Tesla’s bold approach to advertising: Don’t do it

To Lexus or Mercedes, marketing cars means blanketing the airwaves with ads as polished as any Hollywood production.

To Tesla Motors, it means launching a kids’ version of the electric Model S and retweeting customers’ home videos.

Even as it begins to outsell some of its more established competitors, Tesla remains stubbornly committed to unconventional marketing. The Palo Alto company doesn’t advertise. It studiously avoids the kind of carpet-bombing marketing campaigns long favored by auto companies, which rely on a barrage of radio, print and television ads.

Instead, Tesla favors the offbeat and buzz-worthy.

This week, Tesla unveiled a child-size, $499 Model S built by Radio Flyer, a company best known for little red wagons. Video of the kiddie-car in action bounced around the Internet.

Tesla also unveiled the latest version of its customer referral program, offering the chance to win a tour of CEO Elon Musk’s private spacecraft company, SpaceX. And to tie into Fashion Week in New York, Tesla tweeted a three-minute video of Neiman Marcus’ fashion director, Ken Downing, interviewing designer Wes Gordon in the back seat of the company’s new Model X SUV while winding through the streets of lower Manhattan.

Some of Tesla’s marketing moves, the referral program included, rely on the enthusiasm of the company’s customers, many of whom preach the Tesla story with missionary fervor. The press can be counted on to cover even the company’s most minor news.

“If you think of what you’re trying to do with advertising, you’re trying to tell people about your product, about new features, new offerings,” said Wesley Hartmann, professor of marketing at Stanford University. “They’re letting other people do that for them. So what would the point be to spend money on traditional advertising?”

All of Tesla’s tactics play on the public’s curiosity about the upstart company, whose unlikely success building luxury electric cars in America fascinates even people who can’t afford the $70,000 base price. The celebrity aura surrounding Musk certainly doesn’t hurt. And the avoidance of traditional ads helps build Tesla’s image as something different, something special.

“There’s an anticipation of what Tesla is going to be,” Hartmann said. “So people are going to read news that may not be applicable to them because they want to see what’s going to happen next.”

It appears to work. Tesla boasts that its Model S sedan last year outsold comparable, gasoline-powered rivals from Audi, BMW, Jaguar, Lexus, Mercedes-Benz and Porsche.

Tesla has not released full financial details for 2015. But in 2014, the company spent $48.9 million on marketing. General Motors spent $5.2 billion.

Of course, GM is a global automaker that sold 9.8 million vehicles last year. Tesla, whose Model S production began less than four years ago, delivered 50,580 cars in 2015.

Musk recently suggested that the company’s aversion to advertising may change when Tesla introduces the $35,000 Model 3, the company’s first car for middle-class buyers. Production is expected to begin in late 2017.

Tesla’s aspirations to penetrate the mass market rest on the Model 3. After years of targeting wealthy early adopters, Tesla may need a different approach.

“As they get into making millions of cars, they will have to start trying to reach a broader audience, whether that means television commercials or some other media,” said said Ben Kallo, a senior analyst with Robert W. Baird & Co.

Until now, he said, the company’s marketing strategy has been both cheap and effective. The company has built a powerful brand identity that merges Musk’s star power with the allure of the cars.

“The reason the brand has become so valuable is because you’ve got people willing to sell cars to their friends to tour SpaceX,” Kallo said. “That’s on the back of Elon. But it’s also about the quality of the Model S.”

If Tesla ever embraces traditional marketing strategies, what would a Tesla ad look like? In a recent conference call with Wall Street analysts, Musk suggested that it would need to be different from standard auto-industry fare.

“In the long term, I think I could see us doing advertising where that advertising is entertaining and where people don’t regret seeing it, which unfortunately is not the case with most advertising,” he said. “We need to have a more affordable, high-volume car before that makes sense.”

David R. Baker is a San Francisco Chronicle staff writer. E-mail: dbaker@sfchronicle.com Twitter: @DavidBakerSF