Does Tesla Need An Advertising Budget?

Tesla doesn’t spend any money on traditional advertising, and its concept seems to be working just fine.

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Posted on EVANNEX on July 19, 2020 by Charles Morris

What’s the biggest difference between Tesla and other automakers? That is, aside from the fact that its vehicles lack gas tanks, engines and transmissions? To the bewilderment of some, and the delight of others, the company spends no money on traditional advertising. 

As we all know, the legacy auto brands are the ad industry’s bread and butter, spending billions each year on TV and radio spots, billboards, spreads in newspapers and magazines, and all kinds of online campaigns—to say nothing of the huge sums invested in racing teams, trade shows and (my favorite) all-expenses-paid events for the press.

In fact, advertising is such an integral part of the auto industry that we EV journalists often cite the majors’ failure to advertise their electric models as proof that they aren’t serious about selling them.

What gives? Why should Tesla be an exception? That’s what shareholder James Danforth wants to know. He believes ads would “help mitigate and dilute…misinformation campaigns sponsored by competitors and detractors, and steer the narrative more favorably.” At Tesla’s upcoming annual shareholder meeting, he plans to propose that the company start spending at least $50 per vehicle on advertising.

That doesn’t seem likely to happen. Non-advertising has been part of Tesla’s mystique since the beginning, and Elon Musk has said that he seldom thinks about marketing. “If you produce a truly revolutionary product, the marketing will take care of itself.” That’s one of his most famous aphorisms, and so far, it has proven a hard one to argue with.

Of course, just because Tesla isn’t patronizing the Mad Men doesn’t mean there’s no advertising going on. Matthew DeBord, writing in Business Insider, points out that the company benefits from a lot of “earned” media—positive messaging created by satisfied customers. In fact, there’s a huge amount of this out there, from homegrown rave reviews on YouTube to some very slick 30-second commercials created by fans on a volunteer basis. (In 2017, Tesla held a competition to choose the best of these.)

Carolyn Fortuna, writing in CleanTechnica, seconds the assertion that “metaphoric advertising,” of which Elon Musk is a master, is more effective than traditional ad spots. “Musk seems to spend part of every single day making sure we are exposed to the Tesla brand,” she writes. Musk directs and stars in a “theater of Tesla” that keeps the brand in the public eye constantly (usually in a positive way).

All these writers make good points, and they all boil down to this question: what could an advertising budget give Tesla that it doesn’t have already? It’s hard to imagine how awareness of the Tesla brand could be much greater. Even people who are only vaguely aware that electric cars exist know about Tesla, and those who do follow the automotive market can’t fail to be well-informed about the company, as it is regularly featured in car mags, techie mags, greenie mags, the financial press…

This leads us to another point. The reason for advertising is to increase sales, and by all accounts, Tesla is currently selling its vehicles just about as fast as it can build them (as Musk has said several times, it is “production-constrained”). A company that just opened one new factory in China, is building another in Germany, and is planning a third in Texas, somehow doesn’t sound like a company that needs to find new ways to increase sales.


Written by: Charles Morris; Source: Business Insider, Forbes, CleanTechnica

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