Nigeria’s tier-1 banks spent a combined total of about N44 billion on advertising and sales promotions in full-year 2019. This is according to checks by Nairametrics. The banks are First Bank of Nigeria Ltd, United Bank for Africa Plc, Guaranty Trust Bank Plc, Access Bank Plc, and Zenith Bank Plc (FUGAZ).
Some details to note
Out of all the banks, First Bank incurred the most advertising cost last year, followed by Zenith Bank and United Bank for Africa.
Note that First Bank’s huge advertising expenditure is most probably due to the fact that the company celebrated its 125th year anniversary, an event that must have required enough of money for publicity and event planning.
On the other hand, Guaranty Trust Bank spent the least on advertising in 2019, compared to all of its competitors. GTBank’s low advert cost is part of the company’s overall cost control strategy, which its Chief Executive Officer, Segun Agbaje, had recently spoken about.
Breakdown of how much each bank spent
Guaranty Trust Bank: According to information obtained from GTbank’s audited financial statement for full-year 2019, about N4 billion was spent on advertising and sales promotion in 2019. As we mentioned earlier, this is the lowest amount that was spent by a tier-1 bank in 2019. The amount is also less than the N6.4 billion cost, which the bank incurred for the same purpose in 2018. Again, cost control.
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Access Bank: This tier-1 bank’s advert costs stood at N6.3 billion in 2019. This is more than the N4.9 billion, which the company spent on advertising and marketing during the comparable period in 2018. It should be recalled that Access Bank acquired Diamond Bank in early 2019, and this might have contributed to the rise in its advertising costs. This means more money had to be spent to advertise products and services that were hitherto offered by Diamond Bank.
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United Bank for Africa: This bank spent a total of about N7.4 billion on advertising and marketing communications in 2019. This makes UBA the third highest spender on advertising and marketing, compared to the other tier-1 banks.
Note that in 2018, UBA incurred a total cost of N7.3 billion for the same purpose.
Needless to overstress the fact that UBA is quite masterful with its advertising and marketing strategies. The bank is also known to make use of A-list celebrities to help endear its numerous services to target audiences. And as you may well know, this costs a lot of money.
For instance, out of the N7.4 billion which the bank spent on advertising and marketing in 2019, popular Nigerian singer WizKid got at least a cool N1 billion. That is how much the tier-1 bank paid the singer in what has been described as the biggest celebrity endorsement in Nigeria.
Zenith Bank Plc: Last year, about N7.9 billion was spent by this highly-profitable bank on advertising and marketing communications. Interestingly, even though this amount is lower than the N9.6 billion the bank spent in 2018, its revenue and profits grew, as you shall see shortly.
First Bank: As we mentioned above, First Bank spent the highest amount on advertising and marketing communications last year. In specific terms, a total of about N18.4 billion was recorded. This is significantly higher than the N7.8 billion that was recorded in 2018.
Note that the recorded advert and communications expenses represent how much was spent across FBN Holdings Plc and its subsidiaries. FBN is the parent company of First Bank of Nigeria Ltd. It has other companies under its fold, including FBNQuest Capital Ltd, FBNQuest Securities Ltd, FBNQuest Capital Asset Management Ltd, etc.
Now, let’s juxtapose advert spending with revenue and profit
In 2019, Zenith Bank Plc made a total revenue of N662.3 and a profit after tax of N208.9. It was the most profitable Nigerian bank last year, a position it has held for, at least, two consecutive years. This shows that the money spent on marketing communications and advertising is yielding the needed results.
Guaranty Trust Bank is the second most profitable Nigerian bank in 2019. The bank had recorded total revenue of N296.2 and a profit after tax of N196.8. What this shows is that even though advertising is essential, sometimes all you need is to offer products and services that people love.
Access Bank came in third as the most profitable tier-1 bank, with a profit after tax of N94.9 billion. The company had also recorded the second largest revenue of N536.8 billion, right behind Zenith Bank.
United Bank for Africa Plc made a profit after tax of N89 billion, followed by First Bank which generated a profit after tax of N61.9 billion, according to its unaudited financial statement.
Why advertising is important to Nigerian banks
Nigerian banks typically operate in a saturated market where competition is rife. Therefore, in order to stand out, it is not enough for them to offer high-quality products and services; they must also be able to adequately communicate the benefits of their products and services to customers. This is the whole essence of marketing communication and advertising.