Etsy announced on February 26, 2020 that it would fund ads for sellers’ listings outside its marketplace and charge the shop if an advertising visit produced a sale within 30 days. The new Offsite Ads service was planned for the second quarter of 2020. For a small shop, Etsy would take on the risk of paying for an ad that brought no sale. An order attributed to the ad would still carry an advertising fee. [S3][S4]

Etsy named Google, Facebook, Instagram, Pinterest and Bing among the channels where it would buy ads. Its announcement ties the seller’s charge to a shopper clicking an offsite ad and then buying from that shop; the same-day investor slides supply the 30-day window. A purchase need not happen at the first visit to fall within that window. This is a rule for attributing an order to advertising, not evidence that the buyer would never have purchased without the ad. [S3][S4]

Etsy was also splitting an existing advertising bundle. Its presentation describes the consolidated Etsy Ads platform launched in August 2019 as combining seller-funded Promoted Listings on Etsy with seller-funded Google Shopping ads. Under the February plan, Etsy Ads would become a dedicated on-site promotion service, with sellers paying to promote listings to shoppers already on Etsy. Offsite Ads would put the upfront purchase of external advertising with Etsy. The distinction is both where the shopper sees the listing and who finances the ad before a sale arrives. [S3][S4]

Etsy’s own financial incentive was explicit in the investor slides. The company planned to record Offsite Ads fees as marketplace revenue and its associated spending as marketing expense. It forecast a positive effect on earnings before interest, taxes, depreciation and amortization, or EBITDA, and an improvement in that margin. Those were expectations about Etsy’s profitability, not a projection of a seller’s earnings. The shop would still need enough left from an attributed order to cover the advertising fee and the cost of making and fulfilling it. [S3][S4]

Source documents

  1. Etsy Updates Advertising Offeringshttps://investors.etsy.com/news-events/press-releases/detail/102/etsy-updates-advertising-offerings
  2. Q4/FY 2019 Financial Results — February 26, 2020https://investors.etsy.com/_assets/_9db1bbfb2737ffa53dcf5fc108ac3ec5/etsy/db/938/9462/presentation/Etsy-4Q-2019-Earnings-Presentation_FOR-IR-WEBSITE-FINAL.pdf