One thing you can say about Tesla — it does not follow a “business as usual” model. Its cars have no gasoline or diesel engines. It has no franchise dealers. Its cars are updated constantly over the internet and have the most sophisticated autonomous driving technology available. Oh, and one other thing — it spends nothing on advertising. Nada. It prefers to let its products speak for themselves in the belief that its customers will spread the good word. So far, that’s been working pretty well for the Silicon Valley startup, wouldn’t you say?
BrandTotal tracks what companies are doing in the retail environment. It has just released a report detailing how major car companies use social media to advertise their products. Some prefer Facebook, others Instagram or YouTube. The breakdown is in the chart below.
The big news, of course, is that last line. Tesla spends nothing to get its message out on social media and yet it has one of the highest social media profiles of all.
“Facebook reigns supreme for paid campaigns among these four digital channels for major autos,” says Alon Leibovich, co-founder & CEO of BrandTotal according to a report by Forbes. “Our data shows that when brands are looking to engage older audiences, they lean on Facebook to do so, while YouTube and Instagram are mostly used to reach younger audiences.”
Regarding Tesla’s strong showing, Leibovich says, “Strong brands are able to command high engagement even without a robust digital ad spend. In Tesla’s case, we see their engagement numbers are high compared to other auto brands allocating spend in their digital campaigns. This may be a result of Tesla’s fans already being engaged and active users on Twitter and other platforms. The brand doesn’t feel the need to spend on paid social media marketing when their organic reach is so strong.”
The Rest Of The Story
While the rest of the internet dailies are hyperventilating about how Tesla spends no money on social media yet has a strong social media presence, the BrandTotal report omits one significant bit of information — the number of dollars each manufacturer actually spends. For instance, it’s all very interesting that Toyota devotes 62% of its social media budget to Facebook but 62% of what? BrandTotal doesn’t say and a flurry of internet sleuthing failed to provide that information.
Which leads to another point. Automakers spend billions on advertising every year. Once again, accurate and up-to-date information is hard to come by, but according to Advertising Age, in 2016, General Motors dropped $3.5 billion on advertising. Ford was second at $2.68 billion, Fiat Chrysler was third at $2.25 billion, Toyota fourth at $1.8 billion, and Nissan fifth at $1.14 billion.
To give those numbers some perspective, GM sold just over 10 million cars in 2016. That works out to about $350 in advertising for every car sold. And that doesn’t include what local dealers spent to advertise their wares. According to Reunion Marketing, in 2018, dealerships spent an average of $630 in advertising for every car sold, bringing the total amount spent on advertising per car for GM products to just under $1,000.
How much does Tesla spend in comparison? It spends via the referral program, but that’s largely in free Supercharging, future free cars, and tickets to Tesla or SpaceX events. Will Tesla’s magic formula continue to work in the future if it is making and selling millions and millions of cars a year? That’s a legitimate question, one that can’t be answered accurately at this moment.
But the point is, while the FUD community is ganging up on Tesla at every opportunity — half of the headlines in the Google news feed for Tesla today are about various analysts predicting the imminent demise of the company — many people continue to overlook the many ways in which Tesla is different from the rest of the industry and how those differences represent strengths that are undervalued.
Is Elon Musk sometimes a trifle over-exuberant in his Twitter posts? Yup, he sure is. But he has played Twitter like a fiddle since the beginning of the company and it has worked out pretty well so far. If the day comes when Tesla needs to devote some dollars to advertising, we can be certain Musk will think of a way to do it in a way no one else has ever considered.
In the meantime, ignore the background noise about how Tesla is on the brink of disaster. As Mark Twain liked to say, “What you don’t know won’t hurt you near as much as what you do know that t’ain’t true.”