Don’t tell me Tesla doesn’t pay to advertise...

Don’t tell me Tesla doesn’t pay to advertise...

Of course I’m talking about a free Tesla Roadster for 50 referrals. There are several you tubers out there now reporting they have qualified. Some even saying they’ve reached a status where tesla covers the income tax or even a 2nd roadster. Seems like a pretty rich referral program. Not sure it is wise use of marketing funds but what are your thoughts? Many of these youtubers only get 1000 clicks or so, and likely mostly from people who already own, or have already made the decision to buy a tesla. So I don’t believe these tubers are convincing a lot of these guys to buy the car, but simply entertaining them while they wait to be in a position of buying the car. So I’d guess out of 50 referrals, maybe 5 are truly incremental. Is it worth giving away a high end roadster for what amounts to maybe $50k worth of incremental profit? True I’m pulling a lot of numbers out of my arse but would be interested in other opinions.

jordanrichard | 10/11/2018

When it is said that Tesla doesn’t advertise, they mean no TV, magazine, newspaper ads, product placement in movies/TV.

It is truly word of mouth/video search engine (You Tube)

spuzzz123 | 10/11/2018

Yes but it is still technically a funded marketing program. But this is not really about the semantics ...I’m curious what folks think about the return on marketing dollar of the referral program versus traditional marketing expenditures.

NKYTA | 10/11/2018

One test drive is all you need. Now that’s what I call “marketing”!

jordanrichard | 10/11/2018

It is not semantics. No one ever said Tesla didn’t have a marketing team, just that they don’t advertise in the traditional way.

I got a $600 Radio Flyer toy car for referring someone. Of course $600 is retail and I am sure Tesla didn’t reimburse Radio Flyer the full retail price.

I once read that when looking at what Jaguar spends on advertising to the number of cars they actually sell, it works out to about $6,000 per a car’s price/cost is for advertising.

wluk | 10/11/2018

Those youtubers deserve those rewards. They give us so much more info about the cars than traditional ads.
Also most people would not bad mouth their Teslas because they want their referrals from their friends and family.

SO | 10/11/2018

55 referrals does seem low for a Roadster.

Frank99 | 10/11/2018

($250,000 selling price - 25% margin) / 50 = each referral must be worth about $3750 to Tesla. Of course, there are going to be a lot of people who work on referrals, but don't make it to 50 who are essentially working for free. I'll guess that cuts the cost of each referral by 2/3 - so it'll cost Tesla a bit over $1000 per referral for those who get to Roadster.

Not as expensive as it seems.

SO | 10/11/2018

@Frank99 - good analysis.

I was thinking in terms of Tesla referral being worth about 2k. (Older article.)

“Musk explained that every time a new customer buys a Model S through Tesla’s network of direct-sale stores, the electric carmaker spends around $2000 on the sale, hence the one-grand bonus to each referrer and new customer. The program runs through October 31st of this year.”

El Mirio | 11/11/2018

"...I’m curious what folks think about the return on marketing dollar of the referral program versus traditional marketing expenditures."

Tesla marketing cost with referrals occur after a car is sold, so that is a plus from a cashflow perspective, also it's spend internally(!) which allows Tesla to use it strategically.

The free roadster will generate more free advertisement per unit then its cost, meaning it generates awareness prior the marketing dollar is spend and likely will have a long lasting after glow building und boosting the brand.

Still many folks don't know much about Tesla, free roadsters will certainly help to become a house hold name, that investment is hard to measure on a per unit basis.

SO | 11/11/2018

I am certainly looking forward to the Roadster being in races.

tew ms us | 11/11/2018

@SO What will the crew do in a Tesla pit stop?

jamesguan117 | 11/11/2018

Whatever it is, I like that fact that it’s not in the form of an ad but it is something that will benefit me.

jamesguan117 | 11/11/2018

Whatever it is, I like that fact that it’s not in the form of an ad but it is something that will benefit me.

ReD eXiLe ms us | 11/11/2018

Frank99: 50 cars, average selling price of $90,000, with 20% profit margin... Comes to $900,000. A sports car with a $250,000 sale price and 20% margin costs Tesla $200,000 to build. So Tesla still has $700,000 from the sale of those 50 cars. Thus, the referral 'cost' amounts to maybe... ~22.222%...? OK. I think that is a sufficient return.

h2ev | 11/11/2018

While waiting for my Model 3 since August this year, I've probably watched the majority of Model 3 related videos posted lol. Many provide genuinely useful information, while others are obviously working with Tesla, like this one lady who had her smashed Model 3 (relatively minor front end) repaired within a day as well as having assigned VIN 100000 for her family member. Right.. Some are more transparent about asking their viewers to use their referral codes (though never usually more than saying that it helps the channel), others not so much. I imagine many who used their referral codes are not informed of the awesome rewards (a free Roadster, or TWO?!) they get.

Not sure what my point is here, but I guess I feel it's a waste of marketing dollars. Dollars probably better spent on putting up more superchargers or expanding some of the Tesla centers. All it took was one spam email from Tesla to get me sold. Think that email came in mid-July, letting me know Model 3 orders were opened to all and that test drive was available. Went for my test drive 2 weeks later and I placed my order on the spot.

ReD eXiLe ms us | 11/11/2018

50 cars at $90,000 average sale price comes to $4,500,000 in revenue for which Tesla is getting around 25% profit margin, that's $1,125,000. With the interim prizes being a set of wheels, a toy car, a PowerWall, entrance/invite to unnamed events at their own expense for travel & lodging... along with a handful of other perks, and eventually a car or two as appreciation? Keep in mind that to qualify they have to first BUY a Tesla just to get the Referral Code to begin with? No. Not a 'waste of marketing funds' at all.

The folks on 'LIKE TESLA' are well known as avid promoters of Tesla. Naturally, when they had damaged their new Model 3 right about the same time Tesla opened their own collision repair center in the Atlanta area, they chose to take care of their issue IMMEDIATELY. Wouldn't you? I certainly would have. It's a good idea to satisfy your already satisfied customers in a manner that WOWS them. It helps if they happen to operate a very popular YouTube channel. hat strategy is full of WIN from my perspective. I don't understand your motivaton to put it in the LOSE column. The Referral program would have been a resounding success if only six, seven, or eight cars were sold per existing owner. For any of them at all, let alone several, as being documented as reaching 50 or more BUYING customers is truly outstanding and absolutely profitable.

Remember, the $49,000 Model 3 outsold EVERY VEHICLE offered by the entire Cadillac Division during Q3 2018. I bet you have seen numerous Cadillac commercials and advertisements during that time frame and since. The Model 3 has also outsold every passenger car offered by General Motors, including Chevrolet and Buick brands head-to-head in recent months. All without traditional paid advertising in print, on radio, or through television. So, who is 'wasting marketing dollars' again?

h2ev | 11/11/2018

It that repaired within 24 hours video, it was clearly stated that no special treatment from Tesla was given. As you pointed out, special treatment was clearly given. Another gentleman was rear ended which *looked* minor in the video waited 3 months for his car to be repaired. I believe he's from Canada but the collision and the repair happened in the US, and it was a Tesla certified shop.

It's one thing when they're giving out chargers and such, but when the prize is a $200k sports car, I will have to take any info given by any promoter with a huge grain of salt. It's already hard enough to sort out what to believe out there. When they're throwing in prizes worth $200k, you just can't trust the information provided.

h2ev | 11/11/2018

Also, not sure why the hostile tone in questioning my “motivation”. Motivation? I’m movitated to find useful and truthful information.

Sure Tesla has given motivation to many in promoting their cars, and not just YouTubers but all websites. All posts their referral codes but none was transparent about each referral works toward the grand prize of a free Tesla Roadster.

I have never bought any products based on a tv commercial, so yeah tv commercial dollars are wasteful.

What is useful for Tesla is to expand some of their existing centers or build additional. Both Tesla centers around me are tiny and have nearly no room for storing their cars, so I understand why they’re so aggressive in scheduling these deliveries - they want the cars picked up as soon as they roll of the trucks since they have no room to store them. I’m rescheduled again from this past Friday. I lost count but probably my 6th reschedule.

spuzzz123 | 11/11/2018

Red I hadn’t thought of the work that people do who never actually reach 50 so that’s a good point. But you may be assuming most or all referrals are people who were truly convinced by the YouTuber. My contention is that these folks were already largely convinced to buy one. But were so grateful to be entertained and/or educated that they used their referral code.

talels | 14/11/2018

Watching some YouTube videos influenced my decision to buy a Tesla quite a lot..

Pepperidge | 14/11/2018

I thought Elon paid $20M for the advertisement on the Tweet. :P

ReD eXiLe ms us | 15/11/2018

h2ev: Concerning your 'huge grain of salt'... In your studies thus far, has your scrutinous eye found any actual evidence of outright lies, fabrication, or misinformation from those 'sources'? Skepticism has its place. Sure. They have the opportunity to mislead potential buyers. Have they actually taken advantage of others as a result? Maybe I'm just a sucker. But each of those 'promoters' seems to be genuinely, sincerely, completely surprised to have received so much support from online viewers and then received a prize/gift/'kickback' from Tesla as a result. Why are you so certain they are anything else than what they appear? Is it your position that it is impossible for people to enjoy the sales, service, or driving experience from any vehicle to that extent? Why? Has your own experience with cars in general or Tesla products in particular been so poor in comparison?

It seems very much that you are seeking a means to cast doubt on the viability of the Tesla Referral Program. It seems that you are looking for others to cosign your theorem that people who might eventually benefit in some way by sharing their enthusiasm for Tesla products via online social media are inherently untrustworthy.

As for 'transparency' -- every time there is a change to the Referral Program it is updated here on Tesla's website and there are numerous posts here in the forum from both happy and unhappy participants. No one decieves anyone on this. Early on, the Referral program seemed to have maximum limits per quarter. Then it became apparent that Tesla was keeping a running tally for ALL the completed Referrals for every owner. Then the Tesla App updated to let people know there were Secret Tiers that could be unlocked. So then people learned there were secret prizes that could be attained in time as more Referrals were made.

This has been public knowledge for MONTHS. There is no need whatsoever for those offering Referrals to annotate on a regular basis how 'close' they are to a new level, goal, or prize. What is your problem?

12Brent | 15/11/2018

Tesla doesn't pay to advertise. Now what?