Advertising budgets in the auto industry can be astronomical, and in the industry where an automaker like Volkswagen can spend $6.6 billion a year on advertising*, how is Tesla able to generate more publicity by spending only $66.5 million (1% of the Volkswagen’s budget)?
For one, Tesla doesn’t spend any marketing funds on traditional advertising such as TV, Radio, Print/Newspapers, or Sponsorship. They instead elected to focus on media coverage and word of mouth.
Insert from Tesla’s annual report: “Historically, we have been able to generate significant media coverage of our company and our vehicles, and we believe we will continue to do so. To date, for vehicle sales, media coverage and word of mouth have been the primary drivers of our sales leads and have helped us achieve sales without traditional advertising and at relatively low marketing costs.”**
Obviously, they are oversimplifying their marketing strategy, and while we agree that media coverage and word of mouth play an essential role, there are other factors that cannot be ignored.
It all starts with a great product. If Roadster, Model S, Model X, and Model 3 were your typical evolutionary products (business as usual), we wouldn’t pay attention. However, Tesla’s products always feel futuristic and revolutionary, and we all want a little peek into the future. This is primarily why media outlets give Tesla unprecedented coverage during their product launches.
Successful Brand Association
Tesla’s early efforts to build electric vehicle (EV) awareness with consumers is paying off, because it successfully associated its brand with the EV movement, and it’s hard to imagine anyone looking to purchase an electric vehicle without considering Tesla.
Superb Brand Experience
Tesla seems to win most brand experience awards and owner satisfaction surveys. So why is the Tesla ownership experience so much better? First of all, by selling directly to consumers Tesla made the buying experience enjoyable (with no ‘pushy car salesman’ in sight), and with frequent software updates Tesla keeps their cars relevant for years to come, and more importantly, keeps their customers happy by continuously adding convenience and safety features. Also, Tesla and Elon Musk immediately address customer complaints (often using social media), making customers feel like they have a personal relationship with Tesla.
Elon Musk Factor
The auto industry is full of great CEOs, but Elon Musk is not just a CEO. Irrespective of the topic, Model 3 (Tesla’s latest sedan), artificial intelligence or colonizing Mars, when Elon Musk speaks, we listen. The amount of free publicity he generates for Tesla every year cannot be replicated, even if you have a few billion to spend.
Thinking Outside The Box
Launching Tesla Roadster to space atop SpaceX’s Falcon Heavy rocket is the latest example. Probably one of the greatest marketing and publicity stunts of our time.
In summary, Tesla can achieve more with less, because they are always thinking outside the box. Furthermore, Tesla’s marketing, events, and promotional efforts never feel ‘business as usual’, and if we add Elon Musk to the mix, you have a marketing mix that is hard to beat, even if you have billions to spend on advertising.