For my first Etsy shop, I didn't start using Etsy Ads until 4 months after opening the shop. I already had a lot of sales and data that allowed me to start effectively.

First Strategy I Used

I began by using a $5 ad budget on the 10 most profitable products. As I mentioned earlier, Etsy automatically manages the budget among these 10 products based on their performance.

The results were good very quickly, and I achieved a ROAS of 3.4.

I maintained this budget and ROAS for 3 months. Then, one day, I decided to increase it to $10 per day.

My ROAS slightly dropped to 3, but my profits increased, allowing me to earn $600/month just from Etsy Ads.

I also noticed an increase in my organic sales, going from an average of 8-9 sales per day to 12-13.

Second Strategy I Used

Later on, I started delving deeper into my research and came across someone who experimented with setting their Ads budget to the maximum... And it worked quite well. With a ROAS of 3, I thought it was worth testing. So, I increased my budget from $10 per day to $200 for the same 10 items.

The next day, I noticed that Etsy hadn't spent the full $200, only $110, and to my surprise, my ROAS dropped to 1. The second day was similar, my ROAS dropped to 0.9, and I started losing money on the ads. Plus, you need to consider adding VAT to the ad budget, which can significantly increase it.

This time, I decided to analyze more deeply what was happening. First, I deselected all products priced below $4, leaving me with 3 products. I also optimized the keywords in my ads (I'll explain this in detail in the next section). The results were much better the next day; the ROAS went up to 1.7, and my spending seemed to be better controlled.

So, I kept at it, deciding to try this approach for two weeks. My ROAS eventually stabilized around 1.9, and most importantly, my organic sales skyrocketed from an average of 12-13 per day to over 20.

I'm still using this strategy for now. If my ROAS drops too much, I'll adjust the budget to around $30 per day.

The strategy I would use if I had to start a new shop

I'm aware that many of you are new shops and don't have bestsellers to advertise. In that case, I'll tell you what I would do if I were to start a brand new shop.

First and foremost, I would optimize my shop and products to the fullest. While it's often said not to be too much of a perfectionist, for Etsy Ads, you need to be. If any of your pillars isn't solid, it won't work. So, first, strong fundamentals.

Secondly, I would try to gather a few reviews before starting the ads. You can offer special deals, etc. There are many ways to obtain reviews while respecting Etsy's Terms of Service (TOS).

Thirdly, I would add at least 5-10 products. Etsy customers find it difficult to buy from a shop with only a few products.

Fourthly, once your shop gains some legitimacy, I would start using ads on products with the most potential, with a budget of $5 per day.

Fifthly, I would wait for a month and analyze what happened. If it worked, great. I would increase the budget and/or the number of products. If it didn't work, I would look at the data and improve my products until it does.

Lastly, if one of my products becomes a bestseller, I would continually increase the budget until I find the optimal balance for maximizing profits.