Tesla CEO Elon Musk reportedly disclosed that he will use traditional advertising methods to promote Tesla cars for the first time. In other words, viewers will have the opportunity to see the company’s Model Y and upcoming Cybertruck pickup truck in TV or online ads, and maybe even Musk himself.
Musk revealed the plan at Tesla’s annual shareholder meeting on Tuesday, a big shift for the tech mogul, who recently acquired social media company Twitter. He hasn’t used advertising for years, instead using the widespread attention he has attracted and the enthusiasm Tesla users have for the electric car company for the purpose of free publicity.
“We’ll try a little bit of advertising and see how that works out.” Musk told investors in Austin, Texas. Tesla shares closed up 4.4 on Wednesday.
Musk expects the macroeconomy to come under pressure in the coming year, and Tesla is not immune. The electric car maker has already cut prices in major markets, signaling that it faces growing competition and that Tesla can’t take growing demand for granted.
Whatever advertising path Musk chooses, ad agency executives and investors expect them to clearly communicate Tesla’s strengths, including its technological advantages, in a unique and unconventional way.
Tesla is not like other car companies and Musk is not going to start now, so we expect Tesla to communicate its disruptive technology and personalized appeal through groundbreaking creative,” said Tal Jacobson, who will soon be CEO of ad tech firm Perion Network. “
Jacobson said of Musk, “He has the ability to use the media to amplify his brand and his company’s brand, and that’s an art.”
Musk has yet to comment. But he said in a media interview Tuesday that he envisions using the ads to emphasize the features, safety and affordability of Tesla vehicles. A Tesla spokesman declined to comment further.
Musk previously told the media that he had not yet developed a “sound strategy” for Tesla’s ads. But he said the ads should “communicate the product message” and be “aesthetically pleasing. He added: “There should be some artistic elements. It should be something you won’t regret seeing.”
While Tesla is promoting the car’s message through its Twitter account, Musk said the approach is “preaching to the converted, but not reaching the unconvinced.”
Musk claimed on Twitter last year that Tesla “has a $1 trillion valuation and doesn’t advertise for a penny.
Futuristic advertising
Some industry executives have speculated whether Musk will try to make memorable TV commercials like Apple’s famous “1984” Macintosh computer commercial. The latter was directed by Ridley Scott and aired only during the Super Bowl. Many say the ad, which was based on George Orwell’s anti-utopian novel of the same name, opened the way for big TV commercials.
Bob Gruters, chief revenue officer at streaming platform Loop Media, said, “I don’t think Musk will craft a brand image like Apple, but I think they’ll go minimalist and futuristic.”
Many are curious about the possibility that Musk might even appear in the ads himself, but that approach could carry risks because of the polarized opinion of the CEO.
“Is he an effective ambassador to promote the brand? My guess is that there should be a more secure, mobilizing and engaging way to communicate the brand’s strengths than directly using Musk as a spokesperson,” says Kimberly Whitler, a professor at the University of Virginia School of Business.
Vivek Astvansh, assistant professor of advertising at the Indiana University School of Business, said that although Musk has not disclosed his marketing budget, Tesla is likely to be seen as a major client for top advertising agencies.
None of the four top ad agencies – WPP, Omnicom, Publicis and Dentsu – have commented.
Ad intelligence firm Vivvix says Tesla will spend $151,947 on advertising in the U.S. in 2022. By comparison, Ford and Toyota spent $370 million and $1.1 billion on advertising, respectively, while GM brands spent a total of $1.35 billion on advertising in the U.S. last year.
Regulatory filings show GM spent $4 billion on global advertising and promotions, while Ford spent $2.2 billion on advertising.
Tied to Twitter?
Author and venture capitalist Claire Diaz-Ortiz thinks Musk’s “newfound enthusiasm for advertising” is not surprising, given his acquisition of Twitter last fall. Diaz-Ortiz has held management positions at Twitter and has written books about the social media company.
Musk last week named Linda Yaccarino, a former NBCUniversal advertising executive, as Twitter’s new CEO.
Whitler of the University of Virginia said, “It’s hard for Musk to own a company that needs to survive on advertising dollars while at the same time devaluing advertising in the name of making the CEO of the company.”
Thomas Martin, a senior portfolio manager at Tesla shareholder Globalt Investments, sees Musk’s embrace of advertising as a positive sign. He expects the company will show how its own products are different from those of its competitors. “They’re obviously going to focus on the environment, and they’re going to emphasize that this is the car of the future, not your father’s old car,” he said. He said.
