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In case you haven’t been following the “Tesla should advertise!” vs. “No, it shouldn’t!” discussion of the past decade, the short summary is that Tesla has basically never used traditional advertising. It has engaged in marketing, of course, especially through its well known incentives-based referral program and on social media. But it has not run TV ads like other automakers. As production capacity has grown and Tesla has reached new sales heights quarter after quarter, it has been difficult to maintain the rapid growth it once saw. Many have been arguing for the past couple of years that Tesla needs to start engaging in normal advertising, and that doing so is much cheaper than cutting prices deeper and deeper.
At long last, sometime last year, Elon Musk agreed that Tesla could start trialling some advertising. (As it turns out, this also came on the heels of his purchase of Twitter and the company’s struggle to make profits on its advertising-based model. But I won’t go down that treacherous rabbit hole.) The update we got from a Tesla exec on the company’s last shareholder conference call is that they’d only use targeting online advertising, particularly through YouTube it seems.
I’m a bit skeptical of this approach. Tesla has succeeded massively in the always-online world of social media and YouTube. It is a MASSIVE topic of focus on YouTube channel after YouTube channel. If you have any interest in Tesla at all, you’re sure to see a lot of videos on YouTube hyping up the vehicles and the company. How much does running Tesla ads on top of those vehicles actually help? Well, it must stimulate some sales, but I just feel like it’s putting sprinkles on a cake that’s already made.
Screenshot of Tesla ad on YouTube
Now, in the past week or so, I’m getting ad after ad after ad after ad from Tesla. I’m seeing tons of Tesla ads on YouTube. Of course, I already have a Tesla, and Tesla has been peppering me with emails, text messages, etc. in recent months trying to get me into a new Tesla. Seeing more YouTube ads from Tesla isn’t moving me from my current Tesla to a new one. In my humble opinion, it’s a waste of money. How much are these ads reaching people and influencing them, leading to sales? I have no idea. Maybe it’s a very effective strategy and the targeting is just what’s needed to push people over the line and stimulate more purchases. But I do have some other feelings on this.
Targeted advertising can be very cost-efficient, and conventional TV advertising of the past can be very cost-inefficient, but in the case of Tesla, I actually feel like it needs what most automakers don’t need — time on TV via commercials. As I already said, Tesla has done a tremendous job reaching people online — case studies and college course are surely being conducted on how successful Tesla has been with this. It’s been one of the most effective companies ever — maybe the most effective — at online social media marketing. But it needs to reach new markets now. It needs to climb up the next phase of consumer adoption. In my opinion, it needs to reach people who watch TV and don’t know how to operate YouTube (believe me, many such people do exist, and they are also often in a demographic that buys a lot of cars).
Screenshot of Tesla ad on YouTube
Tesla adoption is far beyond where it was 3 years ago. The early adopters got their Teslas, and yes, some will get a Cybertruck, a new Model 3 Highland, or another updated Tesla. However, most new Tesla buyers are new to the brand and are more “mass market” buyers. As the number of Tesla vehicles on the road grows, more “normal people” notice the, get used to seeing them, and get comfortable with the idea of buying one. People in the middle of the tech adoption curve want to see that presence, that longer time on the market, and even something approaching market saturation before they buy. More and more, that’s where we are with Tesla. And I believe those buyers are going to be more influenced by seeing Tesla commercials on TV — like all the other automakers run — than maybe seeing some on YouTube. That tells them, “Oh, hey, Tesla is a normal company now. Oh, you can consider a Tesla when considering which car to buy next. Oh, nothing to fear, this is a normal automaker after all.” That would go a lot further, in my humble opinion, than showing someone like me 100 Tesla ads on YouTube.
Chime in with your own opinion on this. Do you think Tesla is nailing it with its current advertising approach? Or do you think I’m spot on with this critique? Or are you in a grey area in between or in some other colorful area far away from this whole discussion? And what else can or should Tesla be doing to stimulate demand?
I would also close with a note that we can never really know how much one form of advertising or another drives sales. There are ways to track or survey these things, but they are extremely limited. The “soft” influence of some tactics, even sometimes subliminal influence, is impossible to truly track or quantify. When we talk about broader cultural influence, branding, and marketing, we have to concede this will always be an art, or a “soft science” is the furthest you can go in the other direction. So, the debate can continue forever. At the end of the day, though, Tesla needs to stimulate more sales, and at the lowest cost possible. Good luck! And I’d advise thinking outside the box, which in Tesla’s case might mean some visits to the boxes other automakers live in.
Frankly, I could also strongly critique the Tesla video ads, but I’ll skip that or leave it for another day if I keep seeing them and the matter irritates me more and more.
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