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Business Daily
Date: 16.05.2016
Page 15
Article size: 365 cm2
ColumnCM: 81.11
AVE: 154111.11
How much advertising
spend is healthy in the
financial services sector?
OUTLOOK Study warns
that excess expenditure
can harm a firm's stability
BY VICTOR AMADALA
Kenya's biggest bank by assets, KCB
recently signed a deal with broad­
caster NTV and film production
agency Quite Bright Films (QBF) to air
an entrepreneurship reality series. This
the latest initiative in a series of market­
ing activities that have seen its advertis­
ing spend hit Shl.2 billion, according to
a recent advertising report by Realforge,
a regional media monitoring firm.
Dubbed Lion's Den the series will see
The show comes after a third bank was
recently put under receivership in less
than a year, plunging the sector into a
confidence crisis. Ms Lynette Sogoh, a
marketer with KCB was quick to point
out that the show was not a response to
the crisis, but rather was in line with the
lender's expansion strategy.
But analysts think otherwise.
Ms Linnet Muthoni, the head of mar­
keting at Reelforge predicted there would
be marketing spend in sector after the re­
cent bank closure. She explained that pub­
entiation, he argues that KCB, the market
leader, has the financial muscle and enjoys
public confidence.
He explained that with increased
marketing, KCB and other tier 1 banks
are likely to "harvest" panic­stricken de­
positors from smaller banks, eroding di­
versity in the country' banking sector. He
added that with the Central Bank of Kenya
proposing to consolidate smaller banks in
the country, KCB's intensive only helps to
Kenyan entrepreneurs pitch their ideas
to a panel of five multi­millionaires who
will evaluate them for the possibility of
being funded. The weekly show mirrors
America's Shark Tank and UK's Dragons'
Den series that have nurtured many en­
dwarf smaller banks even further, killing
healthy competition in the sector, an act
lie appeal through aggressive marketing is that is likely to create monopoly, which
the best gun in a banks' arsenal to restore will eventually hurt depositors.
trepreneurs.
And an Halmstad University study
supports Ms Muthoni's outlook. It ex­
plains that companies that maintain or
increase their marketing spend during a
crisis tend to make profits and gain market
KCB director in charge of marketing
and communications, Angela Mwirigi
said the show is part of the lender's Sh50
billion 2Jiajiri initiative which seeks to
empower the youth.
"We are proud to be part of this exciting
phase as the youth increasingly take up
greater sway in the revolution and pace of
the economy in the coming years. They are
the holders of the greatest ideas, the en­
ergy, and the commitment that is needed
eroded confidence and whoever maxim­
Excess marketing
ises on it will reap big.
Even though marketers think that in­
creased marketing by KCB holds positive
tidings for the bank that was perceived
docile four years ago before its CEO Joshua
Oigara took over, studies show that excess
marketing budget for a bank can compro­
mise its stability.
A 2013 study by The Financial Brand
dubbed Bank Marketing Budgets: How
much is enough recommends a marketing
investment that is approximately equiva­
lent to 0.1 per cent of a retail financial in­
stitution's assets. According to the study, a
financial institution is very volatile and its
resources need to be disposed with a lot of
caution. The study shows that most banks
in the US allocate an average of 0.07 per
cent of their total assets to marketing..
share much faster after the storm.
Although KCB recorded a marginal
drop in it advertising spend in 2015/
2016, registering Shl.2 billion compared
to Shl.3 billion the previous year, it is cur­
rently spending hugely especially in digital
marketing channels like Twitter, where its
to drive the transformation. As a bank we initiatives have been trending in Kenya.
Mr Edwin Kiama, a Nairobi­based mar­
are committed to ensure they realise their
dreams through providing platforms that keting consultant on other hand reads mal­
will create an enabling environment for ice in KCB's sudden appetite for brand vis­
these opportunities," said Ms Mwirigi.
ibility. Although he agrees that intensive
Expansion strategy
marketing is one among factors through
­AFRICAN LAUGHTER
which a brand can achieve market differ­
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
Business Daily
Date: 16.05.2016
Page 15
Article size: 365 cm2
ColumnCM: 81.11
AVE: 154111.11
NTV general
manager
Linus Kaikai
(centre) with
KCB director,
marketing and
communica­
tions, Angela
Mwirigi (right)
and QBF Kenya
producer Mu­
rad Rayanir
when they
signed a pact.
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya