Etsy Ads? How to use Etsy Ads to build your Etsy business
Written by Cody McGuffie on April 20, 2021
ETSY ADS.. HOW DO THEY WORK? SHOULD I USE THEM? HOW MUCH SHOULD I BE SPENDING PER DAY?
Sound familiar?
I know, it can be a bit overwhelming.
After reading this post, you’ll understand how top Etsy sellers use Etsy ads to grow their Etsy business into strong, profitable, money-making empires.
Let’s make sure we’re on the same page: when I say “Etsy ads,” I’m only talking about “search ads” currently.. (not Etsy “offsite ads” – that’s a topic for another day)..
How do Etsy Ads work?
Per Etsy, you can use Etsy ads to advertise your products in Etsy search results and other pages on Etsy.
Set your budget and choose which listings to advertise, and they’ll do the rest.
Etsy ads optimizes your budget to advertise your listings in the places on Etsy where they perform best.
What does this mean?
It means you’re handing control over to Etsy when you set a daily budget…
It means that you’re trusting that they spend your money efficiently and effectively..
… It means that they’re putting your listing in front of the right shopper at the right time, based on what they search..
… Basically Etsy’s algorithm knows more about their shoppers than you.
Recognize the below? This is a screen shot I just took when I searched “Mom Shirt.”
About EverBee
EverBee grows your Etsy business using data analytics, and is used by Etsy sellers of all sizes including Top 1% sellers.
About the Author
Cody McGuffie
Top 1% Etsy seller that’s been in the ecommerce industry for over 5 years.
Has done over $330,000 in revenue on Etsy alone.
Successfully owned and operated 2 online companies selling on platforms such as:
Etsy, Amazon FBA, Walmart.com, and Shopify.
Founder of EverBee.io
Notice the “AD” next to the shop name?
So if you’re selling a “Mom Shirt,” but aren’t ranked on the first page already, there is a HUGE advantage to running this ad and showing up for such a relevant keyword.
So, in my opinion, YES, you should absolutely be spending money on Etsy Ads…
…unless you don’t like sales… then don’t use Etsy Ads.
How much should you spend on Etsy ads per day?
Okay, ready to up your budget and spend all your money on ads?
…not so fast.
Just because you increase your budget, doesn’t mean you’ll start raking in the sales… Or the profits.
Be smart here.
Here’s what most of our TOP 1% customers do… including myself.
Set the budget as high as possible, AS LONG AS you’re PROFITABLE.
In other words, make sure your CAC (customer acquisition cost) is less than your gross profit margin.
You probably already understand the basics of profit margins, but here’s a simple example.
I’m selling a “mom shirt”…
I charge my customer a price of: $45
Minus:
My total costs (COGS): $20
Shipping Cost: $5
Etsy commission: $2.25 (5%)
Etsy Listing Fee: $0.20
= Profit: $17.55
Or 39% profit margin…
That means, I don’t want to spend more than $17.55 on ads per sale..
If I spend less than $17.55 on a sale in advertising, it’s profit.
An easier way I quickly look at this is by doing the following:
Go to your Etsy Ads Stats: Seller Dashboard > Marketing > Etsy Ads…
Then look at the last “30 days” stats.
Then I sort by highest revenue first.
See below.
As you can see, the top listing is performing pretty well in Etsy Ads.
Using the same shirt example as above, the second ad is getting close to being shut off.
Since my profit margin is about 39% on this product, I’m actually losing money on this ad listing.
I’d shut this ad off, personally.
Here’s why:
Revenue from ads = $91.32
Budget Spent = $58.09
Gross profit margin: $91.32 x 39% = $35.61
Loss on ads = $35.61 – $58.09 = -$22.47
Now some sellers ask: “Why would you be willing to spend ads just to give up your profit to Etsy?”
Valid question.. But here’s how I look at it.
I wouldn’t have had that sale without Etsy.
If that person buys from me, they’ll love my product and come back and buy more from me (without ads) in the future.
I’m in it for the long run. I want more customers to try my products so they can tell their friends, spread the word, etc..
One mistake I see ALL THE TIME is not spending enough on ads.
Let me take you through some simple math.
The typical conversion rate for my shirt listing is about 3% (about average).
That means I will need 100 visits for that shirt to get 3 sales.. Or 33 visits for 1 sale.
If I spend $1 per day, it will take me SO long to get to 33+ visits..
Hear me out… and let me break it down.
If my average Cost Per Click on Etsy is $0.21
And I spend $1 per day… $0.21 x 33 (visits needed for 1 sale) = $6.93
This means I’ll have to spend about $6.93 to get one sale.
Since I’m spending $1 per day, that will take about 6-7 days! WOAH!
Personally, I want results WAY faster than that.
Now, what if I increase my budget to $7 per day?
You guessed it.. I just got my sale for the day..
And as long as I profit after that ad spend, I can continue to spend that forever and still run a sustainable and growing business.
In summary, if you have enough profit margin in your product, you should be advertising it.
Have any questions?
Email me cody@everbee.io
P.S. If you want to increase your Etsy sales and grow your Etsy shop into a profitable and sustainable business, try Everbee.io – it’s free to start.
EverBee Chrome Extension
- PRODUCT RESEARCH find high-demand products to sell on Etsy so you can make what is trending
- REVENUE ANALYTICS to see how other Etsy listings are selling so you can make high revenue products
- SAVE TIME and only make & sell what people are proving to buy
- CREATE BEST-SELLERS so you can create a growing & sustainable busines
