Are you making any key mistakes that are preventing your shop from being profitable with Etsy Ads? Today we’re picking Kara Buntin’s brain about two different Etsy Ads experiments that she ran in her shop. Keep reading to hear what she discovered and how you can use what she learned in your own shop! This is just one more awesome way we hope you discover even more Etsy shop success!
A small intro
We’re so excited to have Kara back with us on another episode of The Jam! If you’re not familiar with Kara and her work, make sure you check out our last episode for a brief introduction. This week, we continue our discussion with Kara and her recent experience with Etsy ads.
What we’re talking about today
Etsy Ads! As we mentioned above, Kara has done some pretty interesting experiments in the Etsy Ads space. There are lots of people talking about ads! Do they work? Do they not work? Are folks having success with them or not having success?
Kara went out there and did some pretty awesome experiments with her own shop to see just how Etsy Ads were behaving for her. Today, we’re going to walk through how she set up those experiments, how they went for her, and lastly what you as a seller can do to be as profitable as you can when you’re running ads in your own shop.
Ads are fun (this is sarcasm)!
Kara says right off that she’s very bitter about the Etsy Ads system as it is right now, so she’s throwing that out there first. When Etsy gave sellers ads where they could actually set their cost per click, Kara was making fifteen to twenty times back what she put in. This is really good for ads!
When Etsy took that cost per click control away and basically said, “Oh, we have all the information, we know exactly what we’re doing and we can do it better than you” what she was making back, dropped to about eight times an ROI on ad spend. Then it dropped down to five times. Then three times. At this point, Kara says she turned her ads off. This low ROI just wasn’t profitable.
Sidenote: Ads don’t work for everyone
Kara does make it clear that ads do not work for every shop. It’s definitely something that you can try, but they certainly don’t work for everyone across the board. There are a lot of factors that go into Etsy ads and whether they will be successful for you or not.
Kara’s first test and how she set it up
On her first test, Kara took thirty days, giving twenty dollars a day, assuming she was basically throwing the money out in her back yard and it would be gone. She didn’t change any listings or the bid amount. She did this because Etsy says they need thirty days without any changes before they can get the information they need for your listings.
Kara knows very well that Etsy knows what her listings do. She knows this because she sells a lot of stuff and certain listings just sell all the time. So, Etsy doesn’t need information about her listings.
Documenting it all on YouTube
You can see exactly what Kara did and what happened with the ads on her youtube channel. She documented what happened almost every single day, while she was running this test.
The conclusion of this experiment is that it did not go well when she added it up in the end. She did twenty dollars a day on listings she knew would sell. Etsy had information about these listings and she knew they would sell. She put this up for thirty days and she sold a lot of them. She believes they made it up to about eight times return on ad spend. But for Kara, this isn’t good because her items are a lower price.
Do you understand what you can afford?
When you do ads, you have to look at the cost of the ads as part of your expenses. Kara figured out per each listing how much profit she was making after Etsy fees, the cost of her materials, all of it. So she knew exactly how much profit she was making before ads. It ended up being about three dollars an hour that she was working for. That’s definitely not good! Kara says a lot of times people will make the mistake of saying, “Well, I got back three times what I put in!” But when you take the cost of the ads out of the profit from that, you’re either not making any money or you’re just making so little that it’s not even worth doing it.
Again, understand what you can afford
It’s very important that you understand what your business can afford to spend on ads, profitably. It will be vastly different from shop to shop. In Kara’s digital shop, she used to run ads at a break-even. She would make sure that she was only spending X amount per day. If she sold one thing per day, that covered the cost. But because she was selling that, then it gave her whole shop a boost in quality rating. But she says this is a different strategy, where you’re running ads in order to get better placement for your shop overall. And for that listing, maybe an organic search.
Kara’s follow up test
So the first test didn’t go great for Kara. In her follow-up test, she tried to bring it back to when Etsy was allowing people to control their cost per click back in the day. Kara says this is a trick she didn’t makeup herself and it’s been going around for a while.
Here’s how you do it
What you do, is to set your daily budget at one dollar a day, because that’s the lowest you can set it. Kara would set this to a dollar a day before she’d go to bed each night. Etsy will spend this amount really fast and by the time she’d wake up in the morning, that dollar was gone. The clicks would be thirty to maybe forty cents. Kara saw some really weird and wild swings in the amount they were charging. This just means they were showing it at the top of the page or somewhere less obvious.
You send that one dollar, and then what you have to do is babysit your ads. This part was not worth it to Kara, but she did say that some people have really good results with this method. So, you go in and then increase your ads budget by five or ten cents. This is just to control how much Etsy has to spend. If your budget is set to one dollar and they spend that, and then you set it to a dollar and ten cents, all they can spend is ten cents. When Etsy spends that ten cents, you increase it by another ten cents. Kara says she was at the point where she was increasing it by three cents and Etsy was spending it. You can definitely back it down.
Check-in, check-in, check-in
Let’s say that most of your clicks are twenty-five cents, start it at twenty cents and see if you can back it down and still get the same results. It definitely takes a lot of time to do this and you have to be checking in every hour to every half an hour (or however long it takes Etsy to spend that amount of money). The traffic patterns tend to be weird because they will show your ads in less prominent places. But, they’re still being shown for way less than Etsy would be spending on their own.
Kara was able to control the amount of money she was spending per day to like two dollars and fifty cents. She was still getting the same amount of clicks but she wasn’t getting the same amount of sales, because the ads weren’t being shown in the more prominent places. Again, to Kara, this method wasn’t worth the aggravation of having to check in all the time. But Kara says she has people in her group who don’t mind doing this and this method works really well for them.
Tips for being successful and profitable with running ads
Kara says if you’ve never run ads before and if your shop is brand new, don’t run ads yet. Make sure that your keywords and your SEO are in place before you start running ads. The algorithm for ads is different than the organic search algorithm. Etsy will be a lot more “creative” with your keywords on ads and you’ll be found for weird stuff because they’re trying to fit those ads into any place they can.
Things to remember
You need to make sure that the keywords in your SEO on your listings, are bringing you traffic to begin with before you start promoting it, just to make sure Etsy has a good handle on what it is. The other thing Kara recommends for ads is to do at least two weeks at a five dollar a day budget (if that’s all you can afford). But if you can’t afford to take whatever money you’re spending and basically know it could be wasted, then do NOT do Etsy ads. There are other ways to get traffic on Etsy that don’t cost anything.
Turn Etsy off-site ads on
One guaranteed way to keep your cost at a certain point is to turn Etsy off-site ads on. If you’re a new shop, you don’t have to have them on. They take fifteen percent of all the sales from off-site ads. You have to be careful because it takes it out of the shipping too, so that increases the percentage. This is basically a 6.3 times return on ads spend that’s a flat percentage. You’re always going to get that 6 times return on ad spend, which is a lot better than a lot of people are getting with Etsy ads that they’re paying for.
Count the cost
Also, just be ready to not make anything. If you make something, that’s great! But don’t spend more than you can afford. You don’t have to have ads. Kara says that often people feel like they have to pay for advertising, but that’s really not true. You can send your own traffic or you can use social media.
Remember, just because you make more back than you put in doesn’t mean it’s working. When you’re looking at all your gross numbers, and you take out everything and have that net number, that’s the moment of truth when you have to decide if it’s worth it or not. Know your numbers, because if you don’t, you will not know if you’re winning or losing.
Kara says to think of your goal as you’re going into ads. If your answer is that you have to run ads to sell on Etsy, that’s not a goal. That’s a false belief. Be clear with yourself about why you’re running ads to begin with and then make sure you’re monitoring that to be sure you’re actually accomplishing what you want to accomplish.
Happy selling, everyone!
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