HomeOpinion & AnalysisColumnistsAdvertising as a measure of competition in banking

Advertising as a measure of competition in banking

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“Doing business without advertising is like winking at a girl in the dark. You know what you are doing, but nobody else does,” said one Stuart Henderson Britt, a US advertising consultant.

Lately, significant advertising space has been taken up by banks and other financial sector players in the print and electronic media as well as on billboards and even commuter omnibuses.

If this advertising “purple patch” is anything to go by, it is reasonable to assume a corresponding increase in advertising spending in contrast to the hyper-inflationary era when banks seldom advertised because they didn’t need to — customers had no choice but to stream into banking halls as many times as was necessary to withdraw their hard-earned money before it disappeared into an inflationary black hole. This has since changed drastically.

In recent months, there have been full-page advertising campaigns by the likes of Agribank, BancABC, Kingdom Bank, TN Bank, POSB and others. One is tempted to ask: Does this change in advertising habits signify a realisation by banks of the folly of winking at girls in the dark, especially in a dollarised environment where several other potential suitors are winking as well?

For some, like Agribank, advertising reflects a desire to reposition the brand in the minds of an increasingly sophisticated banking public and evolving market dynamics. For many years — since its days as the Agricultural Finance Corporation — Agribank was known as the agricultural lender.

In response to new realities, it is now projecting itself as a multifaceted bank both in terms of product profile and target market hence the new pay off line “Your All Weather Bank”. Agribank’s previous pay-off line was “The Power behind Agriculture”.

For others, like POSB, recent advertising serves the purpose of trumpeting new capabilities such as the bank’s international banking services. TN Bank has consistently showed that it does not hesitate to deploy top dollar in its quest to permanently engrave its image in the public consciousness.

Recent full page advertisements promoting its furniture loan scheme and the huge billboards that straddle key roads into the city centre bear witness to the bank’s dogged determination to make a mark in the retail banking sector.

An increase in advertising activities in the banking sector could be a reflection of improved ability to fund such expenditure as the banking sector slowly but surely makes its way out of the woods.

However, apart from improved affordability, a more compelling reason for this trend could be that competition is deepening in the sector.

FSS recently conducted a quick survey of advertisements inserted by banking institutions and on one particular day, counted as many as six adverts by six different banks in the same edition of a particular newspaper.

The content or — as they say in “advertising-speak” — the copy of the adverts ranged from international banking services, educational loans, personal loans, prepaid electronic cards, unit trusts and in some cases rebranding messages.
Some of the advertisements appeared in two different newspapers on the same day.

However, of note is the fact that advertisements by the traditional banking giants such as Standard Chartered and Barclays Bank are rare, perhaps reflecting their smug attitude towards risk taking.

In order to remain top-of-mind in banking consumers’ consciousness and also as a service to the public, other banks such as Metropolitan Bank Limited, ZABG and ZB Bank sponsor publication of daily financial highlights including Zimbabwe Stock Exchange stock prices/indices, market capitalisation numbers, money market rates, foreign exchange rates and key commodity prices in various daily newspapers.

Another indication that the advertising stakes have shifted a gear into higher competitive territory is the trend that has seen banking institutions partnering with public figures on endorsement deals. FBC Bank has partnered with musical icon Oliver “Tuku” Mtukudzi on their international MasterCard Prepaid Card.

CBZ Bank Limited, official sponsors of the Zimbabwe Cricket Team, are counting on the “gentleman’s game” to give their mobile banking product an edge in a space in which the competitive stakes were recently raised emphatically by the arrival of Econet’s EcoCash.
As has come to be expected from Econet with its war chest of advertising spend, the advertising campaign for EcoCash has been nothing short of massive incorporating radio, print and outdoor advertising.

The TN Group of Companies, which incidentally partners Econet on the EcoCash product, recently enlisted Miss Zimbabwe 2011 Malaika Mushandu to be the face of their advertising campaign for furniture loans.

In exchange, TN provided Malaika with a $25 000 sponsorship package catering for her wardrobe, grooming and medical cover as she prepares to participate at the 60th anniversary of the Miss World Pageant in London. Under the deal Malaika is also endorsing the TN Cash Card given to her to cater for her daily expenses.

This evolving partnership between the banking and entertainment/ sporting industries is an exciting development for artists and sports figures as it holds the promise of similar endorsement deals in future.

However, artists need to spruce up their image if they intend to be worthy of the corporate world’s attention and if that potential is to be realised. In South Africa the likes of Yvonne Chaka Chaka and Zolani Mahola of pop group Freshlyground have endorsement deals with banking giants First National Bank and Nedbank respectively.

It is reasonable to seek to establish a link between advertising and competitiveness, as much as it is tempting to establish a similar causal link between advertising spend and bank performance, but in the absence of up-to-date market share statistics and absolute figures on advertising spend, it is difficult to do so.

A review of banks’ financial statements as at June 30 2011 revealed that most banks do not specify their advertising and marketing costs, but instead lump them under general and administration expenses, making it difficult to tell how much they are spending on winking at girls.

Is there a link between advertising and bank performance? What is your take? Weigh in with your insights on omen.muza@gmail.com.

l Omen N Muza is a banker and managing director of TFC Capital (Zimbabwe) (Pvt) Ltd who writes in his personal capacity.

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