Etsy sellers often ask: Are ads really worth it? The short answer is yes, but only if you know what you're doing. Running Etsy ads isn’t just about flipping a switch and watching sales roll in. It’s about ensuring those dollars lead to real profit, not just revenue. This is why our platform gives sellers clear, actionable insights into their Etsy ad performance. Let’s break it all down.

Etsy Ads, What is the Goal?

Imagine giving Etsy one dollar and getting $10, $20, or even $30 back. Sounds like a no-brainer, right? The issue is that Etsy's ad reporting often lacks the clarity needed to confidently scale ads. Sellers see numbers like "revenue from ads" or ROAS (Return on Ad Spend), but these metrics don’t paint the full picture.

Profit, not just revenue, is the goal. It’s pointless to dump money into ads if they aren’t driving meaningful profit. Ads should amplify your results, not just fill your dashboard with vanity metrics. That’s where our new feature steps in.

Maximize your Etsy ads with actionable tips and our powerful Advertisement Tab. Watch now to boost your profits!

What Happens When You Don’t Run Ads? - A Real Life Example

At ProfitTree, the impact of Etsy ads is underscored by the experience of our co-founder, Hannah. Without advertising in 2023, Hannah would have missed out on over $150,000 in revenue.

In 2023 her shop did over $300,000 in revenue with a $107,240 profit.

Here’s a breakdown of the numbers: an investment of about $40,737.23 in Etsy ads generated roughly $137,362.06 in Etsy sales. Additionally, $2,186.90 spent on offsite ads brought in another $18,089.24 totaling over $150,000 in revenue driven solely by advertising efforts.

This strategic investment not only covered costs but also yielded an extra $34,000 in profit she otherwise would have not made. These figures demonstrate the critical importance of utilizing Etsy ads effectively to avoid significant financial losses.

Our powerful features are tailored to help maximize revenue and profits from Etsy shops, ensuring that no potential earnings slip through the cracks.

The Problem With Etsy's Reporting

Take a look at Etsy’s ad dashboard. You’ll see metrics like views, clicks, orders, revenue, spend, and ROAS. While these seem useful, they don’t answer the most critical question:

Am I making a profit, and how much?

ROAS, for example, often misleads sellers. It only shows revenue directly tied to ad clicks. What it doesn’t account for is how ads drive organic sales, repeat customers, and overall shop growth. This is why many sellers make the mistake of turning off ads based on misleading numbers.

Historically if your ad is performing organically and the ad cost is still clearing a healthy profit you would NOT want to turn off the ad.

At ProfitTree, we focus on something far more meaningful: Ad Cost Percentage (also called TACoS in the advertising world).

What Is Ad Cost Percentage, and Why Does It Matter?

Ad Cost Percentage (or TACoS) is the gold standard for analyzing ad performance. It’s calculated as your total ad spend divided by your total sales (including both ad-driven and organic sales). This is the metric top Amazon sellers use, and we know it works just as effectively for Etsy.

Here’s why it matters:

• It’s holistic. Ad Cost Percentage includes all revenue (organic and ad-driven). This reveals the true profitability of your ads.

• It’s actionable. By identifying listings with higher-than-desired ad costs, you know exactly which products to stop promoting and which to scale.

Let’s say your goal is an Ad Cost Percentage below 12%. If a listing is above that, it’s draining your profitability, and you’d turn it off. Our platform gives you this data at both the shop and individual product level, removing all guesswork.

Making Ads Simple: The ProfitTree Approach

We’ve designed our platform to take all the guesswork out of Etsy ads. Instead of overwhelming data points that lead to confusion, we focus on what actually matters: Are your ads making money after all your expenses?

Here’s how it works:

• Track real profit. Our dashboard calculates operating profit after key expenses like product costs, shipping, transaction fees, processing fees, and marketing costs.

• You control your ad cost percentage! For example, if you want to keep your ad cost percentage for your entire store under 10%, you can use our advertisement tab to identify and manually turn off any listings that aren’t meeting that goal.

• Optimize easily. With our upcoming Advertisement tab, you’ll be able to see performance down to each individual listing. No more guessing which products are holding you back.

What’s New in ProfitTree

We have rolled out our Advertisement tab. Here’s what’s new:

• Listing-level insights: Understand each product’s Ad Cost Percentage and stop wasting money on underperforming items.

• Break-even ROAS: Instantly see if your ad spend is at least breaking even, alongside your profit margins.

• Dynamic tracking: Monitor trends and spot listings with declining performance to optimize your spend.

This feature reflect the same strategies used by eight-figure Amazon sellers, tailored for Etsy’s simpler ecosystem. Now, anything not meeting your Ad Cost Percentage target can be turned off with confidence.

Why Ads Are About the Long Game

When ads work, they go beyond immediate sales. They enhance visibility, improve rankings, and compound long-term growth. This is why you shouldn’t fixate solely on ROAS or short-term metrics.

But—and this is critical—ads only work when tied to optimized listings. If your product doesn’t sell organically, ads won’t be a magic bullet. If you’re struggling at this stage, focusing on improving your listings, niche selection, or skill set is the best first step. We offer free tools, courses, and a community designed to help sellers succeed.

Final Thoughts

Etsy ads aren’t “nice to have.” They’re a competitive advantage when managed wisely. By focusing on profitability, not just revenue, our platform makes scaling ads clear and stress-free.

If you’re ready to maximize your sales and stop leaving money on the table, try us today. With our new feature, you’ll finally know if your ads are working and exactly how to make them better.