Nithin Kamath explains why Zerodha doesn't need to advertise

Zerodha co-founder Nithin Kamath on Tuesday explained why he thinks his firm does not need to advertise in a post on X.

He said that it is a good position to be in when a company does not have to consider customers in terms of acquisition costs and lifetime value.

"It is a good place to be when you don't have to look at customers in terms of acquisition costs (CAC) and lifetime value (LTV). This way, we don't have to push customers to take a trade, we can stay spam-free, not have to sell life insurance as an investment, and more," said Kamath.

Zerodha showed strong performance compared to other discount brokers, with its clients rising by 1.5% month-on-month (MoM) to reach 74 lakh.

Zerodha is one of the top five discount brokers in India, consistently outpacing traditional brokers in terms of active clients on the National Stock Exchange (NSE).

Kamath shared his experience of watching cricket where advertisements promoting brokerage firms were a constant occurring.

"I watched a cricket match after a long time, and damn! Every fourth ad is that of a brokerage firm. Sign of good times for the markets," he said.

He furtehr said that by avoiding advertising, Zerodha can remain spam-free and does not have to sell life insurance as an investment, among other things.

Founded by Nithin and Nikhil Kamath, Zerodha is credited with revolutionising discount broking in India. In a podcast last year, Kamath shared insights into the company's growth.

"In 2020, the assets under management (AUM) of our customers was maybe Rs 15,000 crore. I don’t think any of our peers, like brokers, looked at us very seriously. They were like, 'okay, you have made some profits but what eventually matters is the AUM of the business, how much customers trust you with their assets'. It is Rs 3.5 lakh crore now," Kamath said.

“I keep telling in the office that there is no status quo in today’s world. Everyone’s gonna get disrupted; we just have to stay sharp. There is no other way to build a business," he said.

Zerodha's decision not to advertise sets it apart in an industry where heavy marketing is common.