According to reports, Elon Musk, CEO of Tesla (TSLA.US), has revealed that he will use traditional advertising methods to promote Tesla vehicles for the first time.
This means that audiences will have the opportunity to see the company’s Model Y and upcoming Cybertruck pickup truck in television or online advertisements, and they may even see Musk himself.
Musk disclosed this plan at Tesla’s 2023 annual shareholders’ meeting, marking a significant shift for the tech giant who recently acquired the social media company Twitter.
For years, Musk has avoided using advertisements and instead relied on the extensive attention he attracted and the enthusiasm of Tesla users to achieve free publicity.
We will try a little bit of advertising and see how it goes
Musk told investors in Austin, Texas.Read More
Economy Under Pressure
Musk anticipates that the macroeconomy will face pressure in the coming year, and Tesla will not be immune to it.
The electric vehicle manufacturer has already lowered prices in major markets, indicating the increasing competition it faces. Tesla cannot take the growing demand for granted.
Regardless of the advertising path Musk chooses, advertising executives and investors expect that he will convey Tesla’s advantages, including its technological superiority, in a unique and unconventional way.
Tesla is not like other car companies, and Musk wouldn’t start now, so we expect Tesla to convey its disruptive technology and personalized charm through groundbreaking creativity.
Tal Jacobson, CEO of advertising technology company Perion Network
Referring to Musk, Jacobson added, “He has the ability to amplify his brand and his company’s brand through the media; it’s an art.”
Musk: Pleasing Aesthetically
Musk has not commented on this yet. However, in a media interview, he envisioned emphasizing the distinctive features, safety, and affordability of Tesla vehicles through advertisements. A Tesla spokesperson declined to provide further comments.
Musk previously stated to the media that he hadn’t developed a “perfect strategy” for Tesla advertisements. But he mentioned that these advertisements should “convey product information” and be “pleasing aesthetically.” He also added, “There should be some artistic elements involved. It should be something you see and don’t regret seeing.”
Although Tesla promotes its vehicles through its Twitter account, Musk believes this method only reaches those who are already converted and cannot reach those who are not yet convinced.
Last year, Musk claimed on Twitter that Tesla had a valuation of $1 trillion and would not spend a cent on advertising.
Futuristic Advertising
Some industry executives speculate whether Musk will attempt to create memorable television advertisements, similar to Apple’s famous “1984” Macintosh computer advertisement. Directed by Ridley Scott, the advertisement, based on George Orwell’s dystopian novel of the same name, aired only during the Super Bowl and is regarded as paving the way for large-scale television advertisements.
I don’t think Musk will craft a brand image as meticulously as Apple, but I believe they will adopt minimalism and a futuristic style.
Bob Gruters, Chief Revenue Officer of the streaming platform Loop Media
Musk: Brand Ambassador?
Many people are curious if Musk might even appear personally in the advertisements, but due to the divided opinions about the CEO, this approach may carry risks.
“Is he an effective brand ambassador who can promote the brand? I guess there are safer and more inspiring ways to convey brand advantages than directly using Musk as a spokesperson,” said Kimberly Whitler, a professor at the University of Virginia Darden School of Business.
Vivek Astvansh, an assistant professor of advertising at the Indiana University Kelley School of Business, stated that although Musk has not disclosed the marketing budget, Tesla could be seen as a significant client for top advertising agencies.
WPP, Omnicom, Publicis, and Dentsu, the top four advertising agencies, have not commented on this.
Previous Spending on Adverisement
According to advertising intelligence company Vivvix, Tesla spent $151,947 on advertising in the United States in 2022. In comparison, Ford and Toyota spent $370 million and $1.1 billion on advertising, respectively, while General Motors’ brands collectively invested $1.35 billion in advertising in the United States last year.
Regulatory filings reveal that General Motors’ global advertising and promotion expenses reached $4 billion, while Ford’s advertising spending was $2.2 billion.
Associated with Twitter?
Writer and venture capitalist Claire Diaz-Ortiz believes that Musk’s “new enthusiasm for advertising” is not surprising since he acquired Twitter last fall. Diaz-Ortiz had previously held a management position at Twitter and has written books about the social media company.
Last week, Musk appointed Linda Yaccarino, former head of advertising at NBCUniversal, as the new CEO of Twitter.
It’s hard for Musk to simultaneously own a company that relies on advertising revenue and, in his capacity as a manufacturing company CEO, undermine the value of advertising.
Whitler from the University of Virginia
Thomas Martin, Senior Portfolio Manager at Tesla shareholder Globalt Investments, believes that Musk embracing advertising is a positive signal.
He expects the company to highlight the differences between its own products and competitors. “They will clearly focus on being environmentally friendly and emphasize that these are cars of the future, not your father’s old car,” he said.