Almost a year ago, Godrej Consumer Products, one of the country’s largest advertisers with media spends to the tune of Rs1000 crore, cut out advertising agencies and built its own agency in-house. It wasn’t an eureka or light-bulb moment, Sitapati had told Storyboard18. The in-house agency is called Lightbox.
Sitapati, a marketing veteran who spent over two decades at Hindustan Unilever before joining GCPL in 2021 as chief, said that ad agencies need to reinvent themselves and “creativity is the opposite of bureaucracy”. He added, “Creativity has to trump and whatever is the best model for creativity to succeed, that will succeed.” For now, that model, it seems, is getting out of the agency ecosystem and building your own ad ecosystem in-house.
The larger point was that agencies need to reinvent themselves to be relevant and useful to brands and advertisers like Godrej in such complex times. The impetus on activity rather driving big creative ideas that are effective in gaining share of mind, market, wallet and voice, has left classical ad agencies redundant.
Sitapati reiterated his views on the reinvention of advertising agencies during his address at the recently held Subhas Ghosal Memorial Lecture, organised by the Advertising Agencies Association of India (AAAI) and the Subhas Ghosal Foundation (SGF).
He was speaking to a room full of advertising and media agency executives.
Sitapati also shared his insights on building brands in today’s India. But adding a word of caution when he said India is not doing as well as it seems to be doing in the context of FMCG volumes.
On advertising Sitapati shared that Godrej increased ad spends significantly, two years ago, going from Rs500 to Rs1000 crore now. He stated that the decision was made even if it came at the cost of profitability. For Sitapati, advertising is the lifeblood of the FMCG industry.
On the state of advertising and agencies
Subhash Ghosal was J Walter Thompson’s first Indian CEO, the iconic agency later named Wunderman Thompson that was recently killed and merged with VMLY&R. Sitapati said, “I think he would be upset that the identity of J. Walter Thompson, the agency that he spent 50 years working in, 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.”
Sitapati would go on to say that Ghosal would blame it on the change of the commission model where agencies would make 15 percent commission from media owners for the advertising 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,” Sitapati said.
On the FMCG industry
Sitapati, who is also an author and has spent his entire career in FMCG, working as a brand manager on brands like Surf Excel early in his career, said that the Indian FMCG sector is stronger than in the rest of the world. He added that FMCG is still the largest spender on advertising in India and “advertising is its lifeblood”.
“FMCG is the bell-weather consumption and compass for most consumer companies. It’s not unfair to assume that advertising has played an important role in FMCG. It has played perhaps a slightly less, but nonetheless crucial role in consumption in general.”
Sitapati’s advise for the advertising industry and marketers
Sitapati has many friends in the advertising industry given his years working on iconic brands at HUL. As CEO of GCPL, he still finds time to get into the making of brand campaigns, at least the very first ad of any big campaign. Sitapati’s advise to adlanders and marketers is simple: don’t be insular. His remedy is to have marketers spend more time with non-marketing people, CEOs and even CFOs. He said, “They all have a unique point of view on how advertising works and advertise it in a line and finally talk more numbers.” He added, “CEOs are only willing to pay substantial amounts if they see something that drives their share price in the next 12-36 months.”
In a philosophical turn of words, he said: “We are more concerned with being never wrong rather than being right. 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.”
Speaking about how to speak the language of CEOs and CFOs, Sitapati said that clients want more data on how their advertising is working for them. Just gut feelings and instincts is not enough. They want agencies to talk more in numbers and hard facts. “Agencies,” he said, “need an entire department on marketing effectiveness.” He said, “Your real customers are those who control the P&L, not those that control ad spends. So have a clear and succinct view on how advertising works in driving profits.”
Sitapati’s views on how advertising works or should work were set early on. One principle he calls ‘Be famous before you get persuasive’. A big believer of the Big Idea, he said, “Don’t sell just be known for what you sell. Once you buy this belief system there are some necessary concomitants. They are the power of the big idea that helps you stand out, consistency, fewer copies, risk taking….”
The other is penetration not consumption drives growth and penetration is driven by salience, not equity attributes. Salience is driven by making your brand mentally available to the maximum number of people. He said, “In media terms it is reach and not impact that matters.” Adding one more advertising principle, Sitapati said, “It is better to whisper to many than to shout to a few.”