Using Etsy Ads will bring you numerous benefits, even if they are not immediately profitable.
Here is a non-exhaustive list of advantages associated with using Etsy Ads:
Increase Your Revenues Of course, one of the first reasons that comes to mind when talking about using Etsy Ads is to increase your revenues. Your revenue goals, however, should differ depending on whether you're a new seller or an experienced one. If you've been selling for some time and want to boost sales for specific products, you should aim for a positive ROAS (a 2 would be good). However, if you're a new shop, simply getting sales would already be a success in itself.
Boost Your Visibility The main challenge when starting on Etsy is visibility. As a new shop, you have no reviews, no sales, and the algorithm is just beginning to understand what you sell. Etsy ads will be an incredible visibility accelerator. Firstly, this will help the algorithm understand your shop's offerings more quickly, and after a days of adjustment, it will target your audience. Your products will appear on the first page for many keywords, and if they are well optimized, you should obtain your first sales.
Collect Useful Data Sometimes getting results from Etsy ads can be challenging, especially for new shops, as you may not yet have legitimacy, and your products might lack optimization. However, even if it doesn't work or works minimally, you will have collected a tremendous amount of data to analyze. Didn't work? Alright, why? Is the click-through rate (CTR) very low? Is my conversion rate very low? Is there a product that performs better than others? All of this data will allow you to filter and analyze your products and make them more optimized. This will make your shop better.
Save a Lot of Time Using Etsy ads will save you a considerable amount of time, especially if you're a new shop. Why? Firstly, for the reason mentioned earlier: you'll quickly collect a lot of data that will help you improve your products. And secondly, you'll get sales and reviews more rapidly than if you don't use Etsy ads. This will make your shop more legitimate more quickly. Let's take this example: Shop A uses a $5 daily budget and ends the month with 13 sales, a ROAS of 1, and 2 reviews. Shop B doesn't use Etsy ads and ends the month with 1 sale and 0 reviews. Which one would you choose?
Improve Organic Ranking If your Etsy Ads perform well with a positive ROAS, it should also boost your sales and organic ranking. If the advertised product is sold several times, this signals to the algorithm that it's a product with high sales potential. Since Etsy's revenue also comes from sales fees, your product will be organically pushed by Etsy. From experience, the higher the ad budget, the more the shop is "boosted" by Etsy. I'll delve deeper into this point later.