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Advertising Is The Last Thing Tesla Should Do

Automobiles

Revealed on July 2nd, 2019 |
by Loren McDonald

July 2nd, 2019 by Loren McDonald


Fellow CleanTechnica author Barry A.F. lately penned two impassioned articles explaining his arguments why Tesla ought to begin advertising (see: Tesla Should Advertise and Tesla Should Promote, Part Deux). I utterly disagree, as I feel traditional promoting is the very last thing on which Tesla ought to spend its restricted advertising finances.

To be clear, I’m not saying that Tesla ought to by no means advertise, just that it shouldn’t use traditional national TV, radio, and print advertising — and it shouldn’t promote at all right now.

One of many issues that Elon Musk likes to tout about Tesla is that the corporate doesn’t promote. He apparently has a robust disdain for advertising, which based on Wikipedia might be traced to historic civilizations. But despite Musk’s personal dislike, there are actual strategic causes for not spending Tesla’s valuable advertising finances on promoting.

It is very important make clear, nevertheless, that while Tesla presently doesn’t spend cash on conventional nationwide/countrywide or native/regional promoting, the company’s success so far in most markets is driven by quite a lot of advertising and buyer experience-oriented activities. These embrace check drive events and meetups, website content material, public relations, social media, showrooms and galleries, presence of charging stations, referral incentives, and e-mail advertising.

The Case Towards Conventional Mass Advertising For Electrical Automobiles

“Many manufacturers secretly question whether advertising really sells their product, but are vaguely afraid that their competitors might steal a march on them if they stopped.”
— David Ogilvy (Source: Brainy Quote)

Automotive advertising is an enormous enterprise, with automotive corporations spending an estimated $33.eight billion across 10 key nations, together with $18 billion in the US in 2018, in response to Zenith. Different key statistics:

  • More than 50% of all automotive advertising expenditure goes to television – 54.5% in 2018 (Zenith)
  • Zenith forecasts the web’s share of automotive ad spend will rise to 25.6% by 2020
  • The average value for an automotive lead is $205 (Lion Tree Group)
  • Advertising as a proportion of product sales = eight.2% in 2018 at US auto dealers (NADA)
  • Advertising expense per new car retailed = $624 in 2018 at US auto dealers (NADA)
  • 95% of auto consumers use digital as a source of data, and twice as many individuals start their analysis on-line versus at a supplier. (Google research)

What is necessary to know about promoting is that what the channel is sweet at is influencing a shopper to buy a selected services or products that they have already got an curiosity in purchasing. It’s also good at creating brand consciousness and choice.

I lately spoke at a Chief Advertising Officer (CMO) occasion on the Kellogg Faculty at Northwestern College and one of many professors shared analysis he carried out on internet advertising effectiveness for autos. What he uncovered via purchaser research was that nearly all the shoppers who click on on an commercial for a automotive and who then go on to purchase that automotive have been actually already planning to buy a car.

The implication is that the majority digital advertisements for cars drive a tiny proportion of incremental vehicle purchases. Automotive advertisements don’t encourage shoppers to buy a automotive, but quite improve the probability that they may purchase a automotive they have been already planning to buy or contemplating.

“Advertising says to people, ‘Here’s what we’ve got. Here’s what it will do for you. Here’s how to get it.’”
— Leo Burnett (Supply: Brainy Quote)

Advertising usually doesn’t excel at neither is value efficient in educating shoppers on new product classes. Advertising is usually a passive activity and until shoppers have an present interest in a product or product class, they are much much less more likely to interact with the ad.

George Levy of Automotive and Driver lately penned the article “Why Few TV Commercials Promote Electric Cars” and rightly defined that:

“The other knock against ‘selling the category’ is that if you need to convince people to consider a particular kind of vehicle, it will probably take a long time to convince them to make an actual purchase.”

Utilizing advertising to convince somebody they should purchase an electrical car as an alternative of a gas-powered automotive just isn’t going to be money properly spent. Electrify America and Audi are pursuing an “educate the masses” advertising strategy, but they’ve deep pockets and may look forward to gross sales to comply with years later — Tesla wants consumers sooner. For educating automotive consumers on the advantages of electrical automobiles, there are merely cheaper advertising approaches than promoting.

Then again, concentrating on someone who is contemplating an EV and who’s researching the Jaguar I-PACE with an ad for the Audi e-tron or Tesla Model X goes to be far more successful. They are within the  consideration part and can be very interested and attentive in understanding the variations between those models.

Jaguar I-Pace Google search results page

Jaguar I-PACE Google search outcomes page. | Screenshot by Loren McDonald.

Why Now Is Not the Time for Traditional Advertising

This brings us again to Tesla and 6 reasons now shouldn’t be the time for traditional advertising:

Traditional advertising is dear: TV, radio, and print advertising are very effective at what is known as attain. Need to reach 10 million American shoppers suddenly? Then a national TV advert could make nice sense and return an effective ROI because that could be the one means and most cost-effective technique of reaching such a huge audience.

For a number of years, GoDaddy spent a lot of money with in-your-face, politically incorrect advertisements in the course of the Tremendous Bowl for its area and internet hosting providers. Derided by ad critics, and offensive to many, the advertisements principally put GoDaddy on the map for what’s in essence fairly commoditized providers. (I admit to using GoDaddy for my very own websites and domain providers regardless of also having disdain for their previous advertisements. But despite my dislike for these advertisements, GoDaddy was prime of mind when a couple of years later I started buying domains and wanted a website hosting supplier.)

But that is an example of where advertising works — growing model consciousness and buyer choice — not schooling of a new class or creating demand. I knew what I needed, however did not previously have a excessive brand choice for any supplier — GoDaddy was prime of thoughts.

Not the correct stage of the market: Electrical automobiles are still a brand new product class and in most markets are only being bought by innovators and early adopters. (The few exceptions are markets corresponding to Norway and the San Francisco Bay Area, where EVs have principally already gone mainstream.)

Rogers Diffusion of Innovation

Rogers Diffusion of Innovation. | Source: Loren McDonald/EVAdoption

In 2018, just one.97% of latest car consumers within the US bought an EV. But that proportion is definitely inflated as a result of California having an EV purchase share of 7.87% and accounting for 46.8% of all US EV purchases. Elsewhere, 27 states within the US had an EV purchase share in 2018 of less than 1%, and 43 states have been less than 2%.

2018 California EV Sales Reached 7.8% & 46.8% of US EV Sales-Loren McDonald-EVAdoption

2018 California EV sales reached 7.eight% & 46.8% of US EV sales. | Source: Loren McDonald/EVAdoption

Making an attempt to succeed in lower than 2% of the market signifies that most of your advertising dollars are wasted on shoppers with little interest in electric automobiles.

2018 EV Sales Share By State

2018 EV gross sales share by state. | Supply: Loren McDonald/EVAdoption

EV consumers have already determined to go EV: Most consumers of EVs have already determined for quite a lot of reasons that they’re going to purchase an EV over a fuel car. Individuals not often stroll right into a Chevrolet or Nissan supplier planning to buy a fuel automotive and drive away a couple of hours later in a Bolt or LEAF.

As I wrote in “EVs Require Consumers to Consider New Factors During Their Vehicle-Purchase Process,” shoppers should know the place they will cost, be snug with potential vary limitations or considerations, perhaps set up a home charger, accept potential charge occasions longer than fuel/diesel refueling occasions, be okay with usually spending extra money upfront, and other elements. EV consumers have a multiple-step considering and choice course of they should undergo when contemplating an EV.

Shoppers have to be marketed to very in a different way in numerous US markets: What is going to encourage somebody in West Virginia to buy an EV is perhaps very totally different from someone in the state of Washington. While there are in all probability many commonalities amongst early adopters situated in these very totally different markets, the messaging to these potential consumers might the truth is want to spotlight totally different options and advantages of electric automobiles.

This could only be accomplished via very focused types of advertising, reminiscent of search engine advertising, junk mail, e-mail advertising, look-alike advertisements on Fb, and on-line focused show and retargeting advertisements.

US State EV Sales Share by Various Factors

US state EV sales share by numerous elements. | Source: Loren McDonald/EVAdoption

Not enough provide: As many individuals have pointed out within the feedback in Barry A.F.’s two articles, at the very least for the Model 3, producing sufficient models at scale stays Tesla’s largest challenge. The Mannequin S and X, however might, may benefit from some further advertising to spice up sales, especially with numerous luxurious EVs coming to market. But Tesla’s largest competitor for the S particularly is the Model three.

Other, simpler advertising approaches: For the above and different causes, there are simply cheaper advertising approaches for Tesla to promote more Mannequin 3s, Ss, and Xs. These embrace search engine marketing, content material advertising, test-drive occasions, social media, e mail advertising, and PR. Educating the market on EVs can also be greatest finished by way of different non-advertising forms of advertising.

Advertising and Customer Experience Actions Tesla Should Focus On and Think about

The following is a take a look at what Tesla ought to continue doing, even broaden, and some ideas on potential new actions:

Occasions: The prime two methods to sell Tesla fashions are to have a possible buyer take one for a check drive and to have prospects speak to current Tesla house owners. The company has up to now organized Tesla meetups and drive events and will broaden these occasions.

I’ve personally been to a Tesla-sponsored meetup event on the Half Moon Bay Ritz Carlton and Mannequin 3 drive event at Tesla’s Palo Alto headquarters. We went on a Sunday final yr for the latter occasion and our test-drive rep advised me that on the Saturday before 1 out of 10 people who took a check drive purchased a Model 3 that very same day. A 10% conversion fee is superb!

Tesla Model 3 Test Drive confirmation email -| Image Source: Loren McDonald

Tesla Model three check drive confirmation e-mail. | Screenshot by Loren McDonald

Social Media/Twitter: With more than 27 million followers on Twitter, Elon Musk’s mix of tweets on Tesla, SpaceX, The Boring Company, and different subjects repel his haters and Tesla shorts, however maintain Tesla talked about not just on Twitter, but on Fb, LinkedIn, and different channels. After which the press writes about lots of his tweets, which means that a single tweet from Elon Musk might finally attain 100s of hundreds of thousands of individuals worldwide by way of a number of channels.

Screenshot Source: Loren McDonald

Screenshot by Loren McDonald

The @Tesla account presently has a not-too-shabby 3.9 million followers and a robust social media individual has been apparently been employed to handle the account. The difference in humor and engagement since this individual’s hiring has been noticeable and will result in larger visibility for the company.

E mail Advertising: Tesla needs to continue to leverage e-mail advertising to nurture prospects who’ve shown an curiosity. The firm at present makes respectable use of the channel, but doesn’t look like leveraging offline and online behaviors to deploy real-time and highly targeted emails.

Tesla Model 3 Leasing email

Tesla Mannequin 3 leasing e-mail. | Screenshot by Loren McDonald

However a second area can be to create more of an academic e-mail advertising program to attract and educate people who are probably excited about EVs however are nonetheless in a studying part and aren’t but ready to purchase an EV or a Tesla yet (and maybe don’t learn CleanTechnica).

Galleries and Showrooms: Stealing from the Apple playbook, Tesla has opened an estimated 200 showrooms and galleries throughout the world. Tesla announced plans earlier this yr to cut again on these showrooms, which I consider is a large mistake. Typically situated in upscale buying malls, these showrooms are a super fit with the customer demographic at these mall places they usually hold the Tesla model and image front and middle with upscale consumers.

These are sometimes the primary alternative for shoppers to take a seat in a Tesla and ask questions concerning the automobiles, charging, and so on. As opposed to a standard supplier location and mannequin, Tesla showrooms reach and appeal to shoppers who aren’t necessarily out there for an EV. Tesla showrooms are about constructing Tesla as an aspirational brand, which is foundational to the corporate’s success.

Orange County Tesla Showroom circa ~2012 - My first time in a Tesla - Source Loren McDonald

Orange County Tesla showroom circa ~2012 — my first time in a Tesla. | Supply: Loren McDonald

Fairly than chopping again on showrooms and galleries, Tesla ought to as an alternative make larger use and hence improve the ROI of those places and leases. The firm might hold seminar collection at showrooms, offering ideas and schooling on numerous EV subjects. They might also invite in speakers from utilities, charging installers, local EV organizations and golf equipment, and turn the showrooms into instructional centers that get shoppers more snug with making the leap to an electric car.

Focused Search Engine and Social Media Advertisements: While I’m not in favor of Tesla spending finances on mass advertising methods, there are some targeted approaches that in all probability make sense — especially in markets with excessive EV buy rates. These embrace search engine advertisements concentrating on searches for competitive electrical car models and social media look-a-like advertisements. These latter advertisements goal shoppers who’ve the same demographic and psychographic attributes as current Tesla house owners. These advertisements goal shoppers extremely more likely to think about an EV and could be based mostly on offline and on-line conduct that already exhibits curiosity in Tesla.

Proceed to Construct out the Tesla Supercharger and Destination Charger Networks: Whereas Tesla’s two charging networks exist primarily to offer quick access to charging for present house owners, additionally they serve as very effective “billboards” for the corporate. Their existence at wineries, upscale lodges and resorts, along main highways, and in shopping center and retailer parking tons reminds potential and present consumers that proudly owning a Tesla means you not often have to fret about entry to charging while out and about.

Additionally they merely maintain Tesla’s model in front of non-owners. And to that extent, Tesla should think about, the place potential, growing the branding at Supercharger places. This could embrace digital signage that displays real-time charging statistics and advertisements for Tesla. They could embrace an interactive digital kiosk where shoppers might get information about Tesla merchandise and schedule check drives.

Tesla Kettleman City Supercharger - view of lounge from charger stall

Tesla Kettleman Metropolis Supercharger — view of lounge from charger stall. | Source: Loren McDonald

Within the last yr, I’ve taken two street journeys from Northern California to Southern California and back — trips of almost 900 miles — in our Tesla Mannequin S 60. The 60 solely has about 205 miles of range, which has meant at the very least three stops along Interstate 5 to succeed in our vacation spot. I simply would not have thought-about these trips in another EV apart from a Tesla.

Electrify America, EVgo, Tesla Superchargers - DCFC Locations & Stations -5.25.19 Source: Loren McDonald - EVAdoption

Electrify America, EVgo, Tesla Superchargers — DCFC places & stations as of Might 24, 2019. | Source: Loren McDonald/EVAdoption

For the subsequent few years, these charging networks will proceed to be one in every of Tesla’s largest competitive advantages and one of many the reason why EV consumers select a Tesla over different manufacturers. However Electrify America and EVgo (in the US) and Ionity (in Europe) are quickly constructing out their fast-charging networks.

Tesla should continue to build out the Supercharger network to keep a really actual and visual lead on the other networks. One secret is to proceed to increase the number of connections at key places. Tesla already has a large lead with a mean of greater than 9 connections per fast charger location, in comparison with 4.5 for Electrify America and a couple of.7 for EVgo. These giant “charging centers” are very seen and provide large branding and awareness for Tesla.

Ratio of DC fast chargers to # of locations - US March 31 2019

Ratio of DC quick chargers to # of places (USA) March 31, 2019 | Supply: Loren McDonald/EVAdoption

Secondly, I consider Tesla ought to construct out extra tremendous centers such because the Kettleman City location that has 40 quick chargers and a lounge with restrooms and a espresso bar. They should find these in far more visible and high-traffic places and associate with a food service management operator to run them, probably at a profit.

Family eating at Tesla Supercharger Kettleman City lounge

Family eating at Tesla Supercharger Kettleman Metropolis lounge. | Image Supply: Loren McDonald

These places might also have separate parking for non-Tesla clients who might refuel with food and beverages, whereas also viewing Tesla automobiles, battery storage methods, and photo voltaic panel techniques. These Supercharger tremendous facilities can function visible showrooms and improve consciousness and model choice. These places may even embrace opportunities to check drive Teslas, or at minimal schedule them.

Public Relations: Tesla is a PR machine. Most corporations have PR teams and businesses that spend hours and hours crafting story ideas and pitches, byline articles, infographics, studies, and other content material that they hope the media and bloggers write about and cover. Tesla does not have this challenge.

There are a number of reporters at retailers similar to CNBC, Bloomberg, and others that cover Tesla either full or almost full-time. Then you’ve gotten sites akin to CleanTechnica, InsideEVs, Electrek, Green Automotive Stories, and dozens of others that cowl Tesla exhaustively.

However a lot of the coverage around Tesla is concentrated on the corporate itself, its products, or Elon Musk. Tesla shouldn’t be much of a source for broader EV tendencies, market developments, incentives, and EV and charging ideas.

Tesla ought to spend money on a content material advertising group that produces content that the PR workforce can use to proactively drive general awareness of EVs. Since about 40% of EVs bought within the US are Tesla models, that broader awareness and schooling would benefit Tesla greater than another automaker.

Solar/Battery Storage: There’s quite a lot of analysis that points to the connection between shoppers who set up photo voltaic panels after which additionally purchase or lease an electric car. My own current regression analysis venture that checked out 29 elements which may affect EV sales within the 50 US states and Washington, DC, discovered that the ratio of photo voltaic installations to EV households had the second highest correlation. Solar in essence is the gateway drug to shoppers buying EVs.

While Tesla’s photo voltaic business has declined lately, the corporate ought to aggressively target this market of present SolarCity/Tesla Power clients and people who have installed solar options. These clients perceive the benefits of going inexperienced both to society and their personal pocket guide, so will take little convincing to buy an EV.

Tesla Solar panels and Powerwall

Tesla Photo voltaic panels and Powerwall | Screenshot from Tesla.com by Loren McDonald

Website Resource Middle: In business-to-business (B2B) and high-consideration product/service markets, building out content-based web site useful resource facilities is a really successful technique of driving visitors from serps and changing website guests to e-mail subscribers where you possibly can proceed to teach and nurture prospects into clients.

Tesla presently has very little of this kind of content on its web site, and what content material it does have is usually embedded inside the buying or consideration part slightly than consciousness and discovery. Slightly than having shoppers end up on competitor or basic EV and automotive sites for solutions around EVs, because the market leader, Tesla should personal this matter space and use the inbound visitors to grow its e mail database and nurture these prospects into clients. (Editor’s observe: I oppose this concept on private, egocentric grounds — I feel those individuals ought to be funneled to CleanTechnica, not Tesla.com. 😉 )

Webinars, Podcasts, and Movies: There are dozens of YouTube channels and podcasts devoted to Tesla or Tesla and EVs generally. Tesla should contemplate creating its personal webinar and video collection. These webinars might educate each current and prospective clients on subjects resembling charging greatest practices, find out how to use navigation to optimize for minimal charging time on journeys, residence charging installation ideas, interviews with hosts and users of vacation spot charging places, manufacturing unit excursions, proprietor interviews, Tesla government interviews, function explorations, and more.

They might additionally clarify easy methods to reap the benefits of state and utility incentives, and will function interviews with utility and power executives to dispel myths concerning the grid. This collection might discover points round mining and minerals or the benefits of marrying photo voltaic, storage, and EVs. While the business is already doing a lot of the above, the web visitors isn’t driving individuals directly to the Tesla web site or gallery places — which is a large missed alternative.

Product Features: While features comparable to Ludicrous Mode, Autopilot, the automobiles’ longer vary and effectivity, general efficiency, and different features will not be actual advertising activities, they are continuously talked about on social media and written up in the press. In different words, Tesla’s product features are its greatest advertising tactic.

It is clear that Elon Musk and Tesla executives are keenly conscious of this. Enjoyable options corresponding to the vacation lights and doors function on the Mannequin X, Santa and sleigh on the Autopilot display, and recent video games featured on the middle display hold Tesla in the news and, most importantly, talked about and shared on social media.

But there are a selection of extra critical and revolutionary product-centric areas Tesla is specializing in and will add, together with:

  • Launch the primary 400-mile vary BEV, which will probably be a big business milestone (anticipated by the top of 2019).
  • Broad rollout of V3 of Superchargers, which supply the quickest real-world charging speeds.
  • Charging partnerships with retailers and motels in addition to food service operators.
  • Tesla app options akin to the power to order meals and have it delivered to your automotive while being charged. A toilet finder. A sensible function that sends you a push notification or SMS message alerting you that you simply didn’t plug in your Tesla.
  • An AI-based navigation function that more accurately predicts essential range needed to succeed in your destination, but in addition predicts when, where, and how lengthy different drivers will charge and that routes you to the optimum Supercharger to keep away from wait occasions and/or maximize charging speeds.
  • Improved voice interplay and integration with sensible speakers resembling Amazon Alexa and Google House.

The options and efficiency of Tesla models mixed with the charging advantages of the Supercharger and Destination Charger networks stay the company’s handiest forms of advertising. Tesla needs to not simply continue, but step up its innovation and market-leading options to ensure most awareness and demand era. Overlook fart apps, concentrate on actual innovation.

Past the above advertising and customer experience actions, Tesla needs to step up its recreation within the following areas:

  • Rebuilding trust with clients and staff.
  • Enhancing quality and customer service.
  • Making buyer retention a prime priority.

There are numerous issues Tesla can do to extend awareness of electric automobiles and drive demand for its personal automobiles, however mass advertising shouldn’t be certainly one of them — at the very least till EVs turn into mainstream.

Tags: promoting, Tesla, Tesla advertising, tesla superchargers, Tesla Supercharging


Concerning the Writer

Loren McDonald writes concerning the elements driving adoption of electrical automobiles and the alternatives and challenges the transition to EVs presents corporations and entrepreneurs within the auto, utility, power, retail and different industries. His analysis and content material are revealed on CleanTechnica, his personal blog/website, www.EVAdoption.com, and in his upcoming ebook “Gas Station Zero” concerning the big shifts and modifications in multiple industries driven by the transition to battery electric, autonomous and shared automobiles.