Unlike Big Auto, Tesla spends $0 on traditional advertising
Have you ever wondered why you haven't seen a glitzy TV commercial for Tesla's new Model 3? According to Advertising Age*, "Tesla still doesn't need [any] paid advertising to make sales." E.J. Schultz reports that, "even as the Model 3 goes on sale for anticipated delivery starting in the fourth quarter, word-of-mouth and free media coverage seems to be enough to fuel demand for the foreseeable future."
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Above: All three Tesla vehicles (Instagram: theelectriccar)
On the other hand, "General Motors spent $3.7 million in measured media on the Chevrolet Bolt electric vehicle for the first three months of 2017... [and] Nissan in 2016 spent $4.3 million in measured media on its electric Nissan Leaf, including on print ads early last year that took on Tesla. By contrast, Tesla spent nothing, according to Kantar."
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Above: Comparing automakers, Tesla is the only automaker that shows $0 of ad spending (Source Advertising Age* via Kantar Media)
Citing the reservations for the Model 3, Michelle Krebs, a senior analyst for AutoTrader, explained: "I don't expect that Tesla will have to spend a dime on advertising anytime soon. It will take Tesla a good amount of time to fulfill those orders even if they are successful with their ambitious launch plan. Tesla, indeed, has built a strong brand that requires little or no promotion for now. Tesla has taken on a life of its own."
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Above: Tesla factory in Fremont, California (Instagram: sammacmebabe)
Furthermore, Tesla noted in their December 2016 10-K regulatory filing: "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."
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Above: Between the Model S and X alone, Tesla has already gobbled up nearly half of all U.S. electric vehicle sales (Source: CNBC* via Moody's)
Elon Musk explained on the most recent Tesla earnings call, "We're not promoting the [Model 3] car. If you go to our stores, we don't even want to talk about it, really, because we want to talk about the thing that we can supply. If somebody orders a Model 3 now, it's probably late next-year before they get it."
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Above: Blue Tesla Model 3 (Instagram: masanori_nakayama)
Musk continued, "With a small amount of effort we can easily drive the Model 3 reservation number to something much higher but there's no point. It's like if you're a restaurant and you're serving hamburgers and there's like an hour and a half wait for hamburgers do you really want to encourage more people to order more hamburgers?"
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*Source: Advertising Age, CNBC
