How to Make Your Etsy Ads Work Effectively: A Guide to Optimization

Many people often believe that Etsy ads don't work, but there's a reason for that. To make Etsy ads successful, specific steps must be followed, and their operational principles understood. In this post, we will delve into how to make your ads deliver the desired results, based on information provided by Robert, co-founder of Alerio Print.

Specifics of Etsy Ad Functionality and Common Mistakes

It's crucial to understand that Etsy ads differ from those on other platforms. They don't operate on a "put in $1 and get $2 back" principle. Robert's statement indicates that Etsy ads primarily serve as a branding tool and may not immediately generate large turnovers. Initially, many users report that Etsy ads are ineffective, but often, this is due to a lack of optimization. A successful campaign requires continuous monitoring and adjustments.

Looking at one of the stores, it's evident that ads were run at the beginning of this year and the end of last year, then they were turned off, resulting in a decrease in revenue and views. After the ads were turned back on two months ago and listings were optimized, results began to improve. This emphasizes the need for continuous optimization for ads to work effectively.

Key Metrics for a Successful Etsy Ad Campaign

To understand how ads are performing, you need to pay attention to several key metrics.

1. Cost Per Click (CPC)

You can calculate your cost per click by dividing the total ad spend by the number of clicks received. For example, if $1230 was spent on ads and 4582 clicks were received, the cost per click is approximately $0.27. This metric is considered a good number. Calculations can be done monthly or since the beginning of the year, as per your preference.

2. Return On Ad Spend (ROAS)

ROAS is the most important metric to track. It shows how much revenue you generate for every dollar spent on ads for a particular product.

• High ROAS (good): If the spend is smaller and the revenue is higher, ROAS will be high, indicating good ad performance.
• Low ROAS (bad): If the spend is high, but the revenue is near zero or only one or two orders, ROAS will be low.
• ROAS thresholds and actions:
  • ROAS below 1: This is bad and indicates you are spending more than you earn.
  • ROAS below 1.5 or 2: At this point, you should consider filtering or turning off the ad
  • ROAS 1.53: In the example, this figure is considered "sort of okay," but it still needs to be monitored to see if it's going down. If it drops below 1.3, the ad should definitely be turned off.
  • ROAS 1.45: If it drops below this number, the ad should be turned off.

Important: To objectively evaluate ROAS, a listing must have received at least 100 clicks. Before then, it's too early to make decisions about turning ads off or leaving them on.

Ad Optimization and Management

Ad optimization is a continuous process that requires regular monitoring.

1. Starting Budget

Initially, it's recommended to use a low budget, for example, $5–$10 per day. In the example store, a $100 daily budget is set, but only about $15–$20 is actually spent. Etsy doesn't always spend your entire specified daily budget. By starting with a low budget, you can gradually increase it once you find well-performing listings that start generating money.

2. Time and Patience

Etsy ads are not designed for immediate results. You need to give Etsy time (at least 3–5 days) to analyze keywords and test your ad for a specific product. An ad should not be turned off after two days, as that would be a waste of money and time. After about a week, you can start to see how the ad is performing.

3. Ad Optimization Process

• Track ROAS: Regularly check the ROAS for each listing.
• Turn off ineffective ads: Ads that are not optimized can spend a lot of money without generating enough turnover. You must turn off ads that have a low ROAS and a small amount of sales. For instance, a listing with 544 clicks and a ROAS of 1.53 should be monitored, and if it drops below 1.3, it should be turned off. A listing with 152 clicks and a ROAS of 1.45 should also be monitored, and if it drops below that number, it should be turned off.
• Keep effective ads on: If a new listing has a high ROAS (e.g., 11.70 with only 5 clicks and one order), it should be left on and its development tracked.
• Check spending: Regularly check which listings are spending the most money but bringing in nothing, and turn them off.

4. Increasing Budget

Once you have identified successful listings that are starting to generate money, you can gradually increase the budget – initially to $20–$30, then to $40–$50, and later even up to $100 per day. However, it's not necessary to increase the budget to $100; starting with $10 is perfectly sufficient as long as you are optimizing.

5. Creating New Listings

Continue to create new listings and wait for them to grow. This will help you discover new potentially successful products for ads.

Example from Store Data

Looking at the real store's statistics, it can be seen that at the beginning of the year, when ads were stopped in January, revenue decreased to $1686. After optimizing listings and creating new ones, ads were turned on in May, and now the numbers are starting to go up again. Current daily revenue is $40 with $13.88 in ad spend, indicating that the ads are starting to perform. Initially, at the beginning of the year, when ad spend was quite high, revenue was low because no ad optimizations had been performed. This clearly shows that without optimization, ad campaigns can be ineffective and expensive.

Conclusion

For Etsy ads to work successfully, you need to change your approach. They are not just a "put in money and wait" system, but an active management and optimization process. The main takeaways are:

• Track ROAS: This is your primary metric.
• Check your spend: Understand where money is being spent and if it's paying off.
• Check orders: Analyze how many orders each ad generates.
• Start with a low budget: Gradually increase it when you see results.
• Give it time: Don't turn off ads too quickly (at least 3–5 days, preferably a week).
• Turn off ineffective ads: Only once a listing has received at least 100 clicks and its ROAS is poor.

By following these principles, your Etsy ads can work effectively and help you grow your store. If you are interested in the print-on-demand business and additional tips on selling on Etsy, you can visit alerrioprint.com, where free courses are available.