How Tesla Spends $0 on Ads
If you check the news or watch CNBC every once in a while, you probably hear the name Tesla on a near daily basis. The company is on your TV, your social media feeds, and constantly being discussed by analysts around the clock. In 2020, Tesla surpassed Instagram to be the fastest-growing company in the world, growing 64.9% in that year. Tesla has quickly been touted as the world’s most valuable car company. But what might make its meteoric rise even more insane, is that Tesla has a $0 advertising budget. Seriously, they don’t pay for advertising.
Just take a second, think about all the TV ads, commercials, slogans, and any other promotions you see. Can you recall any about Tesla?
Have anything?
Not even a slogan?
Nope.
How is this possible? How can a company have such explosive growth without telling people about themselves through traditional advertising?
The answer is actually pretty complex, but we’ll do our best to simplify everything.
Advertising vs. Marketing
To clarify before we begin, advertising and marketing are not the same thing. According to the American Marketing Association marketing is “the process of identifying customer needs and determining how to best meet those needs.” In contrast, “advertising is the exercise of promoting a company and its products or services through paid channels.”
Yes, Tesla does spend money on marketing albeit significantly less than the competition. For instance, in 2015 Tesla spent $58.3 million on marketing when competitors like BMW spent $196.6 million.
This is a very intentional decision by the CEO of Tesla; Elon Musk who wants to innovate and push the world forward by making our way of living more sustainable. And yes, he is very outspoken on how he “hates advertising.”
Instead of paid advertising, Tesla does a wide variety of marketing strategies that require very little cost.
The Product:
What sometimes can be an overlooked part of marketing but is so crucial to the success of a campaign is the product. Having a great product that not only does what you tell your customers it will do but also exceeds their expectations will no doubt get people talking about your brand. Elon Musk has said time and time again said that he is focused on creating innovative results over anything else.
Aside from the outlandish price, it’s hard to argue against Tesla’s product. Long-time industry experts and average customers agree that their electric vehicles (EVs) are spectacular. So spectacular that Tesla’s EV’s are often touted as a product from the future. Even former Tesla non-believer, Joe Rogan, bought a Model SP100D and now he can’t stop raving about how great he thinks the car is.
The team at Tesla places a strong emphasis on values that are quickly becoming universal for the industry such as sustainable transport or renewable energy. If you ever listen to a speech from Elon Musk on Tesla, you’ll usually hear time and time again an emphasis on safety, their mission to accelerate the world to a sustainable future, or even dog mode which creates a safe, cool environment for your pet if you choose to leave them in your Tesla.
The brand also places a large emphasis on the customer experience and has been given one of the highest consumer satisfaction ratings in the industry. Tesla created a customer experience unlike any other car manufacturer. From selling directly to consumers rather than licensing, a red carpet experience, EV customization options based on the buyer’s wants and needs, and allowing customers to buy a Tesla either from a showroom or from their home online. What's a crazy idea (and is still only a fantasy) but may one day actually be possible is with the car’s autopilot feature. There might be a day in the not so distant future where a Tesla model could drive itself to you after you buy it online all while you never leave your bed.
The company’s belief in investing resources towards the quality of the product instead of spending on advertising means Tesla relies heavily on word-of-mouth advertising. This essentially means Tesla markets to its customers by not directly marketing to them. Instead, they encourage others, namely customers, to advertise for them. The company even created a Referral Program where customers who refer their friends to purchase a new EV from the company then can receive up to $1,000 in credit towards a new Tesla as well as various other ever-evolving rewards.
But Tesla’s marketing within the community doesn’t stop there.
Community Engagement:
The marketing team at Tesla has found some very creative ways to get people talking about their product. For starters, the company offers a number of signature cars such as the Tesla Model S, Model 3, Model X, and Model Y. You put those four model cars together and you get a clever anagram, or a S3XY anagram (I’m sure you can tell why the internet loved that one). Another way to get people talking? How about when the Model S price was suddenly changed to exactly “$69,420”... I’m also sure you can put together why the internet went wild for that one too. All of these little innuendos were of no extra cost to Tesla but gave them free publicity from the countless conversations happening across online communities. You only need to visit the Tesla subreddit to discover just how passionate these fans are and how they will gladly tell everyone about what Tesla is doing.
In fact, online platforms such as YouTube tend to be one of the best (and cheapest) ways for the brand to get its message to the world. YouTubers are often the best advertisers for Tesla vehicles as the channels with larger audiences can offer referrals to more and more people. Take Ben Sullins who is Tesla referral program member and used his YouTube channel to get an insane $12 million in sales for the company. In return, Tesla sent him two free Founders Series Next Gen Roadsters.
How much does this cost for Tesla in advertising? Nothing. What’s the upside? Sales going straight to the actual moon.
However, not every Tesla marketing strategy focuses on meme culture. In 2018, SpaceX launched the Falcon Heavy Rocket into orbit. The event was viewed by millions from across the world and had dozens of media eyeballs covering the spectacle. Once the rocket reached orbit, it released its payload, a brand new Tesla Roadster. Yes, Tesla really launched one of its cars into outer space. This quite literally took Tesla to a new height and was one of the most out of this world marketing campaigns (pun intended).
Tesla has mastered the Free Media equation which simply states having an interesting story + media = free publicity. The team continuously finds new and unique ways to stand out from the crowd and get the people talking. However, the most effective spokesperson, who without question, generates the most newsworthy events for the company is none other than Elon Musk.
The Technoking:
No matter what you think of him, whether you love or hate him, you cannot deny that the CEO of Tesla (now Technoking) Elon Musk, is doing some remarkable things in the world. From online currency with PayPal, sustainable transportation and energy with Tesla, to space travel with SpaceX. Elon is moving the world forward, prompting some to call him the real-life Tony Stark (albeit he needs some work to pull off that Robert Downey Jr. swagger). It has even gotten to the point where Neil De Grasse Tyson said Elon is the most important person in tech ever (choosing Musk over the likes of Steve Jobs, Mark Zuckerburg, and Bill Gates).
While the most influential tech person in the world title is up for debate, one thing you cannot deny about Elon is that he knows how to use social media, specifically, Twitter. If you have been clicking the hyperlinks so far you would have noticed a couple of links to various outlandish tweets from Musk. This is no accident, and in fact, is an integral part to Elon Musk's marketing for his companies. Many say Elon Musk’s Twitter account is the primary source of promotion for Tesla.
As mentioned earlier, there is no standard advertising campaign for Tesla. No slogans, no radio ads, no commercials, not even a social media strategy to update the brand with the most relevant memes. Yet despite this, a random tweet from Musk can receive extensive news coverage, even reaching people who don’t use social media. His Twitter page has become so influential that he can change a stock's price (for better or worse) with just one tweet. The company is aware of the “Technoking’s” social media power and utilizes the page as a way to communicate with the public, promote new products, or announce new release dates. All at no extra cost.
Can Tesla keep doing this?
While this is incredible that Tesla has found a way to advertise at no additional cost. We would be remiss to not mention that some of this success has also been a result of being in the right place, right time. Part of the reason why the brand has been able to thrive without shouting their name to the world, is because the world has been in need of a company like Tesla.
With the growing threat of climate change, it is estimated that we will need 1 in every 5 cars on the road to be electric by 2030 in order to combat the crisis. People are looking for a company that represents sustainable energy, electric vehicles, and strives to be the leader in clean energy. They’re looking to get behind a company that is striving to move the world forward to help combat the growing climate crises happening across the globe. In fact, the electric vehicle industry is supposed to grow from 140 billion USD in 2019 to 700 billion USD in 2026. Tesla is selling cars faster than they can build and have placed an emphasis on creating new factories in China, Germany, and planning a new Gigafactory in Texas to meet the high demand for EV’s. Fortunately for Tesla's position in the market, other automotive companies such as Ford or General Motors are well behind in the EV market and only began selling electric vehicles within the past few years. However, companies such as GM promise to go all-electric by 2035.
While the brand has certainly capitalized on the insanely high interest in their company, it does bring up questions on how sustainable a $0 advertising budget is. What's going to happen when the rest of the automotive industry goes fully electric? Will Tesla be able to maintain their market lead? What happens if the electric vehicle industry stops growing so rapidly? These questions seem to be on the mind of Tesla shareholders as well since during a meeting in 2020, some members tried to force a vote to make the company start using paid advertising.
Even Elon Musk, the Technoking of Tesla admitted in a 2020 tweet “at some point we should do advertising”.
