There are two types of advertising on Etsy: Etsy Ads, which you manage from within your shop, and Offsite Ads, which Etsy runs on your behalf on external channels such as Google and social media. They're charged on different logic; if they're set up wrong, you can lose profit even while sales come in.

How do Etsy Ads work?

  • Your products are shown with an "Ad" label in Etsy search results and on product pages.
  • You pay per click; Etsy sets the click price through an auction.
  • You set the daily budget; Etsy distributes it across the products you advertise.

How do Offsite Ads work?

  • Etsy advertises your products on channels outside Etsy. You don't pay for clicks.
  • If a buyer coming from one of these ads makes a purchase within a certain period, a fee is deducted from the order.
  • Offsite Ads are mandatory for shops that exceed a certain sales amount in the past 12 months, and their fee rate is lower; shops below that threshold can opt out if they wish.

Because margins on POD products are thin, the Offsite Ads fee significantly affects profit. Set your prices accordingly: print on demand pricing.

Which products should you advertise?

  • Products that get favorites/clicks organically: Ads grow a product that's already getting attention; they don't rescue one that isn't.
  • Products with a strong first image: The image determines the click-through rate on ads. See professional mockups.
  • Products whose margin can support advertising: On low-priced products, click costs quickly eat into profit.

Are your ads profitable? ROAS and break-even

ROAS = Sales from ads ÷ Ad spend.

Calculate your break-even ROAS from your own margin. Example: If you have $9 left on a $30 product after production, shipping, and Etsy fees, your margin is 30%. Break-even ROAS = 1 ÷ 0.30 ≈ 3.3. In other words, if you don't get at least $3.30 in sales for every $1 you spend on ads, you're losing money.

Compare the ROAS shown in Etsy's ad dashboard with this number; remove the products that fall below it from your ads.

A practical plan to get started

  1. Start with a small daily budget for the first 2–3 weeks.
  2. Advertise your best 5–10 products, not all of them.
  3. Check clicks, sales, and ROAS weekly; turn off those below break-even.
  4. Fix listing quality before advertising: title, tags, description. See Etsy shop optimization.
  5. Click costs rise in Q4; review your budget at the start of the season. See the Etsy Q4 sales calendar.

Frequently asked questions

Should a new shop advertise?

In a shop with no sales or reviews yet, ad clicks are harder to turn into sales. Focus first on listing quality and your first sales: your first sale on Etsy.

Should I turn off Offsite Ads?

If you're below the mandatory threshold and your margin is low, opting out may make sense. If your margin can absorb the fee, you can leave it on as an additional sales channel.