Advertisement expenditure as percentage of total income of private banks was higher as compared to public sector banks (PSBs) during 2006-07 and 2005-06. The ratio of advertisement expenditure to total income of 17 private banks decreased from 1.16% in 2005-06 to 0.83% in 2006-07. Similarly in the case of PSBs, the ratio decreased from 0.24% to 0.22% during the study period.
An analyst from a rating agency said, ?The ratio of ad spend to total income of PSBs will be much lower than that of private banks because of the high level of income that they have?. So even with a similar ad spend, the ratio for private sector works out higher due to lower total income in absolute terms.
Secondly, due to better penetration of PSBs than their counterparts in the private sector, they don?t have to advertise aggressively.?
?Besides most of the private banks are of recent origin and hence they need to be more visible in market place as compared to public sector banks,? he added.
In absolute terms, the 17 private banks earned total income of Rs 61,541 crore in 2006-07 as against Rs 41,980 crore in 2005-06 (a rise of 46.6%). The advertisement expenses of these banks worked out to Rs 511.93 crore in 2006-07 as against Rs 485.91 crore in the previous year (a rise of 5.4%).
In the case of PSBs, the 27 banks earned total income of Rs 1,93,833 crore in 2006-07 as against Rs 1,61,851 crore in 2005-06 (an increase of 19.8%). The advertisement expenses of these banks worked out to Rs 426.74 crore in 2006-07 as against Rs 383.66 crore in the previous year (an increase of 11.2%).
In terms of the amount spent on advertisement during 2006-07, the topper in the list of 17 private banks was ICICI Bank (Rs 217.74 crore) followed by HDFC Bank (Rs 187.96 crore) and Axis Bank (Rs 29.62 crore).
Among 27 PSBs, the top three spenders on advertisement during 2006-07 were SBI (Rs 88.43 crore), Bank of India (Rs 42.50 crore) and Canara Bank (Rs 39.28 crore). The highest increase in advertisement expenditure during 2006-07 was seen.