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New Etsy Ads for April 2020

Another change, but this one is better than what we have now.

I’ve had a lot of people sending me questions about the new ads setup…I’ll be talking about it and the Q4 earnings report on my Youtube channel during my Tuesday Live, but for now, here are some answers to common questions. These have been gathered from the Admin Q&A, the written material Etsy has put out, and other official sources that are available publicly, so it’s all answers from Etsy, not me! I’m also not saying that I like everything about this program, but it’s better than what we have now.

Q: Will the $10,000 cutoff apply to each individual shop if we have more than one, or are they combining our shop totals?

A: They’ll be treating each individual shop as a separate entity, so if you make less than $10,000 in two shops they’ll both be eligible for the opt-out even if the combined incomes are over $10,000.

Q: Are we being charged the off-site percentage on all clicks from Google or other ads? What about on our own social media posts?

A: You’re only charged a fee if Etsy runs an ad for one of your listings, someone clicks on it, then buys something from your shop. If someone clicks on another seller’s ad and buys from you, you won’t pay the fee. If someone clicks on one of your social media posts or off-site ads (if you run them yourself), you won’t pay the fee. If someone clicks on an on-Etsy promoted listing ad, you won’t pay the fee. The fee is only for off-site ads that lead people to your shop and lead to a sale from your shop.

Q: Etsy says that the number of sales in my shop that will have the fee is going to be about 15%, is that right?

A: They said that’s an estimate, and isn’t guaranteed. (It seems to be based on the actual traffic from off-site ads now, and as we know, traffic doesn’t equal sales, so it’s likely that the actual percentage of sales that will be affected will be a lot lower than that.)

Q: When is this starting?

A: They’ve said they’re going to start rolling out the new dashboard in a few weeks, so probably mid to late March for that. Then there will be a “trial” period where sellers will be able to see how many sales are actually coming from off-site ads before we have to pay for them, so if you have a shop that makes less than $10,000 a year you’ll be able to see if it’s something you want to opt out of. If you have a shop that earned more than $10,000 in the past 12 months, you’ll be enrolled automatically and can’t opt out. If that’s the case, you should use the trial period to make decisions about whether you should raise prices to cover any fees you may have to pay. However, if you only get one or two sales from off-site ads in that tie, it might not be as big a deal as people are making it out to be. So wait to see what happens in your shop, because everyone’s experience will be different.

Q: What if I don’t raise my prices, but then an ad goes viral and I start getting a ton of traffic from that ad?

A: If that happens, raise your price for that item. It’s really unlikely that an ad is going to go viral, but I guess anything can happen…

Q: Why did Etsy try the first system then change it?

A: In the 4th quarter earnings presentation, Josh said that they listened to the sellers and decided this was a better way to handle it. He also mentioned that they realized that the percentage of sellers who were paying for google shopping ads wasn’t going to increase as quickly as they had anticipated, so I’m sure that had a lot to do with it.

Q: Will I get to choose which listings I advertise on the off-site ads?

A: Etsy has said that they give the entire Etsy catalog to each off-site platform, and that platform decides which listings to advertise. So be aware that if you have something on a deep discount, there’s a small chance that it could be purchased through an outside ad. But remember that it’s a really small chance. Don’t feel that you need to increase your prices or change other things in your shop on the off-chance that sometime in the future you MIGHT get a sale from off-site ads that makes you pay a fee on a sale listing. The Etsy admins also addressed this in the forum Q&A and said they would look into that, so they might adjust things for sale items in the future.

Q: Why are they doing this?

A: Etsy’s goal that they stated last year was to move their own advertising budget away from ads that led to individual shops, and into ads that drove more brand awareness and got more people onto Etsy as shoppers and returning shoppers. They wanted to reduce their off-site ads budget and have sellers finance the ads that drove people to their own shops, so the first version of ads tried to do that. Because sellers weren’t adopting the google ads as quickly as they anticipated, they’ve changed it to more of a commission/affiliate system for the off-site ads. In effect, Etsy is our affiliate, and if they make a sale for us they get a commission.

Q: Why can’t we opt out if our shop makes more than $10,000?

A: I don’t like that part either, but they’ve said that a lot of Etsy sellers don’t want to grow their businesses because they’re just doing it part time, and they’ve determined that the $10,000 annual income mark is kind of a breaking point where people who are making more than that tend to be the sellers who DO want to grow more. So making it mandatory for shops that earn more than $10,000 will keep the system where Etsy subsidizes our off-site ads viable.

Q: How do they figure the $10,000?

A: They’ve said that they’ll do a monthly review, and if in the past 12 months your shop made $10,000 or more, you’ll be automatically enrolled in the mandatory version from then on. So at that point you can’t opt out of the program even if your income drops below $10,000 annually.

Q: How do we know that the sales are actually coming from ads or not? I don’t trust Etsy to tell the truth.

A: First, I would say that if you don’t trust Etsy, go sell somewhere else. Don’t stress yourself out by dealing with a company that you don’t trust. Next, every ad campaign uses tracking software that generates reports about the traffic and where the customers clicked and what they bought. That’s not a weird thing, it exists and has been used for years, so Etsy is going to be using the data they get to generate the off-site dashboard where you can see where someone clicked to lead to a sale in your shop. That will start showing up in your shop dashboard in the next few weeks.

Q: Wait, is it “sells” or “sales?”

A: “Sell” is a verb. “Sale” is a noun. So you would say “I’ve had 10 sales today, I would like to sell more by having a flash sale.” (Sorry, couldn’t resist)

Q: Isn’t this just a way for Etsy to make a profit off of us?

A: Etsy has ALWAYS paid for off-site ads as long as there’s been a marketing department. A lot of sellers just don’t seem to realize that they’ve been getting traffic that they weren’t paying for, Etsy’s been footing the bill for that. It benefits both the seller who gets the traffic and Etsy as a platform since it drives customer awareness of Etsy. But they’ve decided that the lower-funnel  traffic (traffic going to one shop) isn’t as beneficial to Etsy as a platform, so they’ve been moving their advertising budget toward tv ads (higher funnel traffic) to drive overall awareness in people about Etsy.

They’re still going to be paying for most of the cost of off-site traffic. The 12-15% that we pay won’t completely cover the cost of Google Shopping ads, or Pinterest, Facebook, Yahoo and Bing ads. But they said that they’re okay with that because they realize that the off-site ads benefit both sellers and Etsy by getting new customers to the platform. Etsy is subsidizing our off-site ads, we’re not subsidizing theirs.

Q: If we see that one of our listings is getting a lot of off-site sales and we don’t like it, what can we do if we can’t opt out?

A: You’ll have to take that item out of your Etsy shop, since they give the entire catalog to outside platforms and they’re the ones deciding when to show it. You can’t take it out of off-site advertising unless you just don’t sell it. I’ve done that with one of my listings that got a ton of clicks from google shopping ads and no sales, so now I just sell that item on my website.

Q: I have some items that are over $1000…would I really have to pay a $150 fee on that?

A: They’ve said that the fee will be capped at $100, so once it hits that amount it won’t go over regardless of the final sale cost. That’s still a lot, but at least it allows you to plan for a specific amount and not worry that a $4000 item will result in a $600 fee.

Q: Are they going to bring back Cost Per Click control for our ads on Etsy?

A: They haven’t said anything about that but they’re still hinting about more changes to come, so we have to wait and see.

Q: What happens if I refund an order that had the off-site fee attached to it?

A: They have said that if there’s a full refund or a partial discount issued on an off-site ads order, that percentage of the fee will also be refunded, it works like any other fee.

Q: Why does it give credit for the ads for all orders from that person for 30 days? That seems really long.

A: This is more of an affiliate model, where Etsy is out trying to sell our orders, and if they make a sale for us, we pay them a commission. 30 days is pretty standard for that type of model, so it’s not unheard of. I have an affiliate plan for my programs where people get 50% of every referral they make and they’re linked FOREVER, so 30 days is short compared to that.

Q: Why does Etsy give credit for ads to things that my existing customers buy, sometimes? I know they’re a repeat customer but they still give ads credit for it.

A: The customer is probably typing your shop name into the search bar, then clicking on the top row of ads to get to your shop. That’s human behavior, it’s aggravating, but there’s no way to totally prevent people form doing it.

 

That’s all I can think of right now, so if you’d like to ask more questions you can leave a comment and I’ll try to find the answer. You can also join my public facebook group to get CONSTRUCTIVE Etsy and home-based business advice. It’s a non-promotional, non-whining group, so for complaining please go to the Etsy forums. But if you’re interested in doing the work to get your Etsy shop on a good track come on over and join us here: Home-Based Business and Etsy Tips 

And yes, you do need to answer the questions to get into the group…I do check  😉

Comments

  1. CindyLouWho2 says:

    You state “[the estimate] seems to be based on the actual traffic from off-site ads now, and as we know, traffic doesn’t equal sales, so it’s likely that the actual percentage of sales that will be affected will be a lot lower than that.” – it’s based on sales from those ads, not the traffic from them. My “estimate” of 15% is pretty accurate for the past 18 months of offsite ad sales in my jewellery shop (anyone can track this in Google Analytics); my traffic from those ads is a lower percentage than the sales.
    It doesn’t make sense to base their estimates on traffic & not sales when Etsy obviously would have to analyze both to come up with the percentages for this program, and when many sellers are going be furious if their actual sales work out to be higher than the estimates.
    While you are correct that sales are always lower than traffic, percentages should be roughly the same unless some types of shop traffic convert poorly compared to others. Sources such as forum traffic usually convert poorly, so for any seller getting empty looks somewhere, this ad traffic should actually have a higher conversion rate than their overall average.
    If this program was in place in 2019, I would have paid Etsy roughly another $1000 USD. That is a massive fee increase for a medium sized-shop.
    Everyone should remember that Etsy will need another new source of income next spring to keep showing shareholders a consistent revenue growth rate. This is not the last fee increase.

    1. kara buntin says:

      You’re probably right that this isn’t the last fee increase, I have no doubt! As far as the traffic stats, that 15% seemed to be the traffic that was coming from my google shopping ads, but that definitely doesn’t equate to the sales that come from there from what I can see in my analytics account. As it is now, Google shopping sends me a lot of traffic for one or two listings that never sell, so if they’re basing that on the traffic then the sales are going to be much lower. I haven’t seen anywhere where they told anyone where they got that number that they sent to people (when they were estimating the amount of sales that would be affected by the new fees), and whenever anyone asked them they just hedged around it by saying that number wasn’t a guarantee. At this point it’s all assumptions, so I’m just waiting to see when they roll out the off-site dashboard to see what the number actually is. I’m taking a wait and see attitude as far as that percentage goes, because there’s no reason they would estimate mine to be as high as it is based on the sales I have from off-site ads now, which are minimal.

      1. CindyLouWho2 says:

        Definitely there will be lots of variation, & if you are getting ad clicks to items that do not sell, that will skew your numbers.
        In the 4th quarter report conference call, they were asked: “I think you said you expect [EOA] to be about 10% of typical seller’s volume. If you could just kind of elaborate on is that kind of based on your experience with the GPLA?” & Silverman replied “Yes, it is based on our existing experience with PLA programs, and so we’re just trying to dimensionalize for sellers what kind of impact this might be because they’ve got to think about pricing strategies and other things.”
        So they are giving us the best numbers they can based on these ads in the past, but for many reasons they are going to be very careful about saying it is not guaranteed. Your item that never sells could suddenly go on a tear, whereas a change to Google’s algorithm could remove some of my best-selling pieces, as just 2 examples. And that is true even once we have the dashboard going forward, & a seller would have no control over it either way, other than deleting or selling out of the item/s.
        I was a bit surprised that my numbers matched so well, since we can’t track every ad click or sale in Google Analytics. None of the app traffic gets seen, which is around 20%, and some people have items that sell better on the app than on mobile browser or desktop.

        1. kara buntin says:

          Absolutely, at this point there’s no way to know what will happen. If we have 5% of sales coming in on a regular basis, then something goes viral and for some reason starts selling ten times a day, that’s going to be a big chunk of change. At that point it would be time to raise the price of the item!

  2. Ellen says:

    Thanks for this post – shared on Twitter. I don’t believe saying Etsy was paying for these ads previously is accurate. In a viable marketplace model, Etsy’s commission should cover these expenses for Etsy. They are just trying to use both a marketplace and affiliate model to cover their expenses associated with their advertising so they don’t have to (at this time) increase their commission rate again.

    To be clear, I don’t believe this will impact me much (I’m under 10K on Etsy). I just think truth in advertising (pun intended) is important.

    1. kara buntin says:

      They have been paying for them, though. If you didn’t pay for your own google ads through Etsy, they included your shop in the pool of listings that were advertised that they paid for. It was a weird system, and what’s going to be happening is definitely more of an affiliate model, but they’ll still be paying for some of the ads cost. They addressed the fact that they’ll still be subsidizing ads that go to individual shops during the Q4 presentation.

      1. Ellen says:

        We were not directly paying for them but that advertising expense should have been covered by the commission rate. In other words, Etsy should not have an expense that they did not have revenue to cover through their various income streams. I may have poorly articulated my point.

        1. kara buntin says:

          Well, that’s essentially what they’re doing now, but they’re still going to be paying for a portion of the ads because they’ve said they know that off-site ads benefits both the seller and Etsy as a platform. I guess they paid for them in the past because it did get traffic to Etsy, and they know that. But they’re moving their ad budget to top-funnel instead of bottom-funnel, so now we’ll be paying for the ads that bring us sales. I’m not saying I love it, but it’s better than what we have now.

  3. DC says:

    The $10.000 or more mandatory off site ads it’s not mandatory for Etsy Ads too, just for off-site?

    Also, not totally related but with the current Etsy Ads and the Etsy Plus subscription, the ad value they offer when you subscribe it’s discounted on your monthly budget or it’s added to your monthly budget, I mean if I had set $1 a day for 30 days will I have $35 a month for ads?

    1. kara buntin says:

      The Etsy Plus plan gives you a $5 ad credit for Etsy ads, so you get that before your budget is spent. If your budget is set at $30 for the month, they’ll spend the $5 credit first then start spending your budget. The $10,000 if=s for off-site advertising, not Etsy promoted listings ads on Etsy. You don’t have to use those if you don’t want to no matter how much your shop makes.

  4. Deb Haget - Handmade By Remember Me says:

    I have mixed emotions about this. As one of the sellers who will be forced to opt in, I’ll follow the rules and adjust my strategy like with any other business. We always have a choice, adapt or leave – and, Etsy knows it.

    Positive: Since most of my google advertising keywords have been irrelevant to my product, I’m thrilled I don’t have to pay for the curious clicks.

    Negative: I have a lot of higher priced items with lower profit margins. If I raise the price, they won’t sell. If I remove them, of course they won’t sell (and they are a large part of my business). If I leave them, I’ll break even at best.

    So, I have to move my higher priced items somewhere. Perhaps a separate shop so I’m not obligated to advertise. However, these items have tons of sales history that I’ll lose.

    The negative outweighs my positive, unfortunately. As a business woman, I think it is a great business strategy by Etsy and so do their stock holders.

    1. kara buntin says:

      Just hold on until you see how many sales you’re actually getting through outside ads. I really don’t think that the number is going to be as high as people think.

  5. Diana Burrell-Shipton says:

    Thank you !
    Most of these do help make it clearer.
    But, the last Q&A makes no sense.
    If someone types my shop name in the search bar, then they did NOT find me from an ad through Etsy or Google… . They already knew my shop or else they wouldn’t have done that. So there should be no fee from ads. If their system can tell where from where a sale comes, it surely should be able to know that AND know a returning customer as well.

    1. kara buntin says:

      I just added that one because people were asking why Etsy gives credit to an ad click for some customers who are returning customers, it was more to explain how it happens than whether it’s fair or not! I have a bunch of customers who come to Etsy, type in my shop name, then click on ads. I can trace their actions through the ads stats and google analytics, so I know that’s why Etsy attributes that sale to an ad click. There’s no way to stop people form doing it, but if Etsy did figure out a way to not attribute it to an ad.

  6. Ginger says:

    Unless I pay for my own advertising targeted at my niche market, I know $10K/yr. won’t happen with Etsy, opt in or not.
    And if I bite that bullet, I will be taking that clientele to a website, not my Etsy shop.
    No worries.

    Plus, I would have to be getting $250 per item and still be doing nothing but stitching all day, everyday.
    Nope. Staying a hobby.

  7. dkhalcomb2@gmail.com says:

    Probably won’t effect me since I only get 2 or 3 google visits a year. If I ever get to 10K in sales I would be upset with the mandatory. I just wish they would do the only pay if buy on Etsy ads but at lower %. Taking a wait and see attitude.

    1. kara buntin says:

      I don’t think I would like that (the On-Etsy ads) because I’d be paying a lot more than I’m paying now for a sale. But my ROAS is still better than most people’s, I think, so it would hit me harder, possibly. It depends on too many things to be able to say one way or another.

  8. Megan says:

    Great post. Thank you for taking the time to put this together.

  9. Vee says:

    Thank you for keeping it real! There is so much confusion out there. Grateful to have you as the voice of reason!

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