Some iconic campaigns worked more for my career than for the brand: Sudhir Sitapati

One of the first things that Sudhir Sitapati did when he joined as the MD and CEO of Godrej Consumer Products (GCPL) two years ago was to "dramatically" increase the company's ad spends. "Even if it came at the cost of profitability," he averred. The gamble eventually paid off rich dividends for the company.

The GCPL Chief Executive delivered the Subhas Ghosal Memorial Lecture at the Advertising Agencies Association of India (AAAI) event on Thursday on the topic he titled "Does the advertising industry need a dose of its own medicine?" 

With a touch of wry humour, Sitapati addressed the many issues, even the topic of the contentious fee model that has the industry at loggerheads. He said that he considers himself "one of the advertising fraternity" and made some compelling points, calling for increased synergy between agencies and advertisers.

He began by stating that Subhas Ghosal, the legendary adman who was JWT’s first Indian CEO, would be disappointed that J. Walter Thompson, the agency where he had worked for 50 years, has now been subsumed in VML - perhaps not for the name change itself but more as a symptom of what he would see as the decline of advertising.

He said that Ghosal would blame it on the change of the commission model where agencies would make 15 per cent commission from media owners for the advertisements they bought. "The fortunes of advertising died with the current fee model that leaves no room for investments in people and research, and no real incentives for agencies to push the business of the client to the maximum," he noted.

"Over the last 30-40 years, advertising has done extremely well in India,” said Sitapati.

He shared that in 1983, in an article titled ‘Advertising a Critique’ Ghosal argued for more spending on advertising and said that the sector contributed to about 0.2 per cent of GDP while in Indonesia it was close to 0.6 per cent. Forty years later, advertising now contributes to about 0.5 per cent of the Indian GDP.

Sitapati also said FMCG was still the largest spender on advertising in India by a distance and advertising is the life blood of the FMCG industry. “I would say that the Indian FMCG sector is stronger than in the rest of the world and this is in turn led by advertising. The Indian companies are much more profitable than their global peers. He also said margins in India are higher than the global margins as brand presence in India is much stronger. Their EBITDA is on average 20-25 per cent vs. global peers at 15- 20 per cent and they list at 60X P/E multiples vs 20X for their global peers."

“FMCG is the bell-weather for consumption and compass for most consumer companies. It’s not unfair to therefore assume that advertising has played such an important role in FMCG. It has played perhaps a slightly less, but nonetheless crucial role in consumption in general.”

Sitapati shared three basic points for folks in advertising: "Spend more time with the CEO, CFO and other non-marketing people; have a unique point of view on how advertising works and advertise it in a line, and finally talk more numbers."

"Who the consumer is depends on what you want. If your objective is to structurally reset the profitability of the advertising category the consumer is not the brand manager or the marketing head but the CEO. What do CEO’s want?  

If I were to take a sample of one - CEOs are lonely, self-important, paranoid people craving the attention of others. We are extremely paranoid of people who sell to us but we love it when others study our business, praise us first and then criticize us."

He further shared that in today’s post-modern world, we recoil at a definitive answer on how advertising works instead of listing the various ways it could work. “We are more concerned with being never wrong rather than being often right. There may be many roads to the advertising heaven, but an agency must choose one of these roads and convince the CEO that their religion is the true one.”

Sitapati further said that his own beliefs on advertising were shaped by two epiphanies. "As a brand manager on Surf Excel in the mid tweens, I noticed that whenever a measure on our Milward Brown brand tracker called ‘Proven ad recall’ rose then a few weeks later our sales rates went up as well. In other words, all it took for consumers to buy more was to be able to narrate the story of the ad impromptu.

“I call this principle 'Be famous before you get persuasive'. Don’t sell, just be known for what you sell. Once you buy this belief system there are some necessary concomitants – the power of the big idea that helps you stand out, consistency, fewer copies, risk taking etc.," he noted.

Sitapati's second epiphany, he said, was shaped around that same time when he read a book that now seems to be on everyone’s bookshelf – ‘How Brands Grow ‘ by Byron Sharp.

"His thesis is that brands grow not by heavy users consuming more but by non-users or very light users consuming a bit more. Penetration is driven by salience not equity attributes (hence fame > persuasion) and salience is driven by making your brand mentally available to the maximum number of people. In media terms, it's reach and not impact that matters," he said.
 
The second advertising principle for Sitapati has been: 'It is better to whisper to many than to shout to a few'. This too has its concomitants – never getting carried away by the impact, keep looking at the cheapest media, at consumer cohorts who never see your brand ever and don’t over segment markets, Sitapati observed. 

He shared that his favourite brand in India is Wipro’s Santoor since it has stuck to its big idea of ‘Mistaken Identity’ for years and bravely stuck to mass-scale wall paintings to reach very light consumers of TV in rural India.

Sharing more about his work, Sitapati said: "A decade ago, while operating at the intersection of business and marketing, to solve the Hamletian problem of what I wanted to do and what I willing to pay for, I allocated 5 per cent of marketing budgets into a line item called F&G – Fun and Games. It sounded respectable to the accountants and usually passed audit. It included spends on awards, sustainability, purpose, digital, big data etc. Some of it like an iconic piece for 'Lifebuoy Kumbh' seen by everyone except consumers worked more for my career than for the brand."

“It’s not just important to have a theory of advertising; it's equally important to have a proposition that your agency believes in and everybody in the agency repeats at all forums. With just these two principles consistently at play, I’ve winged my way through marketing for the last 15 years.”

He also said that his final suggestion on marketing advertising is for the agency world to speak a little bit more in numbers to brands.

“We as clients would love it if you had more data at your disposal on how an ad is working than we do. If you came to us and said this isn’t working, pull it off or it's working you’ve got to spend more money on it. Not based on gut, which you do quite often but based on hard facts. Agencies need an entire department on marketing effectiveness – you’ll have to invest in the databases and in people, but I can assure you that whenever a consultant or an external advisor has proprietary data on my brand or company, I take that very seriously.”

He concluded by giving a piece of advice to a fraternity: "Your real customers are those who control the P&L, not those that control ad spends, and have a clear and succinct view on how advertising works in driving profits and stick.”

Before Sitapati, luminaries like Rajan Anandan, Uday Shankar, Ronnie Screwvalla and Aroon Purie have all delivered motivational and informative talks at the same event.

As a memorial to one of the most influential figures in the history of advertising, Ghosal, the Subhas Ghosal Foundation was established by a group of senior communication professionals who lived during his era. One of the primary objectives of the Foundation is to promote the professional values, Ghosal embodied throughout his lifetime. With the support of Advertising Agencies Association of India (AAAI), the Foundation has been hosting its 'AAAI Subhas Ghosal Memorial Lecture' series, for several years.