Compared to more established car makers, the Tesla Inc (NASDAQ:TSLA) ad and marketing budget is extremely conservative. Mercedes-Benz spends over $12 billion annually on advertising costs. A review by Statistica points out that Toyota, in 2015, spent nearly $2 billion on marketing in the U.S. TSLA directs only a fraction of those figures to the same cause. Despite holding back on its ad budget, the popularity of its battery-powered, luxury vehicles only grows. Meanwhile, Tesla Inc shares have been on the decline. They began Wednesday’s trading session in the green, after closing 4 percent lower the previous day.
Tesla Inc shares stay on the retreat this week, a trait that is common among leading tech stocks. The makers of the Model S plowed their through several price records during 2017’s second quarter. The event sparked hoards of bullish traders, although June’s closing sees stocks losing momentum.
While Tesla Inc shares take a breather, brand popularity continues to soar. The carmaker doesn’t come close to an annual billion dollars with its marketing. In 2016, it spent just $48 million on marketing and ads. That amount was lower that the previous two years, in fact. However, efforts to tighten it belt have not resulted in less influence.
Tesla Inc has harnessed “one of the strongest brands in the global auto business,” the Financial Times wrote this week. Funds at the firm are clearly tighter now, but the auto brand looks to be thriving. The company even outdoes competitors when it comes to brand influence.
An analyst, Kantar Millward Brown, reckons that TSLA now exceeds the likes Porsche and Land Rover in brand value. Wall Street is yet to ease off the company’s poor financial performance. However, that takes a backseat in light of attractive Tesla Inc shares and high publicity thrown at its sports-luxury EVs.
Elon Musk’s auto business is yet to make its way into the top 100 brands worldwide. It does, though, make the leading 8 car brands in terms of value. Those are from two separate industry researches. In one ranking, Tesla comes just behind Germany luxury auto legend, Audi.
Tesla says that it manages to find other ways to rake in brand awareness. It claims that “media coverage and word of mouth” remain its biggest sales driver. It’s a good strategy too, and one that works very well for car sales. Gathering a great deal of media coverage works wonders, Tesla Inc admits. At its last quarter earnings call, the firm claimed it will keep at this strategy in light of excellent results.
Media drives Tesla sales
Promotional tactics involving the media allow TSLA to alleviate its costs of marketing. Evidently, innovative cars work well with innovative campaigns. News announcements and online coverage seem to fill that gap, bringing in results previously assigned to traditional advertising.
What’s Tesla (NASDAQ:TSLA) driving force? Well, the rise of electric and autonomous car market keeps Tesla newsworthy. The company is the best recognized, electric auto brand by a long shot. Couple this with a growing awareness of car emissions, Tesla’s stance against fossil fuels, and the stylish yet sporty nature of its luxury EVs. All this pulls in attention in the form of the very article you’re reading right now.
Companies can pay less for awareness when everyone is pushing is their brands, says Frazer Gibney. He’s the chief exec at FCB Inferno and believes the likes of Tesla have good public support to boost success.
Indeed, the company has all the right ingredients, according to Brown. “Brands with a strong purpose, a perception that you are making people’s lives better, have a huge advantage,” he said. Like Tesla Inc shares, the company’s cars are driven by a booming EV following and futurism.
Publicity is only growing while the carmaker readies to build its Model 3. The mass market car will go for $35,000 as standard. The chance to join the brand at a discount proved so alluring that the Model 3 scored over 100,000 paid reservations before it was even revealed.
Tesla Inc stock and Fed’s valuation concerns (TSLA)
The U.S. Federal Reserve is on a bubble watch. It fears that asset valuation is on the rise, especially in the markets of equity. Asset prices and debts are skyrocketing again, reports VC Fischer. The reserve believes this calls for more caution, which now spooks investors in many markets.
Tesla Inc shares are not immune to the Fed’s current concerns. They, too, have withdrawn in the wake the news, although analysts cite other elements as well. A TSLA (NASDAQ:TSLA) dip has long been on the books. Stock have been labeled “overvalued” for some time along with warnings about far-fetched bullishness. Mid-week trading sees Tesla Inc shares still in the red, a break from its powerful performances during the second quarter.