Max Burt
Earlier this week at Tesla’s annual meeting, Elon Musk casually made a major about-face on a principle the brand had been lauded for by its many fans over the years. Tesla, he said, will “try a little advertising”.
Coming from a man who as recently as last year was celebrating the fact that Tesla had never advertised, you could be shocked by the subtle admission to what looks like a major change of heart.
But this development shouldn’t be surprising. It was inevitable.
Electric vehicle manufacturing is now a rapidly maturing category – something for which Musk and Tesla deserve a significant amount of credit. And in mature categories where giant brands compete tooth and nail to eke out market share for their ultimately very similar products, advertising is one of the key arenas for competition.
The legendary advertising figure Bill Bernbach famously said: “It may well be that creativity is the last unfair advantage we’re legally allowed to take over our competitors.”
Investors love a moat – the ability to maintain competitive advantages, protecting profits and market share from competitors. And for a long time Tesla, as a cashed-up first-mover, enjoyed such a moat.
As Musk tweeted last year, he built a company with a “$1 (trillion) valuation with $0 advertising spend”. A remarkable feat. But there’s one element of this success story that gets glossed over in the telling. Throughout the company’s remarkable run, Tesla and Musk enjoyed enormous amounts of attention. The best kind of attention: attention freely given – or in other words, great PR.
Earlier this year I had lunch with Bob Hoffman, an internationally recognised advertising expert and author (and a huge champion of impactful advertising), when he made a brief visit to NZ. He made some telling remarks.
Paraphrasing here, he said: ultimately in business you want fame. The best way to get fame is to have a great product that everybody wants to talk about. The next best way is to have good PR – a great story or leader of the business that everybody wants to pay attention to. Barring that, you’ve got to advertise.
Tesla is in some ways a victim of its own success. Through force of will, it has manifested a highly competitive category and accelerated all the world’s carmakers pouring huge investment into research and development of amazing electric vehicles. There are now multiple brands with electric vehicles every bit as exciting as Tesla’s. At the same time, Musk has become somewhat less of an unequivocally revered figure, and consequently less of a positive PR asset to the business.
As this new reality has dawned on investors over the past year, a certain bird-app has diverted attention, and challenging operating conditions have taken their toll, Tesla stock has bounced around at less than half its 2021 all time high.
About his tried and tested method of making product announcements via Twitter, Musk said it’s “preaching to the converted and not reaching people that are not already convinced.”
So what do you do when you’re no longer earning attention from the audiences you need? You pay for their attention.
