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Most companies depend on advertising to inform persuade and remind consumers of their products
and services. But not Tesla. You won't see any Tesla ads anywhere. Not online. Not on the radio.
And not on television where sometimes companies can spend millions on just a single ad. Norway,
coming for you. It's unclear how much General Motors spent on this Super Bowl commercial but
the going rate for a 30-second spot is $5 million. In total, GM spent $2.7 billion in advertising and
promotion in 2020 - that's actually down a billion from the year before due to disruptions from COVID-19.
Here's the advertising cost per vehicle sold for the leading automakers. Genesis, part of the
Hyundai Motor Company, dished out $2,000 per vehicle in 2019 whereas Tesla
spent 14 cents, incurring costs from promotional activities rather than traditional advertising.
So why does Tesla not run ads? It doesn't have to persuade anyone to buy its electric cars. Back in
the day, Tesla couldn't keep up with demand. There was no need for advertising. Thank you to everyone
that ordered the car. We love you. Customers had to wait years to get the car they ordered
like the $35,000 Model 3, its most affordable model yet. And when they did, a million people watched the
handover on Tesla's YouTube channel. Its streamed events frequently rake in millions of views.
Oh my (expletive)
Well, maybe that was a little too hard.
The Cybertruck unveil where a steel ball shattered the armored glass also apparently
helped smash sales. Oh man. CEO Elon Musk suggested the company had received 250,000 orders of the electric pickup
less than a week later. All without having to pay for advertising.
Still, even events fail to fully explain why Tesla doesn't advertise. Musk has gone on the record to say he'd rather use that
money to make the product great. Tesla's research and development budget has been increasing
drastically over the years while GM's has been steady and recently dropped slightly in 2020.
It still spends considerably more than Tesla - it does own several car brands. However, Musk's company
is closing the gap. The thinking behind Tesla's focus on design, engineering, and testing is that
if you build the best car, the product will speak for itself or have others speak for it free of
charge. Celebrities and influencers have showered plenty of affection on the company. Jaden Smith
showed off his pink Model X in a music video. Kanye West has made no secret of his Tesla love affair.
YouTuber ZHC surprised Mr Beast with a custom designed Tesla. Not to mention, Tesla also receives
an abundance of free promotion from Musk's other company SpaceX. Model X's carried NASA astronauts
to the launch pad for flights aboard Falcon 9 while the Falcon Heavy launched a Tesla roadster
on a path to Mars. That event generated a flood of media attention but the relationship between Musk
and the traditional news media hasn't always been so rosy to put it lightly. He's criticized media
coverage. For example, about a deadly crash of a Model X on autopilot mode or production delays
involving the Model 3. Musk suggested journalists write negative stories in order to get maximum
clicks and because gas and diesel car companies advertise with these news organizations
while Tesla does not - inferring big oil plays a role behind critical coverage of Tesla which
reporters have denied. You might think Tesla would respond with a slick public relations campaign
but actually, Tesla got rid of its PR team in North America although it still has one in Europe.
While most companies use their PR departments to communicate information to journalists,
Tesla appears to be cutting out the journalists in favor of communicating directly with the public
via social media. Musk's belief in the power of social media is so strong that he once hired a
meme maker as Tesla's social media manager. Adam Koszary had a sheep to thank for the job. He caught
Musk's attention after tweeting out a photo of this absolute unit when he worked at a British
museum. It went viral and for some reason, Musk ended up changing his profile picture to that
of the big fluffy fella which generated even more chatter online. His 50 million follower count on
Twitter is far greater than that of the leading automotive companies combined. He often replies to
people asking for help like the time singer Sheryl Crowe got stuck in a parking lot with a dark
Tesla display. It's not just the rich and famous who have his attention. Musk routinely answers
questions from the general public. In many ways, he himself is a walking advertisement for Tesla
though occasionally it's gotten him into trouble. The U.S. Securities and Exchange Commission
sued Musk for fraud when he tweeted he was considering taking Tesla private at
$420 a share - a reference to marijuana. And that funding had been secured. Controversial or not,
Musk puts his companies in the spotlight without the need to pay for it. It should be noted that some
other companies have employed the same strategy. Starbucks relied on word of mouth to grow.
Costco doesn't pay for advertising. Neither does Krispy Kreme.
So, Tesla is far from the only brand that doesn't rely on paid advertising. It does, however, rely on its website for sales.
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first purchase of a website or a domain. Thanks for watching. For Newsthink, I'm Cindy Pom.