Be famous before you get persuasive: GCPL CEO Sudhir Sitapati

He was delivering the keynote speech at the annual AAAI Subhas Ghosal Memorial Lecture.

Sudhir Sitapati wants agencies to come speak to CEOs and CFOs rather than the brand and marketing managers.

The CEO of Godrej Consumers Product Limited (GCPL) made this eyebrow-raising, yet not completely surprising statement during a speech he delivered at the annual AAAI Subhas Ghosal Memorial Lecture.

It was a speech which he, in a forewarning, said would be, “novel yet self-indulgent, flippant yet reverential”; a nod to how the legacy adman Ghosal would have delivered it.

Sitapati’s lecture revolved around how the advertising industry “has done a fantastic job for media owners, and Indian industries over the last 40 years, but has probably done a little less of a good job for itself.”

The CEO spoke about Goshal’s thoughts on the commission model: “Agencies would make 15% commission from media or advertising they brought in but the present model 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.”

Sitapati said he’d only partially agree to the legendary adman’s thoughts because he felt the Indian advertising was in better shape. “While in dollar terms, the Indian GDP grew by 6.5% over 40 years between 1983-2023, advertising has grown in dollar terms by almost 9.5%. The advertising industry in rupee terms is likely to grow somewhere between 13-15%.”

He is clear, “What ad agencies need to do to market themselves better is spend more time with non-marketing folk which is CEOs and CFOs in the company.”

Why? Because the CEO is only focused on “driving their company’s share price up in the next 12-36 months” and if agencies want a certain kind of ad (he showed Lifebuoy’s handwashing campaign for the Maha Kumbh), it must help the CEOs reach their goal.

He says that FMCG which is the largest spender on advertising in India is stronger than the FMCG sectors of the rest of the world, and it is led by advertising.

Taking the EBITDA margins of the top five companies in India, the GCPL CEO says, “Indian FMCG companies are much more profitable than their global peers and trade in the stock market somewhere between 50 or 60 times their profit compared to global companies that trade 20 times their earnings.”

Sitapati revealed when he took over the reigns of GCPL, “I dramatically increased advertising spends." It rose from 8.6% in FY 21 to 13.5% in FY23.”

The result, he reveals, was evident. “Our share price has risen by 60-70%... a lot of investors believe in advertising.”

He goes on to say that in today’s post-modern world CEOs need more definitive and decisive advisors than correct advisors. “We recoil at definitive answers on how advertising works. Instead, listing various ways in which it can work. We are more concerned about never being wrong than being right most of the time.”

“There may be many roads to advertising heaven but an agency must choose one of these roads and convince the CEO that their religion is the true one.”

He went on to speak about two epiphanies that have shaped him as a marketer. The first one is, “Be famous before you get persuasive.” Sitapati refers to old Taj Mahal tea brand ads, and how despite a stop in its advertising and subsequent revival, it enjoyed good brand recall.

His second epiphany was shaped “not from lived experiences, but from a book.” It was How Brands Grow by Byron Sharp. The learning GCPL’s CEO took from the book was that brands grow not by heavy users consuming more but by non-users or light users consuming a little better.

“Penetration not consumption is the driver of growth. Penetration is driven by salience and not equity attributes.”

The media principle, he went on to speak of which he lives by was: It is better to whisper to many than to shout to a few. Sitapati revealed Santoor is his favourite brand because “it stuck to the idea of mistaken identity for years building a memory structure.”

And right before he signed off, he left the audience with a nugget, “Your real customers are those who control the P&L and not those who control advertising spends because, for spends, it's always a cost. For those who control P&L, it is value.”