Competition makes commercial banks focus on advertising

YEREVAN, October 13. /ARKA/. As competition is stepping up, Armenian commercial banks are taking a more serious attitude to advertising. A survey of Armenia’s commercial banks conducted by the ARKA News Agency shows that advertising is gradually gaining a foothold on Armenia’s banking market. As competition is stepping up, Armenia’s commercial banks are more active in using the potential of advertising for informing the public of the services rendered by them. Banks plan such measures as on-target, informative and corporate advertising.  They also plan media and billboard advertising. Banks plan to include charitable actions and sponsorship in their advertising campaigns.

Almost all the banks interviewed by ARKA were of the unanimous opinion that, with competition stepping up, efficient advertising methods will allow them to improve the presentation of their services on the market. This allows the banks to expand their client base, more applications for credits and other banking services are made. This opinion is held by Bank Prometey, BTA InvestBank, and International Trade Bank (ITB).

Bank Anelik pointed out that each service or product has its niche on the market only through information. Otherwise, it becomes an end in itself.

Experts of the Araratbank hold the opinion that the companies regularly offering new services cannot do without effective means of information.

The Armbusinessbank has become better known owing to constantly elaborated new methods of advertising policy.

Specialists of the Marketing Department of the Armeconombank believe that the funds invested in advertising are fully reimbursed due to the increasing interest in banking services.
The BTA InvestBank pointed out 60% reimbursement of advertising costs.

The bank VTB (Armenia) intends to increase advertising costs and has formed a relevant department. The bank believes that the lack of honesty and competence in dealing with clients by means of information does not meet clients’ requirements or standards of banking.  

According to the Inecobank, advertising is a promoter of new banking services and products. However, the bank’s Marketing Department, pointed out the necessity for considering the parameters of Armenia’s market, as advertising efficiency depends not only on proper organization of an advertising campaign and selection of target audience, but also on the population size and solvency, which conditions the number of prospective clients.

A number of banks, particularly Araratbank, Bank Prometey, Armeconombank and Bank Anelik include among the requirements to image advertising the necessity for considering the informative direction, subjects and contends of advertising.

Despite this, the Armeconombank continues focusing attention on informative advertising, while the ITB is focusing on recognizability.

The BTA InvestBank’s advertising is aimed at enhancement of the recognizability of its brand, public awareness of new services, changes of interest rates, maintenance of awareness of traditional services.

The bank practices various types of advertising, changing the subjects. Specifically, the bank practices both radio and billboard advertising.

As regards the type of advertising, the banks are mostly of the opinion that television advertising is the most effective in Armenia as it gives a general idea of the services. Among the faults of this type of advertising is its high price and long period of preparation.

In this context, print advertising has a number of advantages, namely a low price, certain target business audience or population groups, opportunity for providing comprehensive information on the product. Print advertising can be used both for rendering new services and for providing information on successfully tested services and advantages over similar services rendered by rival banks.
Banks also readily practice radio advertising.

However, each type of advertising implies specific audience. So it is wrong to claim that certain means of information are the most efficient. This opinion is held by Araratbank, Armbusinessbank, Armswissbank, Armeconombank, Bank Anelik and Inecobank.

In this context, banks prefer using all possible means of advertising. Specifically, the Araratbank reports that 46% of its clients know the bank due to television, 4% due to radio and 2% due to newspapers.
The BTA InvestBank believes a combined method to be the most effective method of advertising – television, radio and printed advertising, Internet and billboard advertising. The bank points out that billboard and Internet advertising are only used for enhancing the recognizability of the banks brand. Television and radio advertising is a primary means of attracting large audience.

Specialists of the Bank VTB Armenia stressed the importance of selective advertising in the context of peculiarities of the advertised products and services and prospective consumers’ interests. They point out that any advertising of the banking sector must not tire the audience and, therefore, must not take more than 1/3 of airtime.

On the other hand, the ArmSwissbank has a somewhat different approach to advertising. The bank does not practice large-scale service of clients so its marketing policy is not aimed at large-scale advertising campaigns, but implies individual approach to on-target groups of clients using Direct Marketing technologies.

In principle, the development of the bank advertising is closely connected with the general development of the bank advertising market. Specialists of the BTA InvestBank believe that one of the most important conditions of successful development of the advertising market in Armenia is the establishment of specialized centers to analyze products of advertising and their efficiency in order to optimize the efforts of clients and advertising agencies, determine the most promising directions, elaborate a relevant governmental policy.  

One would hardly disagree that Armenia’s advertising market has become more active over the last 2-3 years. However, TV and radio commercials of banks are rather monotonous lacking individual approach, a zest. Billboard advertising is mostly official, lacking creativity and duration. On their web-sites banks mostly put general information, say specialists of the Armbusinessbank.

Specialists of the ArmSwissbank pointed out that Armenia’s banks mostly focus on pricing policy, disregarding the quality of service. Moreover, it is at the banks that clients suddenly learn that the real cost of service is much higher than the advertised cost.

Armenian banks are of the unanimous opinion that professionals in advertising are lacking in Armenia. Particularly the lack of professionals and advertising agencies specializing in bank advertising was pointed out as a negative fact by specialists of Araratbank, ITB, and Inecobank. esides, the press service of Areximbank pointed out the lack of professionalism among media outlets, except for news agencies, which demand payment even for reporting information on Armenia.  

Armeconombank pointed out a large amount of low-quality advertising, including bank advertising, on Armenia’s market.

In discussing the strong points of Armenia’s advertising market, Armenian banks, particularly Bank Anelik and Arexombank, point out healthy competition, which affords clients ample opportunities.

This process is greatly facilitated by higher-quality bank advertising over the last few years. The reason is that more competence advertising organizations have launched their activities on the market, a new order of informing the public and bank advertising approved by the Central Bank of Armenia (CBA), as well as the realization of the importance of advertising for banks. Specialists of Inecobank and BTA InvestBank believe this to be a reason for a higher quality of TV and radio advertising, design and availability of booklets and other advertising aids.

In general, Armenia’s bank advertising market is rather aggressive. According to Armeconombank, competitiveness is gradually gaining a foothold here. The reason is to a great degree the entry of new banks and foreign financial structures’ increasing interest in Armenia’s market, which makes local banks improve the quality of their services and facilitates the intensification of advertising policy.  

Although showing sincerity, some of the banks involved in the survey were not quite willing to inform ARKA of their advertising budgets. However, they stressed that advertising costs are annually increased.

Araratbank reported that its advertising budget totaled 12mln AMD in 2006, and 50mln AMD in 2007.

Areximbank’s annual advertising budget totaled $150,000 in 2006, and $140,000 are budgeted this year. The bank specified that most of the advertising is recorded in the 1st and 2nd quarters, as well as in September-October.

Bank Prometey spent over 3.5mln AMD on advertising in 2006 – 300,000 to 400,000 AMD a month. This year, the bank has budgeted 5mln AMD for advertising. Inecobank spent a total of 32.4mln AMD on advertising in 2006, and 46.8mln AMD have been budgeted this year.
The ITB’s advertising expenses do not exceed 5mln AMD in 2007. The bank estimates its advertising activity in 2006 as low, which accounts for less annual advertising expenses compared to the budgeted funds.

In 2007, the Armeconombank has budgeted 43mln AMD for marketing, with advertising expenses prevailing. However, the sum may be changed, which is accounted for by the increasing market competition and introduction of new services.

The BTA InvestBank increases its advertising budget every year, considering the fact that advertising is an integral part of successful promotion of a new product, including banking services. In 2006, the bank spet a total of $62,000 AMD on advertising, and this year it plans to spend $96,000. The bank’s average monthly advertising expenses are about $6,000.

The Bank VTB Armenia has not so far conducted any advertising campaigns. However, in the near future the bank will radically revise the situation. Along with the renovation of its branch network and introduction of new products, the bank intends to implement an active advertising policy.

In 2006, the bank spent a total of 18.2mln on advertising, whereas this sum reached 16.6mln AMD during the first five months of 2007. The bank has budgeted 70mln AMD for advertising this year.

The Armbusinessbank has reported that in 2006 its advertising expenses made 4% of noninterest expenses. In 2007, the share of advertising expenses is to make 3.5% of noninterest expenses. The advertising expenses budgeted for 2007 are 2.7-fold as much as actual expenses in 2006.

The Bank Anelik did not cite any specific sum, stressing that in 2006 and in January-June 2007 the bank spent considerable funds on advertising.

The Conversebank pointed out its intention to implement an aggressive advertising policy in 2007, especially in the latter half of the year.  

It should be noted that the Bank Mellat is the only bank that admitted the inadvisability of spending funds on advertising. Since the bank is a resident bank of the Iranian State Bank, its principal clients are representatives of the large Iranian diaspora in Armenia. Although the annual interest rates on deposits are only 1%, this does not affect the number of clients, as they trust state structures.

Thirteen out of 21 banks operating in Armenia participated in a survey entitled “Armenian commercial banks’ attitude to advertising in the context of using this instrument for enhancement of competitiveness”. The survey was conducted by the ARKA News Agency in June 2007.

The ARKA News Agency expressed its gratitude to the following banks: Prometey, BTA InvestBank, ITB, Conversebank, Bank Anelik, Armeconombank, Armbusinessbank, Araratbank, Inecobank, Bank Mellat, Areximbank, Bank VTB Armenia, ArmSwissbank, which provided the information. P.T. –0--