A Decade of Ad-Libbing a New Kind of Business

MTMedia Arts' Ilya Slutsky recalls the pre-crisis days, when profits doubled with no effort.
Just over a decade after Ilya Slutsky launched a graphic design business as a 21-year old, that business has metamorphosed into Media Arts, one of the country's top 10 advertising agencies.

He had come to Moscow from Almaty, Kazakhstan, in 1985 to design robots, and with seven classmates from the Moscow Technological University, they launched "a very small business," christened the Information Technology Marketing Service, or IMS for short.

"I don't remember whether I understood the meaning of the word marketing, but we were very proud of it," he says, recalling the perestroika era with a smile.

Slutsky says he learned the ropes on the fly, following the demand for services wherever it led them -- from computer art to TV ads.

The studio designed computer graphics for some of the early television commercials. Among Slutsky's clients were Vladimir Gusinsky's emerging MOST media group and MMM, Sergei Mavrodi's soon-to-be-infamous financial pyramid scheme, which at the time sold computers.

The business was steadily growing and moving into other segments of the then inchoate Russian advertising market. By the time Slutsky graduated in 1992, he was running a full-service advertising agency called SFT.

As time passed, some of the co-founders of the business scattered in different directions and its core shrank to just three -- Slutsky, Alexei Krasnov, a schoolmate from Almaty, and Dmitry Chernyshenko, a college friend.

It was these three who started the Media Arts agency in 1994 and it is this firm that later grew into the group of 10 business units operating today in four countries with a staff of 300 people.

"We had no idea that we were creating a whole group specializing in marketing communications," Slutsky recalls. "We didn't know such words then. We followed our intuition in starting new companies rather then any serious business development strategy."

By 1996 Media Arts was up and on its feet, working out of its first office on Likhov Pereulok, just behind the massive Moscow police headquarters building at 38 Petrovka.

"Money was flowing from everywhere," he says. "We had our revenues double annually without any effort. If we had made any effort, our revenues would have tripled each year."

The financial crisis struck in August 1998, but Slutsky said this shock actually benefited the advertising market, filtering out nonviable firms in a Darwinist survival of the fittest.

Slutsky says his agency's serious work really took off in the post-crisis years, although the team had to go through some tough times first.

"The most unpleasant feeling was when you would come to the office in the morning and realize you came there for no good reason -- there was no work to do," recalls Slutsky. "There were no orders for three months."

To rid itself of the inertia, the firm had to change its strategy, he said. Prior to the crisis, foreign clients made up 90 percent of the client base.

"It was easier and more understandable to work with foreigners. Our personnel had Western-style training and they didn't know Russian equivalents for phrases like media plans," he said.

Having been accustomed to speaking English with foreign clients, the firm decided it was time to seek out business from local marketing directors.

Six months later, the share of Russian customers had risen to 60 percent to 70 percent of the firm's client base, from the miniscule 10 percent they comprised before the crisis.

And as the business regained its pre-crisis momentum, Slutsky and his partners dusted off plans they had shelved to expand into the neighboring CIS countries.

"It was difficult to overcome the psychological insecurity of fear of expanding our business," says Slutsky. But by 2002, the group had opened affiliates in Kazakhstan, Moldova and Ukraine.

At the same time, Slutsky's team was working on making the group what it is now -- a structured holding in terms of management and finances.

Apart from the flagship Media Arts FCB, affiliated with Foote, Cone & Belding, which ranks in the top 10 worldwide, Media Arts Group includes Effective Solutions, a full-service advertising agency and media agencies The Strategist Media, Media Agency Regions and Media Sales. The DTV-MA production center also falls under the holding's umbrella, as does the Promotion Vazari design studio and Sportima, a sports marketing company.

He says the firm has learned from its mistakes and gotten wiser with age.

"We could have a museum collection of the wheels we invented," he says with an ironic smile. "I should have done all the studies I've done in recent years back in 1993. We would have prevented a lot of the mistakes we made."

The advertising market here is highly competitive, yet that cutthroat attitude fades away when peers of his speak of Slutsky and his contributions.

"Ilya is a strong strategist. He sees the big picture, understands his own position and makes the right essential decisions," says Igor Luts, co-president of rival advertising agency BBDO Moscow who has known Slutsky for five years.

It's also unique that a team of people like Slutsky and his two close friends who started the business have stayed together, Luts said.

"Generally, money and business spoil personal relationships. If these people have been able to keep their friendship all these years, it is a very big advantage for them. This is very rare now," Luts says.

The father of two young sons, Arseny, 5, and Daniil, 2, Slutsky says he juggles his work commitments with a desire to spend more time with them.

"I want to run my business in such a way that in eight to 10 years time I can pay much more attention to them."