Etsy has a two different types of ads and they charge differently for them both. Both can be profitable, but it’s important to know how Etsy will charge you for these ads.
Learn About Ad Types
Etsy offers two different types of Ads. Etsy ads, formerly known as promoted listings, and off-site ads.
Etsy ads are shown to buyers who come onto Etsy or the Etsy app and do a search. They show up in a row of search results and say “Ad by (Shop Name)” as shown below. Etsy ads are optional for your business.
Offsite Ads are ads that Etsy runs for you off of Etsy in places like Pinterest, Instagram, Facebook, and Google. Offsite ads are optional as long as you have made less than $10,000 on Etsy in the last 12 months. When your revenue increases above that, you are required to participate in the offsite ads program.
Understand The Cost Of Each Type
Etsy ads are charged on a CPC (Cost Per Click) bid system. That means you pay for your ad every time a buyer completes a search and clicks on your advertised listing. Unfortunately, on Etsy you are not able to set a max bid for each click. That means you set a daily budget and Etsy will decide what keywords to bid on and how much you will spend per click.
The amount per click will vary with a lot of factors influencing it. If you have a lot of competition bidding for similar keywords that you’re using in your listing or if your listing has a lot of generic keywords that have a lot of competition, your CPC will be higher. That doesn’t mean your ads can’t be profitable, but it might be a factor in your strategy.
Offsite ads are quite a bit different in how they’re charged for. You are unable to set bids or a budget for these ads. But the good news is that you are only charged when you make a sale. If you have made less than $10,000 in the last 12 months and are not required to participate in this ad type, you are charged 15% of each sale you make through the ads. If you are required to participate, you are charged 12%.
Choose An Ad Type That Works For You
You can use one or both of these ad types. Here’s what I recommend. If your shop is newer or not making consistent sales on Etsy yet, I recommend using offsite ads because you only get charged when you make a sale. If your shop is making regularly sales and converting visits to sales at a normal or better than normal conversion rate, then Etsy ads are a great option that you can scale to much higher revenue levels.
Set A Budget And Stick To It
If you’ve decided to run Etsy ads, you’ll want to pick a budget. What I recommend is picking a budget that you are willing to lose daily for $30 days. The ads algorithm can take some time to optimize and you don’t want to change it for the first 30 days to make sure you give the algorithm enough time to work. So pick a budget then leave it alone for 30 days.
Monitor Your Results
When you come back after 30 days, you’ll want to assess your Etsy ads results. Particularly your ROAS (Return On Ad Spend). If your ROAS is 10, that means for every dollar you spend, you made 10. Decide what your goal is and adjust your ads accordingly.
Ready to learn more about Etsy ads? You’re ready for the Seller Collective, my signature Etsy membership that teaches you how to get more sales on Etsy, with or without Etsy ads. Learn more about it in my free masterclass here.