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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