By Gabriel Chen
Reporter
gabrielc@sph.com.sg

 

A BRANDING war in the airline space is brewing between DBS Group Holdings and OCBC Bank.

OCBC fired the first salvo earlier this year when its newly acquired private banking unit Bank of Singapore, started to partner with carriers like Cathay Pacific and Singapore Airlines, to get its name out to well-heeled travellers.

This is how it works. You recline in your airline seat and when you switch on the in-flight entertainment system, out pops a short clip extolling the virtues of the Bank of Singapore.

The awards the bank picked up this year are also prominently highlighted in the video.

Bank of Singapore chief executive Renato de Guzman says the campaign – it amounts to a quarter of the bank’s advertising budget this year – has worked so well that it is in talks with other airlines to explore similar opportunities. It is targeting not just travellers living in Singapore, but also people in the greater China region.

Not to be outdone, DBS announced this month that its new TV commercial will also run on the in-flight entertainment systems of Asian airlines like Singapore Airlines, Cathay Pacific and China Airlines (note: these airlines all fly frequently to the mainland).

This is all part of the bank’s new $30 million branding campaign across Asia to help drive its expansion plans.

The campaign – which will go out across television, print, cinema, radio, online and outdoor – will target the key markets of Singapore, Hong Kong, China, India, Indonesia and Taiwan.

I don’t doubt the benefits of branding. It increases awareness and recognition for one’s products and services, differentiates a firm from its competitors, and creates a positive spin in the minds of the targeted markets that is emotionally connected with their daily lives.

BRAND IDENTITY

Don’t forget, it could increase sales and enhance customer loyalty too. But it won’t be easy to build brand identity in certain markets.

Take China for example. China’s Big Four banks come up in the top 10 most valuable Chinese brands in the latest report by Millward Brown’s BrandZ Top 50 Most Valuable Chinese Brands.

Their network and distribution channels make them more entrenched in the lives of people there, so Singapore banks, which lack the presence and reach of Chinese banks, will find their ongoing brand building initiatives challenging.

As HSBC has found, it can have ads plastered on airport walls and street corners about how it is the “world’s local bank” but at the end of the day, it isn't going to guarantee performance in all markets.

In Europe and Asia, HSBC is thriving, but in the US, its showing has arguably been quite a disappointment. In 2008 and 2009 alone, HSBC’s North American operations recorded a combined pre-tax loss of US$22.8billion.

One thing about branding is that it has to be consistent. It is pointless having a good vibe for a few weeks that cannot be sustained over a longer period of time.

DBS should know about this. In the same month it announced the branding initiative, it was caught squarely in the news about how an Australian client is suing the bank.

The client claimed that DBS made fraudulent and negligent representations that a US$1.5 million ($1.96 m) Lehman Brothers-linked investment was “sound”.

To be sure, DBS has denied the allegations, but bad publicity indubitably erases much of the wonders a $30 million campaign can achieve.

Another thing that calls for some attention. United Overseas Bank has been conspicuously lying low this year with regards to branding.

Maybe it will show its hand in 2011.

gabrielc@sph.com.sg