I have been reading a lot of fuzz about Tesla's needs for ads.
The more I think about it, the less it makes sense.
Don't get me wrong, I am actually in the camp of Tesla doing some informercial to promote EV and killing some FUDs.
However, I don't think ads are an effective way to spend money right now.
Before they spend a few hundred million on a marketing budget, they can spend that on smaller Gigas (Megas?!) to serve some specific markets where tariff makes EVs very expensive. From an investor perspective, I think it makes more sense. Tesla has more demand than what it can cater. The only people not buying Tesla is because it's not within their budget.
Yes, I get that Model Y/3 are now either in line or below the average selling price of a vehicle. But we need to see the bigger picture. It's not about just those "rich" in highly developed economies like US/CA/EU/CN... etc. It's about those who need/want a car but can't afford a Tesla. If there's a Tesla in 2x,000 or even 1x,000 range, it will cater to an entirely different market segment.
Put it into a perspective, everyone would love to have a Rolex... but it's Casio and Swatch that sell the most watches. Heck... even a no-name watch factory in China probably ships more watch that PP and Rolex combined.
And as for bringing more awareness... seriously... Elon dropped 44 billion to buy Twitter. If that's not big enough of an advertisement expense and brand awareness, I don't know what is. Tesla is synonymous to EVs. And everyone who uses Twitter, who became aware that Elon bought Twitter, will surely know or become aware about Tesla.
The Apple Watch was the best selling watch in the world, back in 2017:
.https://www.cnbc.com/2017/09/12/apple-watch-is-now-the-number-one-watch-in-the-world.html
As for advertising the traditional broadcast and print advertising are no longer dominant in any market apart from TV geriatric-targeting products. Tesla has from the beginning mastered 21st century techniques of promotion, eschewing the old ones. Somehow every few days people come up here arguing for those obsolete expensive generic advertising. Of course generic awareness and unaided recall are important, so Tesla has near 100% awareness and unaided recall even in countries they do not service at all. Intention to buy among prospective BEV buyers and home solar is very high too.
Bluntly it is absurd to suggest Tesla should waste money on any such devices. As John Wanamaker famously said more than a century ago, "I know I waste half my advertising budget, the problem is I don't know which half". Now in the 21st century we no longer need waste the half. Now there are highly specific promotional techniques, and Tesla uses them masterfully.
Right now Tesla needs only to produce more of all products, while allowing other manufacturers and media to ensure every potential buyer knows what is happening. In reality even the FUD tells potential BEV and storage products that competitors are terrified, so generates attraction that can be accelerated or deferred by pricing changes and/or increased Point of Sale supply when that is possible.
Why, I wonder, is it so difficult for many of us to understand these things? After all it is now a decade and Tesla has long since understood that:
... charging infrastructure sells cars, especially accentuated when that is opened to non-Tesla vehicles. Seriously, driving Teslas with Superchargers all the way from urban China to Mount Everest Base camp; driving from inside the Norwegian Arctic Circle to your choice of Ankara or Marrakesh and so on...Those generate gigantic PR without any marginal cost to Tesla, PR that nobody else can match.
...awareness of technical features sells cars, specifically all the children who wax rhapsodic over games, strange fart noises, and clever graphics. Do children make their parents buy cars? Cost to generate those future sales and foment wildly favorable attitudes, nearly zero, after all this is paid for by customers.
The list goes on, but many fo us do not see that Tesla wins the five P's of Marketing:
- Product: we all know that one;
-Positioning: by now we know about Plaid, Games, Falcon Wing Doors;
-Placement: no dealers, buy online or at a store with fixed price, all those Superchargers, Destination chargers, do not sell where you have not put Superchargers.
-Promotion: This is Tesla's cleverest trick. New Superchargers generate free publicity, those clever Positioning choices generate enormous word of mouth, among opponents, children fo all ages and buyers.
Price: Nearly all of us seem convinced price is the best tool. Why is Apple Watch best selling watch? Why do Wheaties outsell store brand Wheat Flakes? Why does Starbucks outsell Marcelo's Coffee? For that matter why is LVMH controlled by the world's richest man when all his products are more expensive than many others, and Tesla's CEO the second richest? Neither happened because they view low price as the key to sales. Both understand that Price is a crucial tool, promotional pricing can move inventory timing, careful Placement allows using Price techniques to reach otherwise unreachable markets. LVMH uses judicial product through entities like TJ Maxx, plus an inordinate placement with Duty Free shops.
Tesla is much quieter about their solutions, they sell unwanted trades and damaged products through wholesalers (just like LVMH, by the way). They have end of quarter promotions that generate outsized attention, not least from virulent criticism, that acts to increase sales. That last point is shared with LVMH when they let some excess Fendi or Christian Dior appear on discounters shelves, or Moët & Chandon Dom Perignon shows up with a duty free special.
The pricing strategies that employ those tactics are quite tricky.LVMH is one of the most adept, but Tesla is quite clever too. They regularly clear out inventory when they're ready to make a major improvement, they regularly use added inducements like free Supercharging and/or added features without charge.
The the end Tesla simply does not waste money on conventional wisdom like dealers, mandatory service intervals, or conventional industry incentives. Much less the advertising that really has no tangible benefit apart from making them look like every low margin OEM.
