In a game-changing move that marks a significant departure from its traditional stance, electric vehicle powerhouse Tesla is gearing up to embrace advertising. The maverick CEO of the company, Elon Musk, who has historically shown a conspicuous aversion to traditional advertising, signaled that Tesla is ready to “dabble in advertising.” This move seems to be sparked by the rising competition in the electric vehicles market.
For the past two decades, Tesla has enjoyed success primarily through word-of-mouth marketing and robust brand advocacy from its enthusiastic owner-base and admirers. Musk has been vocal about his disdain for advertising, repeatedly expressing his lack of enthusiasm for this form of promotion.
However, during Tesla's recent annual shareholders' meeting, Musk hinted at a seismic shift in the company's marketing strategy. The billionaire mogul said the company is ready to experiment with advertising and gauge its efficacy, citing his recent experiences with Twitter as a key factor behind this decision, as reported by The Verge.
Elon Musk remarked, “Twitter relies heavily on advertising revenue, so here I am, a person who's never really utilized advertising before, now leading a company that's fundamentally dependent on it.” He jovially added, "So I guess I should say advertising is awesome, everyone should do it!"
While it remains unclear how Tesla's maiden foray into advertising would unfold, Musk hinted in a subsequent interview with CNBC that the campaign would focus on the educational aspect, with an emphasis on entertainment. He asserted that the company's ad strategy would aim to spotlight lesser-known features of Tesla's vehicles and that any campaign must be both "informative" and "aesthetically pleasing".
Musk admitted that this new strategy is still in its infancy, remarking, "It’s worth a try, and we’ll see how effective it is. I only just agreed to it, so it’s not a fully formed strategy."
This announcement comes hot on the heels of Musk's declaration last month that Tesla would prioritize sales growth over profit in the weak economy, kickstarting a price war in the electric vehicles market.
Tesla, which recorded its smallest quarterly gross margin in two years this April, slashed prices in the USA and China to maintain its competitive edge. Musk justified the price cuts by saying, “It’s better to shift a large number of cars at lower margin and harvest that margin in the future as we perfect autonomy.”
The company's new advertising strategy aligns with Marketing Week columnist Mark Ritson's prediction that Tesla's short-term strategy would require revision in the long run. Ritson suggested that advertising plays a crucial role in shaping demand, not just for the next year but for a lifetime.
Musk's personal charisma and controversial antics have also served as a potent marketing tool for Tesla over the years, although his recent acquisition of Twitter seems to have stirred up more criticism than accolades. Amidst all this, Musk remains resolute in expressing his opinions freely, insisting, "I’ll say what I want, and if the consequence of that is losing money, so be it.”