Lots of controversy surrounds the paid Etsy Ads service. Check out Etsy forums and you’ll find people praising … and condemning it.

Browse Google for Etsy Ad, and you’ll need about a year to scroll through the results. It’s no surprise there’s so much interest. Getting your Etsy listings seen by lots of target buyers generally means more sales. And if you don’t want more sales, what are you doing on Etsy?!

There just seems to be way too much contradictory advice out there.

Here are some common Etsy Ads tips you’ll find as you scan through thousands of blogs and articles:

  • Only spend on Best Sellers
  • Spend $3 to $10 a week … or day (depending on the source)
  • Make all tags long-tail keywords
  • Use short-tail keywords
  • Lower your Etsy Ad budget to stop Etsy using Offsite Ads (that tip is VERY out of date)
  • Don’t spend more on Etsy Ads than you’re making in sales
  • Bid high
  • Bid low

I could go on … The fact is, Etsy Ads needs more than surface understanding. And recent changes to the Etsy Ads 2022 dashboard makes checking to see if the advice you pick works very difficult. So, let’s start at the very beginning. Apparently, it’s the very best place to start.

What Are Etsy Ads?

Check out Etsy SERPs, and it’s easy to spot Ads. Ad-served listings always include the phrase, ‘Ad by …’. But as you can see in the non-filtered, empty search bar Party Décor category results below, Etsy Ads doesn’t guarantee top position. Non-ad users have grabbed 8 of the top 12 places. That’s because Etsy Ads is one SEO option.

When alternative SEO strategies are on point, they can (easily) outshine the effects of Etsy Ad results. And last for longer. Most strategies are cheaper, too.

Etsy Ads spots are reserved before the bidding wars even begin. So you’ll nearly always find at least one in the SERPs top rows. But other reserved Ads spots are scattered on multiple pages.  What does that mean to sellers?

Etsy Ads is a personal choice, NOT a necessity.

Look at who’s made it to the top of the generic first SERP above. OK, the top 4 are Ads. The four reserved spots that make Etsy Ads more attractive. Because they’re not just a way to get your listings more visible. They’re a way to get this Etsy marketing strategy more visible, too.

Carry out your own generic search, and you’ll see plenty of paid ad listings on pages 2, 3, 4 … even 20. Paid advertisements do NOT guarantee a position at the top of the first search results page. The top lucky 4 have paid for the privilege, and fulfill lots of other strategic metrics. Most sellers who bid for Etsy Ad space get relegated to spots off page one.

The Etsy Ad first came into being in 2019, and caused confusion and frustration right from the start.

The first Ads combined the then on-site Promoted Listings service with off-site Google Ads. That’s why you still hear some marketing ‘experts’ advise that when you lower your Etsy Ads budget, the less likely Etsy will spend on Google Ads … and the more your product will be promoted on-site.

That used to be good advice, as Google can be expensive. Today, it’s outdated advice.

What’s Changed With Etsy Ads?

By 2020, Etsy advertising change was in the air. In July of that year, some Etsy sellers were given the option to TEMPORARILY opt out of Offsite Ads. The Stop Hate For Profit campaign separated the lucrative on-site and off-site package (you couldn’t purchase one without the other) for a month.

Etsy Ads once placed lots of its off-site ads on Facebook. 2020 just happened to be the year Facebook got tons of negative attention over its publication of hate posts. Etsy was forced to give furious sellers the right to opt out of off-site ads.

The Stop Hate For Profit campaign forced Etsy  to focus on alternative ways to advertise that catered for on-site products on acceptable off-site channels and/OR on Etsy SERPs.

In February 2022, Etsy’s latest Advertising and Marketing Policy was published. Etsy Ads and Offsite Ads became separate entities again.

Does this mean you can save money and select one option? Yes. But you can’t select none. That is, you can’t unless your Etsy shop isn’t earning a certain sum.

You CAN opt in or out of Etsy Ads. But the same principles don’t apply to Offsite Ads. Earn more than $10,000 in sales a year, and off-site advertising is MANDATORY. You pay 12% of every Offsite Ad-generated sale (including shipping) to Etsy.

So don’t forget to opt out when you earn less than that $10k threshold. Because under 10k, that 12% becomes 15%. Now let’s back to the other part of the Etsy Advertising and Marketing department - Etsy Ads.

Changes to Etsy Ads is one of many causes of the 2022 Etsy strike. Another major change is the new Etsy Ads dashboard. Lots of sellers complain about its lack of control options and limited metrics.

And the bidding system generates all kinds of conflicting advice.

How Does Etsy Ad Bidding Work?

Etsy Ads sells on-site auctioned ad space. Spots on results pages are reserved for Ads. And you can’t fill those spots with listings that aren’t Ads. However, not every top spot is reserved for an Ad.

Once you’ve allocated your selected advertising budget to the listings you select for advertising space, you’re part of a sealed bid generalized second-price auction system (SBGSPAS).

An SBGSPAS or Vickrey auction isn’t much like the antiques and car auctions you see on TV. It helps the Etsy Ads algorithm figure out demand, and adjusts the order of listings on the SERPs according to that demand. This particular type of bidding system is essential as it provides lots of supply and demand data.

And you can’t expect a bargain deal when you bid for a spot. Because when you decide to pay $0.5 for every click Etsy Ads generates for your listing, the algorithm assumes you’ve done the math.

  • It assumes you worked out that $0.5 multiplied by an estimated total number of clicks (that you’ve set against your Etsy Ads conversion rate) is included in your selling price.
  • It assumes you worked out your estimated revenue from organic sources.
  • It assumes you researched production and storage prices, and shipping and labeling costs.

In other words, the algorithm assumes you’re making a REALISTIC calculation of:

a) what your product is worth, and
b) what the minimum profit you’re prepared to accept on that product is

Lots of sellers ask Google what the average Etsy bid amount is. The result? A big loss on ad-generated sales because they bid too high. Or they don’t win any bids for more competitive listings. Or they get lucky because the realistic bid price of the item they have allocated to Ads just happens to match the Google average.

When hundreds to thousands (possibly millions) of sellers listing the same products make the same bid estimations, Etsy collects plenty of data. It keeps a finger on the product supply and demand pulse. Data that makes a difference to the amount of the winning ‘bid’ AND where you rank in the Etsy SERPs.

Using the ‘average Etsy bid’ technique is the wrong move. The Vickrey method is sweetened with the ‘second-price’ part of the sealed-bid auction system. If your $0.5 per click is the winning bid, and the runner-up bid is $0.3, you pay $0.3 for every click on your ad. And you think you’re paying a discounted price.

It’s a marketing ploy for sellers. A little like the marketing ploy for buyers that offers free shipping but hikes the product price ;-)

When Do I Use Etsy Ads?

Before you open your Etsy shop, read through the Etsy Ads set up page. It says the minimum default budget is $1 a day. About $30 a month.

If you make $100 in sales a month with a small profit per item, you might want to turn Etsy Ads off. And here’s some important info for new shops … you have to physically turn the service off. Because every new account accepts Etsy Ads as DEFAULT.

Using paid advertising space to promote new, unproven businesses isn’t the right move, either. Because as we’re going to see, it’s not simply a case of the highest bid wins.

For existing businesses, Etsy Ads requires consistent research to find the right products. Yes, Best Sellers benefit from the service. But Best Sellers are popular products across the board. The winning bid here will be an expensive bid.

The best solution is allocating ads to a limited mix of your highest earners, your unique and unusual items, items that sell well all over Etsy (and absorb a big chunk of your Etsy Ads budget), and items in your shop that have big profit margins.

More Etsy Ads Tips

When you’re up against savvy Etsy sellers, you’re unlikely to get a bargain-price Ad. Sellers selling very popular items who charge realistic prices with small profit margins nearly always win the bidding war. When you want high profit margins, Etsy Ads is not the best option.

The demand-based bidding system also means what you pay for your listings ads one week can change the next. The more people compete for specific product listings, the higher the price per click goes - at least until the profit margins have become very thin.

Lots of marketing experts advise using long-tail keywords in the metadata of the listings you select for Etsy Ads to counteract this. However, long-tail keywords - although they might bring in highly targeted buyers - attract less traffic overal. And the Etsy Ads algorithm wants efficiency. It will give more weight to a popular product that pleases a bigger crowd.

New Etsy shops tend to be more cagey with their advertising budget. But underbid, and you won’t appear anywhere. Sealed bid generalized second-price auction systems are rarely won by unrealistic, low bids for already proven products. You’re better off with alternative Etsy SEO solutions.

Etsy Ads to new Etsy shops can, in theory, be used as an expensive brand awareness strategy. For this purpose, your Ads budget must be high. That $1 a day limit might seem to work at the start. But only because, as a new shop, Etsy owns very little data about you.

After a day or two, sometimes just a few hours, it does.

Then the temporary boost Etsy awards your listings ends. Abruptly. In these cases, don’t thank Etsy Ads for your top SERPs positions (although the service won’t do any damage). Thank the Etsy algorithm’s lack of data.

The Etsy Ad Algorithm

Etsy’s calculation of bid value is based on your daily budget and various, lesser-known metrics.

Because - and this is something EVERY Etsy seller should have carved into the office wall - Etsy only wants to spend advertising money on the products that sell best.

Just like you, Etsy wants the biggest possible effect with every advertising cent. That’s where advice to only pay for Best Seller ads has its roots.

But no online marketplace algorithm looks at one piece of data. Algorithms collect multiple data sets and give different metrics different weights or swaying powers. We can conclude winning a bid has good weight. After all, without a winning bid, you’ll never earn an ad for your listing. It’s by looking at your competitions listings that feature the same keywords that you get a better picture of the different data values.

Pretending to live in the UK, I typed ‘baseball cap’ into the Etsy search bar. This is what I got:

For a popular item like a baseball cap, you’d expect ALL the first page to feature ads. But:

  • Etsy Ads feature in 8/20 results, and not all are in the top row.
  • 9/20 feature Free Shipping badges
  • 5/20 are Star Sellers (not as much weight as you might think)
  • 20/20 have at least 4.5 stars (the most important metric)
  • 2/20 are Best Sellers (so don’t put all your Ad eggs in the Best Seller basket)
  • 1/20 has an Etsy’s Pick badge (featured on in-site Etsy content - some weight)
  • 6/20 have Popular Now badges (demand data collect by Etsy - some weight)
  • 1/20 doesn’t use ‘baseball cap’ in its description or photograph (listings relevancy is NOT 100% foolproof)

What’s interesting is how many factors affect Etsy SERPs when you use generic search terms. If ranking was only up to the highest bid, why do NONE of the results have less than 4.5 star feedback?  And why don’t ALL the results feature Ads?

Nearly half offer free shipping. Only one fourth are Star Sellers. And Etsy Ads with Best Sellers feature in only 10% of results … in a group of products that sell very well across the board.

Popular Now badges come and go and are algorithm controlled. When certain items take off, that pink lozenge is automatically placed on the listing. You can’t control demand, and therefore you can’t control some of the factors that drive the Etsy algorithm. However, these metrics are far less important than free shipping and 5 star feedback. But they can give you the edge over your competitors.

Further research shows some sellers sell thousands of products in a couple of years; one sold just 84 items. And that one wasn’t using Ads. And of the product listings using Etsy Ads, all but one are priced over the much-advertised threshold of $12. The one product that isn't? $11.99.

There’s NO point paying realistic CPC prices for low-value items UNLESS you want to spend big on a new shop launch. Why does the Etsy Ad algorithm select such a broad array of results? When we know the answer to that, we can beat the algorithm and get top ranking for every listing, right?

Beat the Etsy Ad Algorithm

As with all search engine algorithms, developers don’t want you to know exactly what and how they measure. Internet tips are either made up, guessed, plagiarized from reliable or unreliable sources, or heavily researched and tested. Knowing which is which isn’t easy.

Algorithm developers encourage confusion. Because when the selling public knows how a marketplace algorithm works, that public is on an equal footing. There’s no point in buying extra marketing tools.

So, when the mysteries of any search engine algorithm start to unravel, the updates appear to add a new layer of mystery. Unless you are always one step ahead and know how to infiltrate in-depth, private programming forums, you won’t get consistent SEO results.

But for the Etsy Ads 2022 service, the methods that score the highest points with the Etsy Ads algorithm (not the Etsy search algorithm) are DEFINITELY:

  • Bidding Power

Of course, if you don’t place the highest bid, you won’t get an Ad for your listing. And as we’ve already seen, the Vickrey bidding system changes according to demand and popularity. This forces realistic prices. So don’t underbid for popular products.

  • Buyer Personalization

So much depends on something you have no power to change - buyer habits. Personalization means top quality consumer targeting. So putting good target profiles onto paper is part of your Etsy Ads strategy.

To start from square one, the typical Etsy buyer is female, from the US, and a gift buyer with a low mid-range income.

It’s now up to you to work out detailed profiles for your Ads listings (for better Etsy SERP ranking without Ads, this also applies).

How relevant your listing is to your target market makes a big difference in whether or not you win that Ad space. Here is where 5 star feedback plays a role. Many buyers balk at buying from shops with negative reviews. And the Etsy Ads algorithm gives feedback a LOT of weight. AND free shipping.

  • Listing Quality Score

The Listing Quality Score is all about demand - how well does your listing sell? Remember, Etsy only wants to spend on items that sell. Products that don’t sell on Etsy in high volumes are immediately at a disadvantage with Etsy Ads - one of the reasons genuine crafters of intricate goods feel like they’re getting a raw deal.

Listing Quality Score might include image quality, but this is hard to prove. If you’re selling a baseball cap and want to implement Etsy Ads to make the listing more visible, your main image should show the typical shape of one. Don’t risk lowering your LQS by featuring a non-distinguishable close-up.

Expert Help With Etsy Marketing

Of course, what I’ve written today could change next month or next year, depending on the next Etsy Ads algorithm update, or policy tweak. Focusing on your Etsy shop AND keeping up to date with every SEO topic is more than a full-time job.

Hiring an Etsy marketing specialist to rank your listings means you can spend all your working hours finding and selling new products. There’s something you should know.

Etsy Geeks is cheaper than Etsy Ads.

Just tell them which listings to promote, and they’ll propel them into the TOP 10 listings of your target audience! Sign up for a monthly plan, and your personal Etsy Geek will KEEP them there. For however long you need.

When you have a marketing expert like Etsy Geeks on your side, there’s no need for Etsy Ads. Drop the Geeks a line and find out how their prices beat Etsy Ads.

And how their strategies beat the Etsy Ads algorithm. Oh, and while paying for Etsy Ads DOESN’T guarantee top ranking, paying LESS for Etsy Geeks Etsy SEO services DOES. Or your money back.