hesitate to discuss investing. But it depends to what extent that startup matches my criteria.

Can you tell us about your investment criteria and existing portfolio?

There are more than 30 companies in which I have participated so far. I invest in companies in the sectors of e-commerce, digital media, ad tech, marketing tools and mobile. The portfolio’s value increase based on the latest investment rounds exceeds 200% annually. I don’t consider myself an investor; I just like helping young companies with my experience, team and network. In several companies I assist as a board member. The criteria I usually look at: attractiveness of the idea or technology from a user perspective, a “click” with the founders, scalability and mostly how I can really assist the project with my network and knowledge. Also, of course, the valuation needs to be sexy. I’m not obsessed by seeing them achieve exits, I like the entrepreneurial game the most.

Do you feel that the recent international tensions and sanctions have had, or might have in the future, an impact on the Russian online marketing industry?

A lot of foreign companies used to approach me with questions relating to Russian market entry or market intelligence. There are a bit less of those foreign inquiries now, and those who were quite ambitious earlier are watching now to see what’ll happen next. Local demand is on the rise though.

Overall, I am optimistic about the future. E-commerce in Russia is still developing fast, new companies come, technologies arrive, all of them need to sustain their growth and boost marketing efficiency where possible. I guess my local knowhow has proven to be my sexiest asset.