I know not every Etsy seller belives in Etsy ads. You can go down that Youtube Rabbit hole on your own time. I’m not here to convince you that Etsy ads are great or bad. What I do know is advertising is important and it should be a budget line for every business. So if you are trying to sell 3d printed products on Etsy and are going to advertise logically I think Etsy Ads is the best place to start. So if that is the boat you are in, stick around as I get into everything I’ve learned about Etsy Ads as a top 1% Etsy seller.
1. What listings to advertise?
I advertise every new listing I create, and I also only advertise 20% of my listings at a time. Did I get you? lol, I know that doesn’t make sense, does it? Here is what I mean.
The question that is hard to answer is which Listing is going to be in that 20%. Unfortunately, there seems to not be a lot of logic behind what listing does well and which one doesn’t.
If you aren't familiar with the 80/20 rule it states:
20% of your listings are going to generate 80% of your revenue.
I’ve listed the same product with the same pictures, the same description, with the same keywords, everything is the same but I’ll change one word in the title. 1 listing goes on to be an Etsy Best Seller and the other does squat.
This is why I advertise every new listing I create. I want to find out as soon as possible which listings are going to be best sellers and which aren’t going to be big piles of garbage. I’ve found that you can usually determine after 30-60 days so all my listings get advertised for at least 30 days.
2. Etsy Ads ROAS (return on advertising spend)
This brings us to the next consideration when determining what listings to advertise and that is the ROI of the ads spent for the listing.
After the 30 days does the listing have an ROAS of at least 3x? If it doesn’t Ads get turned off and it's not a top 20% listing for me.
Why 3x?
It’s simple math, your “x” number might be different but the logic behind it holds and can be applied to any industry.
I run my shop on about 60% profit margin. Meaning that if I sell something for $10, I’m keeping $6. If I'm paying ads for that $10 sale and was running an ROI of 3x it means I spent $3.33 to get that sale bringing my profit down to $2.67 or 26% profit margin. You can see it eats away at your profit quickly. For me, if I’m not keeping at least 25% of revenue it isn’t worth it.
Using that same scenario above if my ROAS was 2x then it would have cost me $5 to get that $10 sale bringing my profit margin to $1 or 10%. It's going to be very hard to operate any business on margins like that including one that sells 3d prints.
So if your ROAS on your ads are 2x or every 1.5x I think your best case scenario is breaking evening on those sales or worse case losing money….not good.
Just know though that every rule has exceptions and to always keep the big picture in mind. It's possible that a listing might take longer to get going than 30-60 days.
So if you see a listing that is performing well that isn’t being advertised because you turned it off it might be worth turning back on and giving it another chance.
3. Etsy Ads Budget
Once I’ve found the 20% of my listings that are my best sellers. I’m slamming the ads button on them and I’m spending as much in ads as Etsy will charge me.
Etsy won’t always spend your budget. Ad views are based on demand if people aren't searching for your stuff you won’t pay ads. In the beginning, the total Etsy will let you spend is probably something around $5-10 a day. I max out the spend. You'll notice as you do this Etsy will increase the maximum budget available to you I will continue to increase my budget to that new maximum amount.
The goal here is that my budget is high enough that Etsy isn't spending my whole budget every day. If it spends my whole budget that means some people searched and didn’t see my product that day. Me no likely that.
4. When people buy on Etsy
I talk to a lot of new Etsy Sellers and a story I hear constantly is that they turn on ads with a very small budget and that budget results in no sales or very little sales. They then are too afraid to increase their budget because their first budget didn't do anything so why would they spend more.
What we need to look at is when people check out and spend money on Etsy. Over half of my sales in a day sometimes come after 7 pm.
When your ad budget is only $5 and Etsy starts showing your advertised listings at 12:01 am guess whose whole ad budget has been completely spent by 7 pm? You need to have a big enough budget to last until the buying hours. This is why I said above that I never want to actaully spend my full budget. If my full budget is spent it means I potential missed out on buyers that didn't see my ad.
Another option that takes a bit takes a bit more work and time. You can turn your ads on and off daily so they are only running during peak buying hours. I’m too lazy for that and would forget to turn them back on but could be a good option for someone just starting out.
5. Total ad spend in relation to Total revenue.
The last metric I look at monthly is how much did I spend on ads in relation to my total revenue?
Not everyone buys after seeing an ad, but might remember you and come back later. So it’s not always fair to apply your ad spend to only the revenue that came directly from ads. So once a month I divide my total ad spend by my total shop Revenue (ads rev and normal rev). I want that number to be 15%.
Assuming you are only advertising on Etsy ads what this 15% represents is you business wide advertising budget. I read some where that most small business spend 15% of total revenue on Advertisements. So I kinda just ran with that.
6. Sell Thing People want
For any of the above to work and work well you need to be selling products that people 1 will buy and 2 will search for. If you are selling products with keywords that only get a couple hundred views a month it’s going to be tough to have ads do anything for you. My top five listings get over 40,00 views each month and my best 1 month for 1 listing was 165,000 views.
People tend to try to sell stuff they are interested in or they think is cool and often overestimate the number of people who also like those things too and will spend money on it. At the end of the day, you have to sell things people want.