Tesla (TSLA) 2020 Stockholders Meeting: Paid Ads Vs Informational Campaigns

by Ma. Claribelle Deveza May 29, 2020

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 Featured Image Credit: @lourencovc/Tesla Motors Instagram

Tesla (NASDAQ: TSLA) stockholders will vote on whether or not the EV automaker should use paid advertising at the 2020 Annual Meeting of Stockholders on Tuesday, July 7. TSLA CEO Elon Musk has been against paid ads for quite some time now. The vote in July will reveal whether or not stakeholders still agree with Musk. 

According to Tesla's letter to shareholders, one of the items on the agenda refers to paid advertising, which the TSLA Board recommends shareholders vote against. Elon Musk has been vocal about his stance on paid advertisements for Tesla, and it has been a resounding "NO" from the TSLA CEO. Musk has said in the past that Tesla will not advertise or pay for endorsements and that the company's money would be better utilized creating a great product. 

For Elon Musk and the majority of people in the Tesla community--which includes shareholders--paid ads are associated with "trickery" and don't actually portray the quality or value of products. Musk believes that products--at least in Tesla's case---should live and die on its own merits

So far, TSLA has survived without paid ads or endorsements. It has actually thrived on word-of-mouth advertising, largely thanks to its supportive community. Celebrities, social media influencers, and many more prestigious people have already helped Tesla's brand grow without being paid for endorsements. The Tesla community have had fun making their own ads for the company's vehicles, too. 

Barron's recently noted that SpaceX, Elon Musk's private company, boosted Tesla's brand a few days ago during the Crew Dragon Launch, even if NASA postponed the event due to weather. Astronauts Bob Behnken and Doug Hurley rode in a Tesla Model X to get to the launch pad. 

Elon Musk alone has contributed greatly to the growth of Tesla's brand. His active presence on Twitter and self-proclaimed title as a bonafide Meme Lord have undoubtedly helped Tesla's brand spread as well.

However, the vote for or against paid ads in July's Stockholder's meeting indicates that there are still some people who want TSLA to utilize the resource in a positive way. At the 2019 Shareholders Meeting, one stockholder pointed out that paid ads could be used to dispel or combat all the inaccurate information about Tesla vehicles spread by mainstream media. 

Elon Musk argued against paid ads at the time from a financial perspective. He pointed out that Tesla was selling more cars than it could make--during that time. Advertising would increase demand which the company could not to meet--at the time--making "things worse financially," he explained. "It's not a thing that's necessary right now," Musk said.

He added that Tesla could use paid ads like informational campaigns to refute the often false narratives spread by mainstream media. However, Musk warned that paid ads--even those formatted as informational campaigns--could be tricky as well. He argued that people might get a different message from the one the automaker intended from Tesla's informational campaigns.

As Tesla continues to grow, demand has increased, even without ads. However, false or inaccurate narratives have not waned in either intensity or quantity. As Tesla China and TSLA Berlin start their journey, negative narratives continue to spread even further outside the United States. So the vote for or against paid ads may actually answer the question: Will Tesla take control of its narrative?




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