You are here: Home » Management » News » Marketing
Business Standard

Gold shines in advertising mart

Tinesh Bhasin  |  Mumbai 

Actor will soon be preaching you the virtues of taking loans against gold. From today, the star will endorse and Leasing, part of the Manappuram Group, which is spending Rs 100 crore as its advertising budget only on a single product (gold loans) for the current financial year.

“Currently, gold is the last option when a person thinks about borrowing. People in rural areas go to pawnbrokers or moneylenders. Urban borrowers give preference to high interest rate products such as personal or credit card loans. We want to change it,” says VP Nandakumar, chairman, Gold mortgages form over 95 per cent of the company’s loan books.

The plan is to get five brand ambassadors from different regions, who will address the potential borrowers to look at gold as first option when they want to take a loan.

Other gold companies too have been treading the same path. The oldest company in the gold mortgage business, – part of Muthoot – has started aggressive campaigns in the northern region. “We have been growing our advertising budget every year,” says Avinav Chaubey, chief manager at the Muthoot Group. He did not provide data as the company is privately held.

Experts in the advertising field feel that it is still difficult for a person to mortgage gold as it has sentimental value. “The winner, hence, will be someone who would be able to earn the trust of the people,” says Ajit Varghese, managing director, Maxus.

Manappuram is doing exactly that. So far, the company has signed up four film actors from South India. In Kerala, where Manappuram is headquartered and the biggest market for the company, Mohan Lal has started endorsing the brand. In Tamil Nadu, another prominent region, Tamil actor Vikram has been signed. Telugu actor Venkatesh, is seen in the company’s ads in Andhra Pradesh and Puneet Rajkumar in Karnataka.

“A personality or the biggest cricketer does not appeal in the South so we took one film star for each region that audience can relate,” says VA Shrikumar, CEO, Push – the creative agency of Manappuram.

However, there is some degree of acceptance to gold in the southern states. It is the north and the west where these companies want to expand. Gold loan market is negligible in these regions as there is a reluctance to pledge gold. The average ticket size of gold loan is the north and west is much higher than in the south. That is why Manappuram has roped in

These companies are scurrying to tap the gold loan market as more investors are coming forward to unlock the potential of the metal with the rapid rise in gold prices. Worldwide, the demand for gold has risen after the Greece crisis as investor fear it will have a bearing on other nations. Gold serves as a hedge against currency and investors flock to it in difficult times.

In the past one year, prices of the yellow metal have increased over 26 per cent. In three-year period, they have gone up over 100 per cent.

With the economy growing and credit needs along with it growing, banks and other organised institutions have expanded their product suite and reach to offer gold loans,” says Biju Pillai, executive vice president and business head – PL, gold loans, LAS and home loans, HDFC Bank.

The growth in gold mortgage business of these players itself speaks for the rising interest in using gold to borrow. Pillai of HDFC says that the gold loan portfolio is growing at over 60 per cent year-on-year for the last two years. Nandakumar says that Manappuram has managed to grow his business over 100 per cent for the past three years and is confident of sustaining the growth even this financial year.

First Published: Mon, June 14 2010. 00:35 IST