Tesla gains on rivals in the great brand race 

When Mercedes-Benz came to craft the Super Bowl TV advert for its AMG Roadster supercar, it turned to Hollywood for help. 

The German carmaker drafted in Joel and Ethan Coen, the brothers behind No Country for Old Men and The Big Lebowski, to direct the 30-second spot that showed a gang of hardened bikers left gawking when the $180,000 sports car blocks in their motorcycles before speeding off into the dust.

The advertisement would have cost up to $8m to produce, according to industry estimates, while Mercedes had to spend another $5m just to get one 30-second slot during the Super Bowl, the championship game of the US National Football League season.

The total sum — an estimated $13m — may be mere pennies for a company that spends $12.2bn each year on sales and marketing, yet for Mercedes’ upstart rival Tesla, the figure would represent a quarter of its entire marketing expenditure for 2016.

The company spent $48m in 2016 on marketing and advertising, down from $58.3m in 2015 and $48.9m during 2014.

Yet despite eschewing traditional marketing channels and the billboard and TV spots loved by larger rivals, the 14-year-old Californian electric carmaker has developed one of the strongest brands in the global auto business.

Research from Kantar Millward Brown estimates that Tesla’s brand is now more valuable than more established marques such as Land Rover and Porsche, with the company’s lack of financial performance offset by the deafening publicity over its battery-driven vehicles.

Tesla does not yet make it into the top 100 brands listing but the group is ranked as the eighth most valuable car brand in the world in a separate ranking for the car industry, just behind the profitable premium label Audi.

Toyota, BMW and Mercedes are the top three, with Ford, Honda and Nissan next, the research says.

“Historically, we have been able to generate significant media coverage of our company and our vehicles, and we believe we will continue to do so,” Tesla states in its most recent annual report.

“To date, for vehicle sales, media coverage and word of mouth have been the primary drivers of our sales leads and have helped us achieve sales without traditional advertising and at relatively low marketing costs.”

Peter Walshe, a director at Kantar Millward Brown, says Tesla’s distinguishing feature, that its cars are totally electric, adds to the allure of the brand.

“Brands with a strong brand purpose, a perception that you are making people’s lives better, have a huge advantage,” he says. “Tesla has that.”

Yet very few people have ever been in a Tesla. There are a total of 208,000 Tesla cars on the road today — including both the Model S saloon and the Model X people carrier. That pales in comparison with BMW, Mercedes and Audi, which each sold close to 2m vehicles last year alone.

Yet while the actual experience of the brand is extremely limited, “the perception of brand experience is one of the best that we’ve ever seen,” says Mr Walshe.

The only previous times where brand ratings have soared before actual product launches were Facebook and Apple, he says. The problem for Tesla is that it raises the expectations for the final product once it does arrive. “It’s very difficult if you don’t live up to it,” he says.

Public excitement around the group has swelled in the past year as it prepares to push into the mass market with the Model 3, a car that carries Tesla’s swish styling and an advertised range of more than 200 miles on a single charge for a $35,000 price tag.

Before it had even revealed the car to the public, some 115,000 pre-orders had been placed for the model, boosted by coverage from social and traditional media.

“You don’t have to pay for advertising when everyone is doing it for you,” says Frazer Gibney, chief executive at FCB Inferno, the advertising agency that works for BMW around the world.

When Auto Trader carried out polling on which brand consumers would trust to build a self-driving car, Ford topped the poll, Audi came second and Tesla leapfrogged peers to land third on the podium.

The findings are particularly surprising because a partially self-driving Tesla was involved in a high profile fatal accident last year, leading to the company rolling back the capability of its vehicles. Yet consumers still trust it to build driverless cars above Mercedes, a company that has comparable technology on the road today.

This may be due to the rising influence of social media, where unabashed fans of the brand are able to drown out the more cautious established media. A Capgemini survey of 8,000 consumers in eight countries found that 62 per cent of people would be swayed about a car by comments on social media.

This mindset is seeping into the other carmakers. When BMW, which spent €6bn on marketing in 2016, launched its 5-series executive sedan late last year, it did so on Facebook Live, the social network’s live broadcasting service, Mr Gibney says.

“We wouldn’t have done that a few years ago.”

—————

Top 100 global brands
Explore the 2017 ranking of the world’s most valuable brands

—————