Depending on which Etsy “guru” you listen to, Etsy Ads are either the greatest thing since sliced bread or they should be avoided at all costs.
Although I believe that virtually every shop on Etsy SHOULD be running at least a few bucks a day in ads, to get to answer this question for your specific situation, we need to take a little bit of deeper dive.
To that end, let’s get a quick understanding of the different types of Etsy ads and how they work, and then take a look at the actual numbers to see if we should be running Etsy Ads or not.
- How Do Etsy Ads Work?
- How Much Does An Etsy Ad Cost?
- Are Etsy Ads Worth It? Our Experience So Far.
- Quick Recap
How Do Etsy Ads Work?
Before we can figure out whether or not Etsy Ads are worth it, we need to understand how ads within the Etsy ecosystem work.
What Kinds Of Ads Does Etsy Offer?
Etsy offers two different kinds of ads, both of which show up in different places, are charged differently, and have different costs associated with them.
The first and most common type of Etsy ads that are being talked about is the onsite ads that Etsy allows sellers to purchase to have their listings displayed more prominently inside of Etsy search results.
The second type of Etsy ad is off-site ads.
These ads are not run by sellers, but rather by Etsy's advertising team, and as the name implies, they are designed to drive traffic to Etsy from external websites.
Some of the most common places where you will see these marketing teams buying off-site advertising include:
- Google Display Network
- Google Search Results
- Etsy Publishing Partner sites
Now that we understand the two different types of advertisements within Etsy, let's take a look at how and when you get charged for each.
How Do You Get Charged For Etsy Ads?
Similar to how the different ad types show up in different places, Etsy charges for each of these ad types in a very different way.
The way that Etsy charges for the onsite ads (otherwise known as Etsy PPC) is by using a pay-per-click model.
If you're not familiar with the terminology, a paper click model means that an advertiser (in this case, the owner of the Etsy shop placing the ads) is charged whenever someone clicks on the ads.
They are never charged if the ad is shown and not clicked on or if the ad is not shown.
This advertising model is one of the most common across the internet and it is extremely beneficial to the person placing the ad (you, the shop owner) because you are only charged when someone has the chance to buy your product.
Unlike the pay-per-click model that Etsy uses for its on-site ads, Etsy off-site ads are charged on a percentage of sale model.
The exact amount you will be charged by Etsy if their offsite marketing campaign leads to a sale in your shop depends on the amount of sales revenue you generated on Etsy in the last year, but it ranges from 12% to 15%.
For any Etsy shops that have made less than $10,000 in the last year, you are charged a 15% fee based on the amount of money collected from the order.
If your shop earned more than $10,000 in the last year, you receive a slight discount on your fee of 12%.
Now, although these fees may seem high, it's important to keep in mind that rather than you having to master all of these different advertising platforms, BEtsy's expert team of marketers does this for you.
Additionally, these fees are only assessed on orders that are direct results of Etsy's marketing efforts.
Now I'm sure at this point you're wondering “Chris…how do we know when a sale might be attributed to Etsy's off-site ads?”.
The way that Etsy determines whether or not an order should be attributed to offsite ads is very straightforward.
Sales are only attributed to Etsy offsite ads if a buyer clicks on an off-site ad promoting one of your listings and then purchases from your shop within 30 days.
This means, you only pay the offsite ads fee if someone clicks on an ad for one of your products and buys one of your products.
You are never charged for these ads if someone makes a purchase of your product after clicking on an ad for someone else's product.
I don't know about you, but even as someone who runs millions of dollars of ads a year on platforms like Facebook and Google, if I only have to pay when I make a sale, that makes me a very happy camper and it makes my job a heck of a lot easier.
How Much Does An Etsy Ad Cost?
Now that we have a better understanding of how and when Etsy will charge us for each of their different kind of ads, let's take a quick look at their actual cost.
As mentioned above, on-site ads for Etsy or charged on a pay-per-click model.
For most Etsy sellers, you can expect these charges to fall between $0.25 and $0.50 per click, All of this can be slightly higher if your market has lots of expensive products, like jewelry.
Based on our personal experience, our average cost per click in 2022 was 35 cents per click.
Since Etsy's off-site ads are charged on a percentage-of-sale model, rather than a pay-per-click or pay-per-impression model, the exact cost of these ads will vary based on the price of the item you sell.
Thankfully, we put together a very simple-to-use calculator that you can use to calculate the cost of any sale, including sales that Etsy generates using its external advertising team.
How Much Should I Spend On Etsy Ads?
When it comes to setting a budget for Etsy ads, the marketer in me wants to say that the more you can spend the better off you will be, as long as it's still leading to a positive return on investment.
This advice would be useful on most platforms, notice that's not always the case with Etsy.
Although some niches will allow you to spend a lot more, You don't need to get a great return on investment.
If your store is making more than $100,000 a year on Etsy, consider moving that budget to 10 or $15 a day to Get the most from the additional traffic.
Since Etsy's off-site ads are not run or controlled by sellers, you can't set a budget for them.
Can I Turn Off Etsy Ads?
If you've ever wanted to turn off Etsy ads, the answer to whether you can do that or not can be a bit confusing.
If you are running Etsy pay-per-click ads, their on-site ads that show up in the search results, You can turn them off or just the budget at any point in your marketing settings.
When it comes to off-site ads, however, the answer becomes a bit trickier.
If your shop is making less than $10,000 per year, you do have the ability to turn off Etsy off-site ads.
However, if your shop is making more than $10,000 a year, these ads are enabled by default and cannot be turned off.
Although that may not sound fair, it's important to keep in mind that You are only charged for these ads when they directly lead to a sale in your shop.
The Simple 5-Step Process We Used To Generate $64,000 In 12 Months Working Part Time On Etsy.Yes, Send Me The Roadmap!
Are Etsy Ads Worth It? Our Experience So Far.
Now that we have an understanding of how and when you're charged for Etsy advertising, let's dive into the reason you're here.
Are Etsy ads worth it?
Although the true answer to this question is “It depends”, as I say quite often, Etsy ads are almost always worth running, at least as a test to get the data back.
Let's take a look at the actual data we have inside of our Etsy ads account so you can get a better understanding of why I'm such a big supporter of Etsy advertising.
The image above is a screenshot of our actual statistics from our on-site Etsy ads in 2022.
Even just taking a glance at the numbers, we'll show you a few very important pieces of information.
First, we spent just over 1500 which resulted in 7,514.05 in sales spread out over 222 individual orders.
This means, our advertising on Etsy led us to a 4.9 to 1 return on our ad spend.
In normal people English, this means for each dollar that we invested in the Etsy ads platform, Etsy paid us $4.90 in sales.
Now, while this may sound fantastic on paper, I'm sure you are wondering how much profit we actually made.
Although it varies slightly from product to product, our average margin is around 40%.
That means out of our $ 7,514.05 in sales, we made a gross profit of $3,500.62.
If we subtract the total amount we spend on ads from our gross profit, that leaves us with a net profit of $1475.94 + 222 new customers.
|Ad Spend||$ 1,529.68|
|Gross Sales From Ads||$ 7,514.05|
|Average Profit Margin||40%|
|Gross Profit||$ 3,005.62|
|Net Profit||$ 1,475.94|
So not only did Etsy PAY US $1,475.94 and give us 222 new customers (who are likely to buy from us again), but the traffic from these ads converts VERY well.
Generally speaking, a “good” Etsy listing converts between 2-3%, but our ads are converting at 5% (222 Orders / 4,367 Clicks = 5.1%).,
This means, in addition to the 222 upfront orders that we gained, our listings are likely to rise in the Etsy organic search rankings, meaning they will lead to even more sales over time because they are converting very highly and Etsy LOVES when a listing converts better than its competitors.
Now, I know a few people will be thinking….that’s cool for 2022, what about 2023?
So far this year, we are seeing very similar performances.
So far this year, we’ve driven 433 visits from paid ads, resulting in $678.44 in sales from $154.35 in ad spend (resulting in $116.85 in Profit and 20 new customers!).
Obviously, your mileage may vary depending on your products and niche, I hope you at least give these ads a shot!
Like we said above, if your store is making $100k (or less) you can get all of the data you need (and potentially great results like we have) by spending ~$5 per day, so what are you waiting for?
How Long Does It Take For Etsy Ads To Work?
Okay, so now that you know you should be at least testing ads on Etsy. You're probably wondering how long before you start to see results.
Once you get your ads up and running inside the marketing section of your Etsy seller dashboard, you'll start to see at least some results within the first few hours.
Typically, for the first day or two this is only views, meaning someone saw your ad in the search, and potentially a few clicks.
It typically takes a few days or longer for your first order to come in and I would suggest letting the ads run for a minimum of a week before you even look at your results.
How To Know If Etsy Ads Are Working
To get a better understanding of whether your ads are working or not, you'll need to take a look at your ad's analytics.
Inside your ads dashboard, you will see a graph (like the one below) and a bunch of different stats.
If it’s your first time checking your ads, some of the terminologies can be a bit confusing, so let’s take a quick look at what each of the stats means AND how you can use them to get to the numbers that matter.
- Views: How Many Times Your Ad Appeared In Etsy Search Results
- Clicks: How Many Times Someone Clicked On Your Ad and Landed On Your Listings
- Orders: How Many Orders Came From Your Ads
- Revenue: How Much Revenue Was Generated By The Orders From Ads
- Spend: How Much You Spent On Etsy Ads
Obviously, if you’re seeing more revenue than you're spending, you’re headed in the right direction, but it’s important to take this one step further and do a quick profit calculation.
To do this, you’ll need to take the revenue generated from the ads (let’s say $100), multiply that by your profit margin (ours is 40%) and then subtract the amount we spent on ads (let’s say we spent $20)
$100 in Revenue * 40% = $40 Gross Profit
$40 Gross Profit – $20 in Ad Spend = $20 Net Profit
In the case of this example, you can see that after all costs AND our ad spend, we made $20 profit.
Unfortunately, since Etsy doesn’t know your profit margins, you will have to calculate this manually to be sure, but the math is straightforward enough that even I can do it 🙂.
Another metric you may want to take a look at is your conversion rate.
To calculate this, we will need to divide the number of orders by the number of clicks.
If we had 100 clicks that lead to 4 orders, our conversion rate would be 4% (4/100).
Remember, a typical conversion rate on Etsy is between 2-3%, so anything above that is great!
Is It Better To Advertise More Or Fewer Listings On Etsy?
We often get asked how many listings people should select when they first start running their Etsy ads and although the true answer is it depends, the more practical answer is to use as many listings as you have currently.
We're not going to run ads on every Etsy listing forever, but we do once give each listing its own opportunity to prove that it can lead to sales.
Since you don't set individual budgets for different listings, I would suggest putting as many listings as you currently have into the campaign to start with.
Once the ads have been running for at least a week but more realistically 10 to 14 days, you'll start to see listings that you can weed out because they aren't leading to sales.
Each time you do your ads analysis, feel free to remove the underperforming listings and add in any new listings to see how well they perform.
As you can probably tell, whether or not to run Etsy ads can seem like an extremely complicated question.
After all, we do need to consider a bunch of different factors, including our average profit margin, when deciding whether or not they will work in your specific situation.
At the end of the day, the single best piece of advice that I can give you based on our personal experience and the experience of all the sellers that we have helped is that they are worth trying.
Although they might not work in every single situation and for every business, the extremely low investment that you need to make to see a massive return is well worth the risk.
Chris ShafferChris lives at the intersection of business strategy and growth tactics. Having consulted with dozens of different businesses (as well as building several of his own), he brings a unique perspective on what's working across the eCommerce world in businesses of all shapes and sizes.
The Simple 5-Step Process We Used To Generate $64,000 In 12 Months Working Part Time On Etsy.Yes, Send Me The Roadmap!