Pakistan internet ad spend: 2009-2012 analysis

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Source: Aurora Magazine 2012 year-ender
Source: Aurora Magazine 2012 year-ender

It’s a tiny part of the market. A mini-playing field taking baby steps.

It’s small, small, small but the fact that Aurora Magazine’s year-ender for 2012 titled “The Great Digital Debate” had the following excerpt on its cover should perhaps get those involved in the online space to sit up and take notice:

“The evidence is conclusive: get digital or pack up and go home.”

If ad agencies and their clients are finally going digital, those companies (and individuals) who have invested in their online presence can breathe a sigh of relief and hope to earn back some of that hard earned cash that was spent in setting up their ventures on the web.

The added hope here is that with a growing monetary incentive, Pakistan’s online space will mature in terms of content, function, design and overall value for the estimated 20-29 million locals online.

Let’s take a look at some stats (all figures in Rs billions).

2008-09 2009-10 2010-11 2011-12
Total ad spend 24.63 27 31.98 38.38
Internet ad spend 0.38 (1.5%) 0.418 (1.3%) 0.566 (2%) 1.01 (3%)

According to the chart above (all stats from Aurora’s own data in Aurora Magazine) total ad spend in Pakistan has been growing steadily, increasing by 20% in 2011-2012, and by 18% in 2010-2011. In comparison, internet ad spend grew by a whopping 79% in 2011-2012, a big jump from growth of only 15% in 2010-2011.

Let’s look at the breakdown of earnings by the top websites in Pakistan. I’ve only included local websites to indicate what local content is attracting advertising. The only exception I’ve left in is Google because it is still the largest earner in our online space  (all figures in Rs billions).

2008-09 2009-10 2010-11 2011-12
Google 0.2 (53%) 0.2 (48%) 0.2 (35%) 0.25 (25%)
Jang 0.033 (9%) 0.030 (7%) 0.035 (6%) 0.080 (8%)
Geo 0.017 (4%) 0.020 (5%) 0.042 (7%) 0.050 (5%)
Dawn 0.015 (4%) 0.015 (4%) 0.031 (6%) 0.040 (4%)
Business Recorder 0.008 (1%) 0.020 (2%)
Express Tribune 0.008 (1%) 0.018 (2%)
Daily Express 0.022 (2%)
Hamariweb 0.015 (1%) 0.010 (1%)

Yes, news is number one. It is hard to speculate whether this is because Pakistanis are news-obsessed, or because large media groups were the only players willing to strategize and invest (without monetary gain) in the fledgling online space. The answer is probably a bit of both.

Jang, Geo and Dawn dominated for a number of years, but as new online entities emerge, the share of the overall internet ad spend for the big three is at best staying at status quo (though bear in mind, overall earnings have gone up). The good news (for local portals) is that Google’s share of local ad spend has tapered off significantly from more than half of overall earnings in 2008-2009 to just 25% of total internet spend in 2011-2012.

Some other points of interest brought up in Aurora Magazine’s 2012 year-ender:

The share of classified advertising has improved slightly from 16% in 2010-2011 to 17% in 2011-2012. This is after seeing a year of stagnation, before which it declined 4% every year for three years. The increase in classified advertising is interesting considering several free online classified sites have entered the market in 2011-2012. This will be an important category to watch over the next few years.

If you look at the top sites in Pakistan (Alexa) the number one local website is no longer Jang, but free online classifieds site OLX Pakistan. Yes, buying and selling online is going to be huge in Pakistan over the coming years thanks to some breakthroughs in terms of payment options (pay cash on delivery) and sites that allow peer-to-peer transactions and exchanges.

The share of mobile/telecommunications declined from 7% in 2010-2011 to 4% in 2011-2012. One of the reasons for this decline could be that many telcos are shifting budgets from print advertising to digital and especially social media.

Take a look at Pakistan’s top Facebook pages (SocialBakers). Nokia, Ufone, Zong, OLX and the odd one out – the US Embassy in Pakistan – all dominate, with Telenor and Mobilink coming up strong as well. That is not organic growth. That is paid growth in terms of buying engagement, running Facebook ad campaigns and investing in social media teams.

And it’s not just the telcos.

Local media and a swathe of other brands are not far behind on the Facebook/Twitter front either.

Given the success of these pages, and the hard stats that prove that success, expect the media mix to tilt further and further towards social media and away from print, and yes, TV too.

This growing change should be exciting, as old ideas give way for new ways of thinking, working and conducting business – and best of all, when it comes to the internet, it will all be measurable and genuinely consumer driven!


The media — in the near future

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Welcome to 2015. Pakistan has 3G and 4G mobile services active, with millions of subscribers ranging from the elite, all the way down to the lower classes, since now, cheap Chinese manufactured smart phones and tablets have flooded the local market. With mobile penetration climbing beyond the massive 60 per cent as seen in 2011, the media boom the country saw in the 2000s has now entered, kicking and screaming, into its second great transition — convergence between new media and old.

The force of global technological progress and consumer demand led to this new world; one in which breaking news is now spread faster — through Twitter and Facebook — than any local media group could manage on its own. Television still does breaking news, but fewer and fewer people turn to their TV sets to watch the news, as online streaming on the go is a more convenient access point. Newspapers still exist, but their print circulation is now a show piece — a rubber stamp of legitimacy to what have essentially become online entities. This shift, however, has proven to be a blessing, as suddenly, online newspaper outlets find themselves to be just as relevant as their broadcast competition, and audiences do not differentiate where the breaking news comes from in the online world.

Advertisers have wisened up and have finally learnt that return on investment should be based on actual, measurable results — something the internet provides in abundance and something that TV and print both could not offer. Even worse for the media moguls, their lies about ratings, reach and print circulation numbers, now lie exposed in the dynamic online space, where actual reader/viewer interest is visible. With the shift in advertising (strategy and spend) many newspapers and TV channels have shut down, or are in the process of closure, unable to respond to the demands of the new media landscape. The only media groups left are those who had diversified enough, moved to integrate with the internet enough and had at their core, a real dedication to journalism.

The big question facing the local media moguls now is how to maintain high quality journalism on the economics of a largely online business model. Set up pay walls? Create new forms of online goods related to news? Convince advertisers to increase internet ad spend? Earn through mobile apps? Many are looking abroad for answers, hoping to apply the lessons learnt by global media. Things look grim for the media moguls, yet at the same time, the democratising effect of the internet has also resulted in something beautiful; the number of media outlets have reduced, but the content has tightened up and delivers what people actually want to see and read.

While in 2012, there was a real fear that tailoring content to match the (very measurable) desire of the online public would result in a massive, degenerative groupthink that would reduce journalism to a cheap carnival, the reality in 2015 illustrates the diversity of communities and demand for content, even in Pakistan. Yes, there are cheap tricks being used to draw in audiences, but unlike TV or print, there is no lack of space, so all forms of content can exist in parallel without competing. Additionally, there are niche audiences out there for all forms of specialised information and, thankfully, it is these niche segments who are more than willing to pay for the information with their credit cards, or PayPal, which was allowed to operate in Pakistan sometime in 2013.

What lies ahead? Perhaps a cutting edge telco experiment with making mobile phone credit a currency for purchasing content online? Perhaps, an ambitious media group collaborates with a local IT firm to create its own low-cost tablet for sharing its content. Whatever the case, these are both troubling and exciting times to be in the news business.

Published in The Express Tribune, February 22nd, 2012.

Print is dead, long live news

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In case you missed the story, the media world is changing, and print news is dying.

Given that I work in English print in a country where even the last English TV channel standing was forced to shut down, this should be a terrifying thought. I’m not the only one who is scared however – so is the New York Times (NYT).


Watching Page One: Inside the New York Times, a documentary focusing on the NYT’s struggle to stay relevant and adapt to a rapidly changing media landscape is like a glimpse into the future for Dawn, The News, The Express Tribune et al, and eventually, Jang, Daily Express and the rest of our Urdu print.

However, this demise of print has only begun to register in Pakistan, as we stay cocooned in an industry running years behind what is happening in the West. Speaking to local journalists and publishers about print trends abroad, there is always the same, vague, mildly self-confident and optimistic answer:

“Newspapers are going to be around in Pakistan for at least the next 10 years”

Or the frankly stupid:

“Pakistan is not like those other countries. We will always be a newspaper reading nation”

Unfortunately, the question is not ‘Is Pakistan a newspaper reading nation?’ to which the answer would be a simple yes; we Pakistanis do love our news. No – the question is, will we be reading that news in print, on paper?

The answer is no, and it will take far less than 10 years for this to become a reality in Pakistan, and to understand this, lets return to Page One where Richard Perez Pena, beat reporter at the NYT says:

“The collapse in advertising happened faster than anybody anticipated…it might just be that something very permanent has changed.”

Sounds familiar to those of us involved in print? Pena is not just talking about an advertising decline driven by a faltering global economy – he is talking about a fundamental shift in strategy in the advertising industry driven by the emerging shape of the media industry.

Clay Shirky, professor of New Media at New York University expands on this:

“Two things have happened…the first thing is that the advertising market has turned upside down, so the same time the revenue takes a hit, suddenly publishing has gone from something being done by a specialty class to something that literally every connected citizen has access to…so the authoritative tone with which the Times has always spoken is now one of many, many voices in a marketplace. And that reduction in advertising revenue coupled with competition for attention both at the same time has turned this from a transition into a revolution.”

Sounds familiar to everyone at Dawn (and Geo) right about now? However, it’s not just a lack of ad revenue and competition on the print front that is killing print media – critical to its demise has been competition from TV news and the internet, and the fact that local print simply has not taken up the challenge of adding value to their reports to make them relevant (leaving aside whether that value addition will be enough to keep readers). As Page One highlights, at one time the NYT set the news agenda, with all their stories defining what TV talked about the rest of the day. Now the system is reversed, with print journalists reduced to scribbling down their news from TV reports to deliver a mash up for next day’s paper.

Additionally, along come online outlets like WikiLeaks and your average blogger more than willing to break stories online, not giving a damn about legalities or plagiarism, challenging both TV and print. Anyone using Twitter right now knows that a lot of news reaches social media first, TV second, and print a distant third.

Whether our journalists and publishers acknowledge it or not, this phenomenon is already a visible trend in Pakistan. Whether they accept it or not, this is undercutting their relevance, losing them readers first in the tens, then by the hundreds, eventually by the thousands.

But wait.

How important is news on social media anyway? Bloggers and social media folk only talk about content, not create content or journalism. These and other empty sounding phrases by my print journalist colleagues are irrelevant in the long run and display a profound misunderstanding of what social media means, but to try to deliver some context, let me quote Daniel Ellsberg, the man who leaked the Pentagon Papers to NYT:

“When I gave the Pentagon Papers to the Times, there was a 22 month period from the start of my copy, to it finally coming out…had the internet existed then, I would have bought a scanner, sent it out to all the bloggers…it’s not certain it would have had as good an effect, but at least it would have been out.”

Aamir Liaquat and the Pakistan Army, among others have already experienced the devastating impact news online has, and we can expect the online space to drive editorial direction for both TV and print – a trend that will grow rapidly in Pakistan.

What this means is that a fundamental shift is upon the media industry, with the internet poised to take pole position alongside TV, while print (on paper) will be dead and buried, with English print the first to go in Pakistan, or reduced to a token memento of what once was. What we will see in the near future is online versions of all our newspapers taking precedence over the print editions. Whether the media groups realize the significance of this or not is irrelevant. The consumer knows what he/she is doing and how he/she wants to consume news. Next will come 3G and 4G and cheap Chinese Tablets followed by dynamic, interactive Urdu news sites and blog sites. What will this do to a market place with every consumer owning a mobile phone and starved for information in Urdu? That’s right, the death of Urdu print, just shortly after English has wrapped up.

For those publishers or media moguls who believe they will, at that dying point, find the answer to how to save their print empires, or better yet, adopt the solution newspapers undertake globally, here is what Bill Keller, Executive Editor, NYT had to say:

“We’ve looked at every conceivable model all the way from philanthropic, could you find a generous foundation that wants to underwrite the NYT, to memberships. That’s an extraordinary thing. It used to be that newspapers almost gave themselves away; they charged far less than the cost of printing the newspaper and made up the difference in advertising.”

More nails in the coffin from James McQuivey, Analyst, Forrester research:

“The newspaper industry never saw taking the jobs portion away. They didn’t see Craig’s list taking the classifieds portion away. They didn’t see Ford and GM making their own websites to take automotive advertising basically away forever.”

To sum up, the time for change is here. Those who do not change will die, and it will be a huge loss to the public, as there is no replacement for good journalism. To quote Keller:

“News organizations that deploy resources to gather information are essential to a functioning democracy…it just doesn’t work if people don’t know.”

Please note however, that this does not mean good journalism will survive just because it is so ‘good’ or because it is ‘tied to democracy’ – media folk and media well-wishers, beware of falling into that trap. News organisations will be as relevant as their ability to keep up with the changing nature of the world. If they cannot keep up, they will be replaced. This will prove to be as true in Pakistan as the rest of the world.

Published in Tribune Blogs.

Deals in a downturn

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Value and discount deals are a recurring feature of the fast food industry, but recently, the volume of such promotions that are being offered to consumers has reached new heights.

You would be hard pressed to drive down the streets of any major city and miss a billboard advertising a glaring price point intermingled with burgers, chips, pizzas and soft drinks, enticing you to buy ‘more for less’ at lower and lower costs.

So why this intense focus on promoting value deals at this time? To begin with, Pakistan is facing an economic downturn and inflation is in double digits. Fast food is a luxury for the majority of the public, and even the upper SECs of society are feeling the compulsion, at least psychologically, to conserve, consolidate and hold back on cash. Add to this a turbulent law and order situation which has affected the number of customers visiting food outlets, and you get the full picture of the challenge facing the marketing teams in the food service industry.

Given this environment, KFC, McDonald’s and Pizza Hut testify that the value deal strategy is aimed at ensuring a steady revenue stream, even if ‘value’ and discounts mean that an added cost has to be borne for every deal offered. Strategically, all three franchises hope to offset this cost by pulling in existing customers who may be wary of venturing out, as well as new customers. However, all three franchises have taken different approaches in reaching this clientele.

KFC Double Deal

KFC, which is promoting multiple value deals back to back, including the current ‘Double the Deal’ (buy a Zinger meal and get another burger and soft drink for an additional 10 rupees) aims to focus on what Fuad Hameed, Marketing Manager, Cupola (the company which owns the KFC franchise), terms the “value seekers”.

“Value seekers look for value in terms of getting a desired product at a lower cost with perceived value differing on an individual basis.”

Accordingly, this value seeking segment is more interested in finding franchises that offer the cheapest option and will switch from one to the other with relative ease.

While this group does not contribute to the majority of KFC’s sales, in these tough times they have become a key market to play to, although Hameed clarifies that they are not necessarily from the lower SECs as “spending any amount on fast food is a stretch in the prevailing economic conditions.”

The competition for this value seeking segment is particularly stiff between KFC and McDonald’s which are both positioned as quick service restaurants (QSRs) with similar offerings, while Pizza Hut maintains its positioning between QSRs and an informal dining restaurant.

McDonald's snack time

To counter KFC’s value deals, McDonald’s has its own set of value offers such as the ‘Snack Time’ deal, which consists of multiple deals, all for 99 rupees. However, unlike KFC, McDonald’s aims to appeal to the lower SECs with value deals and offerings that start at a significantly low 30 rupees.

Terming it a “penetration strategy”, Raza Ali, Country Marketing Manager, McDonald’s, emphasises that “we are focusing on affordability and although a major portion of our sales come from our main menu, these deals ensure that people keep coming and our outlets remain busy.”

Pizza Hut has also been looking to grow the market with the launch of their first-ever offering for a single person, the ‘124’ deal (a small pizza and a soft drink for 124 rupees) – a big shift away from their family positioning. As Marya Khan, Senior Marketing Manager, Pizza Hut, explains:

“It was an extremely successful campaign in terms of the transactions we were able to do and the share it took up. Normally our product offering is only targeted at families.”

Pizza Hut

Pizza Hut also promotes discount deals to the family segment; their current one being the Panormous deal – two large pizzas for a discounted 860 rupees.

With so much competition and the pressure to retain existing, and attract new customers, the role of advertising has been pivotal, and none of the three franchises have held back in making their deals highly visible, with emphasis put on the price point and the dial-in number.

For all three franchises, ATL media has been the major focus, exclusive of TV, possibly due to the cost of producing/placing back to back TVCs for multiple promotions. KFC and Pizza Hut have also turned to the internet as part of their promotion strategy.

With such emphasis being placed on value deals and lower price points, will consumers ever return to an era of upsized meals and promotions featuring excess rather than savings?

While there is a school of thought which says that consumer behaviour can be permanently changed after an extended economic downturn, the marketing teams at KFC, McDonald’s and Pizza Hut are convinced that the market will bounce back to ‘splurge’ the moment the law and order situation improves and economic stability returns.

A positive indicator has been the recent launch of Hardee’s despite the prevailing environment.

The central question however, remains largely unanswered: will 2010 see a return to splurge with the promise of economic stability, or will the food service industry giants be forced to build yet another marketing calendar dotted with value promotions at ultra-low costs, battling it out like the telecom sector’s price wars?

First published in Aurora January-February 2010 issue.

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There is no doubt in the fact that armed with scissor and seam, fabric and flair, the readymade garment manufacturers have won the wardrobe war; Bonanza is one of the conquerors.”

These sentiments are taken verbatim from the ‘About’ section of Bonanza’s website, and while the site itself may not be much to write home about, nobody in Pakistan would deny that Bonanza is indeed one of the conquerors of the wardrobe war and a pioneer in popularising readymade clothes in Pakistan.

In fact, prior to its launch in 1975, looking beyond tailor-made clothes was unthinkable for most people, and according to Hanif Bilwani, Director, Bonanza Garment Industries, it was only thanks to the foresight of his uncle, Haji Haroon Bilwani, that Bonanza came into being.

“My uncle travelled extensively abroad and he saw that mass-produced readymade clothes were the future, which is why we conceived of Bonanza as a brand, even though in the 70s there was no concept of readymade clothes. It was a very unorganised sector.”

So, while Pakistan was struggling to maintain its once robust textile industry (with a focus on fabrics and not finished goods), it was Haroon Bilwani who had the vision to build a local readymade clothes label – a vision that has been fulfilled by five subsequent generations of Bilwanis. The result is that for the past three decades, Bonanza has been the undisputed market leader in all its product categories (sweaters, shirts and shalwar suits), making it one of the most prominent brands of Pakistan.

The first historical stepping stone was also the defining one – sweaters. Starting out with a range of sweaters for children in 1975, Bonanza’s success in this category encouraged the company to expand into a line for adults. In 1978, dress shirts for men were introduced, followed by shalwar suits in 1991. Over this period, Bonanza saw remarkable growth, with expansion travelling north from its base in Karachi to the larger markets of Punjab – now Bonanza’s main customer base.

Although brands such as Aladin, Cambridge and Oxford, as well as the outcrop of smaller designer labels could be said to compete with Bonanza in both Punjab and Sindh, Bilwani thinks otherwise.

“None of them come even close to reaching 50% of our sales volume.”

Maintaining such a position is not an easy task, as the technology, raw material, manpower and training required to consistently mass produce quality goods at competitive prices has been, and remains, an ongoing challenge, particularly due to constant global technological innovations in the production of garments and the invasion of foreign competition into the market, particularly from China. This is one of the principal reasons why no other company has managed to make its mark in the readymade clothes sector the way Bonanza has done so far.

To give an example: a single Bonanza-made shirt goes through 28 different hands from stitching to packaging, and a single mistake by any one pair of hands will send the shirt straight into the reject pile. Yet it is this strict quality control that Bilwani attributes as the reason for the brand’s success.

Few today will deny that Bonanza is a local icon, known by all, worn by most and as Qaiser Iqbal, Advertising Manager, Bonanza Garment Industries, puts it, “part of Pakistani tradition”.

“We are able to capture every segment of Pakistani society. When someone enters a Bonanza store he/she never leaves without buying something due to the sheer variety of products we create.”

This claim is less a matter of pride and more of fact. Bonanza creates 5,000 new designs every year and these are available in over 50 stores across the country. While admittedly the bulk of the market comprises SECs B and C, the brand’s longstanding equity ensures a degree of penetration into the upper SECs as well, thus staying true to its core value: a local brand made for all and accessible to all.

The extent to which Bonanza has integrated itself in Pakistani tradition is best exemplified in Punjab, where, according to Iqbal, “When there is a wedding, it is traditional for both the bride’s and the groom’s family to give each other Bonanza sweaters as part of the exchange of presents.”

Bonanza has deliberately positioned itself as a traditional, family brand which stays clear of high fashion in order to mass produce what Bilwani calls, “the classic look” – a defining trait of the brand even today. Being (essentially) a monopoly for many decades has given Bonanza the freedom to dictate what is and is not fashion for the general public, and the classic look – i.e. traditional, non-experimental, tried and tested designs – characterise the brand’s image. However, the emergence of other local brands in the readymade clothes category and an increasingly fashion conscious consumer have forced Bonanza to revise some of its more traditional thinking.

Bilwani is resigned to the fact that “with new brands emerging from the textile industry, we have had to start to follow fashion trends more closely, especially when it comes to the young.”

Herein lies one of Bonanza’s major challenges, as selling to the fashion conscious in a market that offers many alternatives is likely to be a very different playing field from the decades-long stretch Bonanza has enjoyed as the only dominant player in its field. However, the family-oriented Bonanza of yesteryear has, to some extent, already begun producing items for the young, and targeting this segment.

According to Iqbal, “Our recent ad campaigns have a young-ish look now due to the fact that we are using younger models. Also, we usually opt for a jingle-based, desi feel in our TVCs, but this year we added a dance routine which isn’t really a part of our (conservative) culture, so that was a major shift.”

Interestingly, this ‘cool’ factor was once part of Bonanza’s appeal. Iqbal laughingly recalls the ‘hip’ image Bonanza used to have in the 70s and 80s when not only was Bonanza the only clothes brand to advertise on TV, but it also featured ‘gora’ models:

“The truth is that using gora models was not part of a strategy, but because in those days it was difficult to find Pakistani women willing to model clothes.”

The impact of Bonanza’s early advertising campaigns is perhaps best epitomised by an exhibition held by Bonanza in Amritsar in 1985, where as Bilwani recalls, the chief guest, Rajiv Gandhi, the then Prime Minister of India, commented that even he had seen Bonanza ads on PTV (the channel was viewable in Amritsar at the time).

By its pioneering efforts in readymade clothes, supported by a strong focus on advertising, Bonanza has proven that local brands can excel. The brand’s equity is a testimony to hard work and sticking to doing what one does best, which, in Bonanza’s case, is staying true to its customers’ preferences.

Looking to the future, the company strategy is focused on ensuring that Bonanza will remain a household name for the next generation of Pakistanis as well.

As Bilwani points out, “We are aiming to go into ladies lawn in the next couple of years as this market is now viable. We have begun to make a limited amount of home textile products such as bed sheets. We have recently expanded into ties, shawls, socks and scarves, and we are also looking at wedding wear; there are many options open for our future expansion.”

Which poses the more pertinent question: What will Bonanza not do in the future?

First published in Aurora January-February 2010 issue.

The Homexpress experiment

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By Jahanzaib Haque

(Published in the Nov-Dec 2009 issue of Aurora)

While the print media struggle globally to stay competitive against the onslaught of free information on the internet, a number of business models have emerged which take a different approach to the problem.

In Pakistan, one such local venture is Homexpress – a 100% ad based free monthly magazine delivered direct to households (in fact, similar to a shopping catalogue); the ads being mainly local retailer (shops, restaurants) driven.

Since its Karachi launch in September 2004, Homexpress has grown from a four-page issue circulating to 10,500 homes in DHA and Clifton, to six different monthly issues (up to 32 pages in size) circulating to 63,000 homes in neighbourhoods across Karachi and Lahore.

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Easypaisa for the unbanked

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By Jahanzaib Haque

(Published in Nov-Dec 2009 issue of Aurora)

In a synergy of telecom and banking, Telenor Pakistan and Tameer Micro Finance Bank have launched ‘Easypaisa’ – a financial service which promises to introduce ‘true branchless banking’ to the unbanked majority of Pakistan.

Accoding to Yassir Shafi, Account Director, Adcom (the creative agency for Easypaisa), “Previously, branchless banking offerings were for inter-bank customers only, but the Easypaisa concept makes these financial services open to everyone.”

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