For That Matter, Will They Even Work For Etsy?
We’re All About To Find Out
Etsy started rolling out its new combined ad-purchasing interface for sellers today (August 27, 2019), giving us the first real look at how this will work. While there are still some questions, and likely some upgrades coming to the stats and options, I am providing a quick summary now so no one is surprised when their ad costs suddenly increase overnight.
But first, a little background. Etsy Ads (EA) combines Etsy’s existing Promoted Listings (PL) with their little-used interface allowing sellers to buy their own Google Shopping ads. Once it has rolled out to everyone, sellers will no longer be able to purchase just one type of ad; if you want one kind, you will have to pay for both.
Why would they do this? CEO Josh Silverman claims that “Our sellers have found it confusing and a bit intimidating to try to manage 2 separate ad programs, and as a result, seller adoption of Google Shopping has been limited. We believe that sellers want a single, simple solution with a single budget, where they tell us how much to spend and we invest that on their behalf, on- and off-Etsy.” In addition, Silverman told investors that Etsy shop owners “have more appetite to invest than we have inventory to offer”, based on the fact that each day, more than half of the maximum daily budgets set for Etsy Promoted Listings go unused, as illustrated in the following Etsy graphic from the second quarter earnings presentation.
Now, I am sure he is correct on both points to some extent. There are a few sellers who find Promoted Listings and Google Shopping campaigns a bit confusing (as evidenced by questions asked in Etsy’s forum spaces). There are also some people who would like to spend more of their daily budgets on more ads.
However, these explanations ignore two points that likely represent a much larger portion of sellers interested in buying ads:
Etsy’s version of Google Shopping ads has been widely panned as far too expensive for the average shop, with no control over maximum bids, and a low amount of sales. [Update (August 28): The program often bids on very generic terms that are unlikely to convert against commercial competition, and may not even be accurate for your items.] Furthermore, Etsy showed items from other shops across the top of the landing pages from Google Shopping, meaning that merchants are paying to advertise other merchants, not just themselves. [Update (Sept. 24): Etsy admin have confirmed with some people privately that Google Shopping ads paid for by sellers do not have other sellers’ listings across the top, while ads paid for by Etsy do. However, Etsy has recently been testing placing Etsy Ads across the bottom of listing pages, and that does include on pages that sellers are paying for in Google Shopping and in ads on Etsy.] In short, almost no sellers use Etsy’s version of Google Shopping ads because the return on investment (ROI) is very poor for individual shops, especially given that they are forced to pay to promote items that are not their own.
Many shops find they have to set their daily Promoted Listings budget far higher than they want to spend, just to get a decent number of impressions and clicks. (Mine was set at $10 a day and I rarely spent more than $1; if I dropped it to $2 or even $5, Etsy showed my ads far less often.) This is the way this version of Etsy search ads has worked for a long time, and sellers have developed this strategy of high daily budgets to compensate.
While we can likely write off the CEO’s comments as spin, it is very possible that they didn’t realize point #2 was such a common practice. If so, Etsy has designed this new platform based on a false premise, which doesn’t bode well for its success. Looks like we are going to find out very quickly.
Etsy Ads - What you Need to Know
While the details are likely to change, given that the dashboard and tools seem so unfinished, there are some things you need to know right now:
Etsy Ads are available to some sellers right now, through the Shop Manager.
The new platform will be rolled out to all sellers by the end of September, and you will be automatically switched to it if you do not change voluntarily. Note that if you turn off your Promoted Listings or current Google Shopping ads, you will not be able to revert to them, and will be stuck with Etsy Ads as your only option.
Sellers still only pay for clicks, not impressions.
You can still opt to promote only certain items, but they will be shown on both Etsy and Google; you cannot select some listings for one venue and others for the other, as we can now.
You can no longer set maximum bids for individual items; Etsy’s software will do all of that for you. However, if you have an existing Promoted Listing campaign, Etsy will look at your current bid customization at first, then will revert to its own stats on what it deems will work best for you.
Since the goal of Etsy Ads is to spend all of your daily budget, those of you who chose a high daily budget solely to increase your Promoted Listings impressions should decrease that now, before Etsy converts your PLs to EAs.
The cost for one click in Google Shopping is still very high compared to Promoted Listings, with sellers who tried it today reporting clicks up to 90 cents. [Update: (September 17): some are now reporting clicks costing up to $1.50 USD.]
Etsy put out a video summarizing the new platform. The example of the monthly overview shows a roughly 2 to 1 ratio for sales and costs, far worse than the vast majority of sellers would likely tolerate. Remember, this is the example Etsy wanted you to see; they could have used far better numbers if they thought far better numbers were going to be common. [Update (August 28): Etsy will be updating the video, and stated that the return shown is $5 for every $1 spent, which they consider “a pretty great return”. In contrast, many sellers have been posting vastly better return rates from PLs, suggesting they won’t agree with admin on this point.]
It looks like one thing that isn’t changing much is the fact your Google ads will be limited to one country in most cases, unless you have a big budget. “On Google, our smart advertising platform will determine the best region for you, so you can reach shoppers that are interested in products like yours and most likely to make a purchase. Etsy Ads targets the country of best return. As your budget increases, we regularly evaluate whether it makes sense to target multiple markets.”
Etsy is still displaying other listings at the top of your landing page from Google Shopping ads that you pay for. I set up the ads in my SEO shop as a test, and clicked on one; here is what I saw:
So, sellers are still being asked to pay to drive traffic to other shops. I expect that this will be a deal breaker for many.
Finally, Etsy is asking for seller opinions in a very short survey. If you are unhappy with this change, I urge you to fill it out and be specific about the perceived deficiencies of the new platform and in their reasoning. If you had a high PL daily budget, or previously tried and ended Google Shopping ads, tell them exactly why.
Things We Hope To Learn In The Next Month
At the top of my list of questions is: Will Etsy continue to buy Google Shopping ads for shops that do not participate in Etsy Ads? Right now, they spend a big chunk of their advertising budget on these ads, and have stated that they are Etsy’s top-performing promotions. It seems really unlikely that they will stop that entirely, at least not right away. I don’t think they can afford to lose that income. [Update (Sept. 6): so far, Google Shopping ads are continuing to run for people who are not buying any ads, and for listings that are not currently included in Etsy Ads, even if others from the shop are in Etsy Ads.]
Update: (Sept. 17) : some shops, especially those with relatively low daily budgets, can see that Google Shopping Ads were turned off for their shop, even though they are enrolled in Etsy Ads. I took the following screenshot of my stats page for my SEO shop on a day when stats were broken and reporting zero views, so I thought it might be an error, but many others are seeing the same thing:
Despite this, both of my items are still showing up in Google Shopping, even though I am only advertising one listing at the moment (as a test). So, Etsy seems to be paying for all of my Google Shopping appearances for the moment, although they have not confirmed this yet in my contact with Support. [Update (Sept 24.): Etsy has confirmed that they are still buying Google Shopping ads for sellers who do not participate in Etsy Ads, and even for some listings that are enrolled in Etsy Ads. The latter seems to happen more with shops with smaller daily budgets. The above screenshot shows Etsy opening a Google Shopping account for my SEO shop, but then putting it on hold while the new Ads algorithm learns about how my listing perform. This explains why some people who saw the same thing in their stats later saw Google Shopping Ads turned back on by Etsy.]
The next question is, are they going to be improving the Ads dashboard? (It is shown at the top of this post.) Right now, it is pretty sparse, and the amount spent is tiny compared to the earnings. You can only choose 30 days or the past year as date ranges, which means that older shops that have been using PLs would lose their keyword data older than 365 days, if this format continues. I have copied all of mine into Google Docs so I don’t lose it; sadly, there is no way to download it. [Update (Sept. 6): Etsy has added more date ranges, and the ability to sort the listings table by various factors. Also, if you have turned off all ads but want to see your old PL keyword data, you can still use this URL: https://www.etsy.com/your/shops/me/promoted-listings/analytics/XXXXXXXX (change XXXXXXXX to your listing ID number) to access it. (Sept. 17): if you see zeros in your Ads stats, there is a workaround for that.]
My last question is, how many more bugs are they going to introduce, and are they planning on fixing the old ones at some point? Promoted Listings have been showing completely irrelevant ads in many search results, and some of them are leading to click costs. Most sellers who advertise their shops through Etsy’s tools have previously found that PLs provide way better results than Google Shopping; reducing the effectiveness of the existing ads while combining them with less effective ads just seems like a bad strategy for the corporation.
What Should Sellers Do?
Wait to see what gets changed; I cannot believe they will continue to expect everyone to pay for ads with other people’s items across the top, with few stats, and with no maximum bids.
At the very least, they have to be planning to add something in that makes them think more people will pay for this. There are signs that they are going to be upgrading the Etsy Plus package, and perhaps finally releasing Etsy Premium. If both of those subscriptions contain lots of things most sellers want (many of which have likely been taken away recently, such as more detailed stats), and also continue to include “free” Etsy Ads budgets, they could end up maintaining most of their ad numbers. [Update: (Sept. 6): increasing the “priority placement” in US searches for listings that ship free, now up to 48 items from 24, is another way to push ads on sellers, if they don’t ship for free.]
And of course, if the ads end up having much better ROI than most of us expect, Etsy could end up making even more money on this than they did before. While I can’t see this new interface working for me, I am sure it will work for somebody.
But maybe they really did blow this one. If so, all of you who have heeded my constant advice to diversify your income streams will be pretty thankful you never got dependent on Etsy’s Promoted Listings!
This post will be updated as required. I’ll also probably fix most of the typos while introducing new ones - it has been a very long day!
UPDATED: Sept. 17, 2019