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Tesla Accelerates Its Advertising Strategy | April 2024

Published Date
Author OC Ferrell

Tesla is an electric vehicle (EV) and energy generation products company based in Austin, Texas. Tesla is known for its innovation which is fueled by the company’s core mission to move the world toward sustainable energy. Remarkably, the automaker managed to become a household name with a $0 advertising budget… until now.

All About Publicity

For 15 years, Tesla effortlessly attracted the world's attention almost exclusively through public relations. For example, the company is well-known for its launch events that draw large crowds including industry insiders and the media. Within six months of its Cybertruck unveiling event, Tesla secured more than 600,000 preorders.

Additionally, Tesla has mastered the art of the publicity stunt. For example, CEO Elon Musk, also the CEO of the aerospace company SpaceX, used the Falcon Heavy rocket launch in 2018 to release a Tesla Roadster into space. Media outlets continue to reference the publicity stunt many years later.

Not all of Tesla’s publicity, however, has been positive. For instance, Musk has made many controversial statements on social media network X, formerly known as Twitter. A series of statements, touching on subjects such as Tesla sales forecasts and possible plans to take the company private, resulted in a lawsuit from the Securities and Exchange Commission (SEC). The SEC charged Musk with securities fraud due to misleading tweets. Later, Musk published a tweet about production capacity, and the SEC filed a motion for contempt because it violated Tesla’s previous agreement with the SEC. This demonstrates that not all publicity is good publicity.

Entering the World of Advertising

Despite any negative publicity, capitalizing on earned media rather than investing in paid media has been a winning strategy for Tesla. So, why is the automaker diving into advertising now?

In the past, Tesla resisted traditional advertising. It's not uncommon for tech startups to rely on word-of-mouth as a form of promotion. In their early years, Apple and Google did as well. However, amid slowing demand for EVs and increased EV competition, Tesla has increased spending on paid media platforms, including X (which Musk owns), YouTube, Google, Facebook, and Instagram. Free media coverage is credited with being Tesla's main sales driver. Last year, Tesla spent $6.4 million on U.S. digital advertising, according to some estimates, which is a dramatic increase compared to years prior.

Slowing EV demand is not the only reason for Tesla’s newfound interest in advertising. Another factor seems to be Tesla's desire to change the public perception of its cars, from impractical sports cars for wealthy people to functional family cars.

Only time will tell if Tesla will continue to embrace advertising as part of its promotion mix.

In the Classroom

This article can be used to discuss promotion (Chapter 11: Customer-Driven Marketing) and the promotion mix (Chapter 12: Dimensions of Marketing Strategy).

Discussion Questions

  1. Describe how Tesla relied on word-of-mouth up to this point.
  2. What factors have contributed to Tesla’s shifting stance on advertising?
  3. Why do you think Tesla primarily invests in digital advertising rather than traditional TV ads?

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.

Sources

Aaron Gordon, "Elon Musk Suddenly Into Advertising Teslas After Buying A Huge Advertising Platform," Vice, May 17, 2023, https://www.vice.com/en/article/ak3eg4/elon-musk-suddenly-into-advertising-teslas-after-buying-a-huge-advertising-platform

Bob Van Voris and Dana Hull, "Musk Defends Tesla Tweets That SEC Says Violated Court Order," Bloomberg, March 10, 2019, https://www.bloomberg.com/news/articles/2019-03-10/musk-twitter-fight-goes-to-court-again-on-sec-contempt-charge

Carlton Reid, "The Cybertruck Must Be Huge—or It Will Dig Tesla’s Grave," Wired, December 1, 2023, https://www.wired.com/story/tesla-cybertruck-success-failure/

Patience Haggin and Patrick Coffee, "Tesla Dives Into Advertising After Years of Resistance," The Wall Street Journal, March 29, 2024, https://www.wsj.com/articles/tesla-dives-into-advertising-after-years-of-resistance-87810a4b

About the Author

O.C. Ferrell is the James T. Pursell Sr. Eminent Scholar in Ethics and Director of the Center for Ethical Organizational Cultures in the Raymond J. Harbert College of Business, Auburn University. He was formerly Distinguished Professor of Leadership and Business Ethics at Belmont University and University Distinguished Professor at the University of New Mexico. He has also been on the faculties of the University of Wyoming, Colorado State University, University of Memphis, Texas A&M University, Illinois State University, and Southern Illinois University. He received his Ph.D. in marketing from Louisiana State University.

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