PSU Banks

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Public-sector banks want to be in public eye

When Union Bank of India (UBI) started advertising on television—this was a first in the bank’s 88-year history —it did so in style, picking the third edition of popular gameshow Kaun Banega Crorepati on Star Plus, and the ICC Cricket World Cup (although that didn’t end well for India and Indian advertisers). “We wanted to make our brand more relevant to the youth and these two events seemed appropriate for that,” says M. V. Nair, chairman, UBI. 

UBI isn’t alone; of late, several public sector banks have embarked on ambitious and expensive advertising campaigns. Their reasons for doing so include centenary celebrations, the desire to compete with marketing-savvy private and foreign banks for a slice of the retail market, or a combination of the two. 

Media owners and advertising agencies aren’t complaining: UBI hired Mudra Group to do its advertising; the bank’s annual ad-spends are likely to go up from Rs25 crore in 2006-07 to Rs50 crore in 2007-08.

Bank of India, which celebrated its centenary recently, hired O&M, one of India’s best-known advertising agencies, to create a campaign that appeared in print and on radio and television. According to a senior executive at Bank of India, who does not wish to be identified, the bank spent around Rs20 crore on the exercise. Data provided by AdEx India, a division of TAM Media Research that tracks advertising, shows that the volume of advertising by public-sector banks on TV increased 33% in 2006 (over 2005); in print, it increased 62%. Executives in the banking and advertising industry believe advertising volumes, and consequently spends, will rise this year too. 

For most public-sector banks, completing 100 years is an opportunity to effect an image makeover. “Our centenary year was the prefect opportunity for us to relaunch the brand,” says D. Krishnamurthy, general manager, retail banking, Bank of India. “Our new ad-campaign has gone a long way in creating visibility and improving our brand perception.” Bank of India, Indian Bank and Corporation Bank turned 100 recently, while Bank of Baroda, and Punjab &amp; Sindh Bank will reach this milestone next year. 

UBI’s Nair says it is important to reinvent the brand for younger customers. “The youth account for over 55% of our population. We can’t afford to lose out,” he says. “Though public-sector banks have been around for a while, their biggest challenge today is to reach out to the youth,” says Jude Fernandes, executive director, Mudra Group. 
Relaunching bank brands or changing brand perceptions can work, as the experience of Bank of Baroda(BoB) shows. In its first 97 years of existence, the Mumbai-headquartered bank built up a customer base of 25 million. Then, in the following two years, 2005 and 2006, it added four million more. The bank’s general manager, human resource and marketing, Dipankar Mookerjee, thinks its recent advertising campaign featuring Indian cricket team’s captain Rahul Dravid, has a lot to do with that. “Cricket being the single-largest craze in the country, we roped in Rahul Dravid as our ambassador. We thought it would help us connect better with our consumers and it did,” says Mookerjee. The bank had set aside close to Rs29 crore for its rebranding exercise of which Rs1 crore went in endorsement fee to Dravid. The buzz in the advertising circles is that the bank is likely to spend around Rs100 crore around its centenary celebrations, coming up in 2008.

Public-sector banks can spend as much as they want to on advertising now without getting an approval from the country’s finance ministry (all government-owned banks effectively report to the ministry). “Now, it is up to a bank’s board to take the final call on its ad budget,” says H.N. Sinor, chairman, Indian Banks’ Association. Last year, four of the top five banks by ad-spends in the print media were from the public sector. 

Public-sector banks believe they have to change to survive and compete in the thriving banking business. Private banks, both Indian and foreign, have always been savvy marketeers and big-ticket advertisers. According to an AdEx analysis, private banks spent more than their public-sector counterparts even in 2005 and 2006. In 2006, for instance, while public-sector banks spent Rs100 crore on TV advertising, private banks spent more than Rs180 crore. “The scenario is likely to further hot up with the entry of players like Barclays and Deutsche Bank in the retail banking space,” says a top executive of an advertising agency.

Banks that don’t focus on their brand communication run the risk of losing out, says Mookerjee: “With the advent of technology, the decision (to choose a certain bank) is no longer based on factors like its location. The decision is driven by the banks’ brand perception.” He claims that BoB decided to undertake a serious brand-building exercise after seeing a substantial drop (from 5% to 3.75%) in its market share between 2000 and 2005.

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While some arguments would be acceptable from these PSBs, I strongly object to huge Advt spending by PSU Oil marketing companies when their balance sheets are bleeding with losses from subsidies/inefficiencies.