Are Etsy Ads Worth the Effort?

2020 Update:

Among the joys of 2020, Etsy had to go and mess with their ad system. Again. Not only did onsite ads change, but offsite ads were introduced (more on that later).

So what the heck happened to good old on-site ads? And where did my sales from ads go?!

Under the old system you got to set your daily budget AND your cost per click. Etsy would recommend your cost per click depending on how competitive your product was (more competitive = higher cost). Now, you could totally ignore their suggestions and price each cost per click higher or lower.

Now my products, phone cases and art prints, exist in a pretty competitive market so my cost per click could be pretty darn high to compete in those general categories. Now, my product designs themselves tended to be a lot more specific: mermaid scales, molecules, etc. To find my items in search organically you would have to look for those specific things, which were MUCH less competitive. Not only were my ideal customers looking for something specific and not just browsing larger categories, but if I targeted my ads at them they would be much more likely to click. Therefore, I could set my cost per click pretty darn low, usually in the realm of 2-10 cents per click.

So, if I set my daily ad budget at just $3, that meant at least 30 ad clicks which generally resulted in a sale every 1-2 days.

Then sh*t hit the fan. Suddenly my ad budget resulted in NO sales even though I hit my daily spend even faster. Lo and behold, Etsy no longer let you set your own cost per click! Since I was almost always setting my CPC lower than the suggested amount, my CPC shot way up once Etsy took over. I’m sure I was also not the only one setting a lower CPC so costs shot up once everything became automated and more competitive overall.

Well that sucked. Previously my ad spending resulted in 4x the revenue which has since dropped to 0.5. That means I spend twice on ads what I actually make off of them. Yikes.

I went and did the math to figure out my average cost per click under the new system, and it was anywhere from 30 to 50 cents. That’s 3-5X more expensive! For one sale from ads I would need to spend about $10, and my average product sells for $20 before all the other fees. On average, that’s only $5 of profit, and that is not even guaranteed under all the new changes. I would MUCH rather spend that kind of advertising money on other kinds of marketing.

So what to do? I wasn’t ready to completely shut off ads, so I decided to experiment.

Please note that this is what I experienced with my products, which exist in pretty competitive categories. Your results may be better or worse, and I highly recommend you experiment with these strategies as well.

1. Only advertise your more expensive or higher profit products.

Now that CPC has shot up for most people, some cheaper products are just not worth the cost of your advertising dollars if they’re not bringing in a decent profit. My digital art prints sell for just over $6, and while they require little effort from me I would likely lose money advertising them, so I turned off ads for them. You can do this in the Etsy Ads page, under the link to “manage advertised listings”. I also went ahead and removed other niche or less popular products from being advertised. If you have a bunch of products all around the same price, I highly recommend just advertising your 10-20 best selling items.

2. Check that SEO!

Do your keywords actually make sense for your product? If you’re noticing a lot of searches and clicks for a certain listing but NEVER getting sales on it, that’s a sign that you’re not accurately describing your product and therefore not getting the right customers. I was totally guilty of this! Marmalead is a great service for analyzing Etsy keywords ($19 per month) that I like to purchase to make sure my keywords are still relevant. You can also simply look at keywords used by people selling similar products, and comparing what works for them.

3. Set your daily budget strategically

Etsy is bad at utilizing your daily advertising budget. I’ve noticed that when I set my budget high right off the bat, say 5-10 dollars a day, Etsy will spend it on more expensive clicks, usually before I’ve finished my morning coffee. I’ve seen as high as $1 per click! (And no, it didn’t result in a sale). Meanwhile, when I start my daily budget at the bare minimum ($1 per day) Etsy is a LOT more conservative with how much I pay per click, and I’ve seen it as low as 3 cents per click!

So what to do with this information? If you want to keep using Etsy ads effectively you have a couple options.

Option 1: this is the set it an forget it option. You’ve fixed your SEO, you’re only advertising your best sellers, and now you want to keep your CPC consistently low. The solution here is to set your budget low, and keep it there. This means leaving your ad budget at 1-2 dollars a day. This ensures your money is spent more conservatively and you can focus your energy on other marketing strategies while not worrying about overspending on ads while still getting a good amount of clicks for your money.

Option 2: this is the advanced step. We now know that you can’t just set a high ad budget and expect success, but perhaps 1-2 dollars isn’t getting you enough sales overall. The strategy here is to trickle in your ad budget throughout the day. By adding to your budget slowly throughout the day you can keep your click cost low while still being able to maximize the benefit of a higher ad budget. My current strategy is to start the day with $1.00 and add a dollar every few hours, usually three times a day. Setting alarms helps with this, since you need to do this manually. It is also crucial to make sure you reset your budget to the $1 minimum every night! Note that the ad budget resets at midnight Eastern Standard Time, so make sure you figure out what that is for you.

4. Make sure you play with these strategies and see what works for you.

No strategy is one size fits all, so test this out with your products and see what works best! These tips should give you enough direction to get started, but at the end of the day you are the expert in how you run your business. By employing the steps above, and specifically using a trickle budget, I now get 3x the profit from what I spend in ads which is a HUGE improvement.