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5 Reasons the Etsy Ad Platform is Doomed (And how to Salvage It)
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(Background: I've been in advertising offline and online for 13 years. I've spent millions on ad spend on my career and actively use every major and minor ad platform out there now. I've sold a crazy amount of products and services for both myself and my clients using every advertising trick in the book. Not here to toot my own horn - just to say I know what I'm talking about in the wacky world of advertising
Posting this while on a business trip from a client's network. My wife has an Etsy account and told me about the ad platform - I immediately told her not to spend a dime on it. This is why.)
REASON #1: CPM - In the world of Internet advertising there are 2 primary ways to by ads: Cost Per Thousand or Cost Per Click.
Etsy is using CPM but should be using CPC. Why? Because you as an Etsy seller are looking for a direct financial return on your ad dollars. Either you make a profit on your ads or you don't. There is nothing else that matters.
CPM is best used in two cases:
A: you've got giant companies buying your ad space and don't care about returns or conversions. Think about Johnson and Johnson buying banner ads all over the Internet to promote a new baby wipe they made. If they spend $4 million on advertising a month for it they don't care about the cost. They want to get people aware of the product. This is called 'branding' and CPM and branding go hand in hand like peanut butter and jelly.
B: you have an advanced bidding system in place that allows bidders to control every single aspect of the ad buying. Ad sizes, locations, bid prices, time of day, re-targetting, destinations, etc, etc, etc.
It's like guys who LOVE cars: they want a manual transmission to have full control, not the automatic shifter on your sedan.
Etsy's CPM *could* be useful, but for reasons I'll talk about soon, it's not the right choice because it does not fulfill the "advertising nerd" requirements I just mentioned.
As a side note - ad platforms that run CPM almost always offer CPC as well. CPM only networks often bite the dust because of disuse and fraud.
REASON #2: no bidding on individual keywords via CPM
Ok. So if I *have* to use CPM, at least let me bid on each keyword with a different cost I want. For example, the word 'red' is not going to be worth much to me but 'red bird sweater' is.
Etsy has decided though that across the entire site certain keywords have a cost, and there is no changing it. If I want to bid on 'red' I pay the same price everyone else does. I cannot pay or less depending on my products.
The system is called 'bidding' when I can set my price. Even basic CPC networks offer the advertiser the ability to enter a bidding marketplace. In fact, I have never seen an advertising platform that does not offer the ability to bid on each inventory item. It is such a basic part of advertising I can't believe it's missing.
Etsy's bidding only allows you to set your bid based on your entire targeting universe.
Used up all your impressions on 'red' 'blue' and 'love'? Too bad.
REASON #3: max of 2 keyword sets
So I'm having to bid CPM and keyword sets you choose - let's pretend this is going to work, and keep going, and look the words Etsy is using.
Notice they are all 1 or 2 word sets. These are called 'short tails' whereas something like 'red bird sweater with tassels' is a 'longtail' keyword. There's an interesting story behind the names that we won't get into. All you need to know is that longtail keywords are where the money is at.
Pretend you a buyer: if you are searching for something soooo specific like 'pink unicorn with a flaming horn' or 'blue kitchen table with tiles' you know EXACTLY what you want. In fact, if you see my unicorn with flaming horn there is a high chance of you buying it. So this is where to target your ada, right?
Well - Etsy won't let you. Why? I don't know. I think it has something to do with their systems not being able to handle a true inventory of keywords "on the fly." Instead they create a list of keywords, all limited to at most 2 words, and let you choose from there.
This is kind of like offering all 6 billion people in the world 30 types of clothing. Doesn't fit you? Too bad kid. Or if Google only let you search for things no longer than 2 words. It's just an arbitrary limit and simply wouldn't work. But Etsy is going to take your money anyway.
REASON #4: floor of 10 keywords
Ok, ok. So we're bidding CPM on shorttails based on what Etsy says to pay. Well, then I'll just remove 'red' 'blue' and 'love' from my targets. Right?
Wrong.
You must bid on 10 keywords.
Without an ability to add your own keywords, you are going to forced to bid on shorttail keywords that are straight up money wasters.
Enforcing arbitrary minimums is called 'flooring.' For example, the MySpace ad platform had a price floor of 25cents to bid. You could not bid less than that. I have used several ad platforms with price floors before, but never one with a keyword floor.
It's exceptionally strange to do this if you're creating a system that is good for the advertiser. It only benefits the ad network owner to enforce floors. In this case, this only benefits Etsy because you are forced to bid and spend money on useless keywords.
In general price floors are signs of manipulated economics and have no place in a true advertising marketplace. Keyword flooring is so strange it's a sure sign that Etsy did not hire anyone with experience to make this platform. In fact I can't think of ever running across this.
REASON #5: bots will kill it
So here's the story. You're being forced to bid on keywords you don't want at a rate you can't set via CPM. Let's talk about fraud now.
CPM fraud is when an evil competitor uses bots or computers to view all your ads thousands of times just to waste your money. Why? Because without click tracking or CPC, CPM is a frauders paradise.
CPM networks are rife with fraud. Sometimes I spend all day just dealing with fraudulent impressions - finding the sources and blocking them and begging for a refund.
CPM fraud is just part of the game though - it happens, and you deal with it by viewing reports and having someone at the network monitoring too.
But do you really think Etsy can do this? They designed the strangest ad platform I've ever seen - my fraud fighting ability in them is 0%. They don't even work weekends (but you'll be paying them on the weekend). I bet they never even thought about this until this week. Other people are already pointing this out.
What does this mean to you? Say my wife is bidding against you for a keyword and I'm evil. I can make a bot in about 5 minutes that uses thousands (Literally, thousands) to eat your impressions. I can take all your impressions in 10minutes or do it in 6 hours to look more natural. Whatever.
The fact is you are now competing with my deep pockets and technical skills. Or let's say I hate unicorns and want no unicorn sellers to make sales via ads. I set my bot to wreck havoc and unicorn sellers are down for the week.
Sound like fun? This is what happens with CPM. Should have thought about that Etsy.
HOW TO SALVAGE THE ETSY AD PLATFORM:
1. Move to CPC.
2. Let people bid on as little or as many keywords as possible.
3. Let people bid on longtails they manually enter.
Or in briefer terms, "act like every other decent ad platform out there."
Look Etsy - I know how hard advertising platforms are to program. Been there, done that. It's HARD. You made it like 70% of the way - and can be really awesome, and offer true value to your buyers and sellers.
Right now you're not offering anything worthwhile. Remove your arbitrary limits (and offer proof of verified anti-fraud measures) and CPM could work as a stopgap until you offer CPC as well.
But please - pull the plug on this platform the way it is now. Please. You are going to get a bad reputation in the advertising world if you actually take people's money with your system now, and the hit to your reputation to your seller's would be fatal.
Posted at 5:15 pm Sep 22, 2011 EDT
Highlighted Responses
First off, it's great to see a discussion like this so early in the life of Search Ads on Etsy. I can't tell you how excited we all are about the product!
I'm Jason, and I lead a team of engineers on the design of the Search Ads system. Between myself and the rest of the Search Ads team, we have many years of experience working at Google, have deep experience in the online ad industry, and have built and designed ad systems previously. Prior to Etsy, I was founder / CEO of the online advertising company Adtuitive where we specialized in ads for small online retailers. It was with our extensive past knowledge and experience of the online advertising space that we designed and built this advertising system for Etsy sellers.
As you can imagine, we explored and analyzed many options in designing Search Ads. I'll go through our thought process.
Auction vs. Dynamic Pricing
Our primary goal of Search Ads is to make them simple to use while also being effective. We wanted to make a system that was accessible for all of our shop owners: one that could be understood and effective for people that have never purchased online advertising before, and equally effective for those familiar with it. We did a lot of research to this end, and here are some of our motivations and findings.
Bidding on keywords is not simple. How much would you be willing to pay for the keyword "wooden bowl"? How much would you pay for "silver bowl"? Auctions are very powerful but also very complex - we didn't want to build an system where you needed to hire a marketing consultant to effectively use it.
Like Search Ads on Etsy, most things you buy in life are actually dynamically priced. Imagine if you went to the grocery store and had to bid on the price for each vegetable in your cart. We've made many efforts to price keywords to reflect the value that sellers will realize by using the system. We've done this by analyzing years of search query data, purchase data, and buyer behavior data. Of course, Search Ads is still in its infancy, and prices will evolve to reflect usage of the system.
The number of keywords is currently around 5,000, but we'll most likely increase selection as the product grows.
CPM vs CPC
Even though popular ad systems may *sell* their ads on a per-click basis, almost every online advertising system uses a CPM model to *price* their ads. This includes Google and Facebook. When Google charges you per-click, the amount you pay depends on something called your "quality score" (adwords.google.com/support/aw/bin/answer.py?hl=en&answer=10215). For example, I might pay $2.00 per click for the keyword "silver bowl", but my friend Frank may pay only $1.00 per click: this is because Frank's quality score is twice as high as mine. The quality score serves as a measure of click through rate: if Frank’s click through rate is 1% and mine is 2%, then each of our effective CPMs would be $10.00. Google sells ads on a CPM basis as well: Natalie can come along and bid on the keyword “silver bowl” directly for $10.00 CPM.
Cost per click pricing works best in a sealed-bid auction (like Google or Facebook) where you can't see anyone else's bids. Given that Search Ads on Etsy is not auction based and that we want to be as transparent and open as possible about pricing, we decided against using a quality score and to charge directly on a CPM basis. We also openly publish our prices.
Once ads go live next week, you'll be able to see performance of your ads on your shop stats console. In particular, we'll be showing you performance broken down on a per-keyword basis. This will give you a sense of which keywords work well and which don't and will allow sellers to tune their Search Ads and decide to eliminate or add keywords or items to their campaigns.
A Marketing Tool For Sellers
In August, we switched the default search order from recency to relevancy. We made this change as we felt it was better for buyers and important for the long term health of Etsy's marketplace. Search Ads is a marketing tool for sellers and has been designed accordingly. We have taken several measures to protect against impression fraud. The requirement of at least 10 keywords is in place because we feel that a larger keyword selection will improve the quality of your Search Ads. We are also looking into showing a greater number of keyword suggestions to sellers to provide more control over when their ads appear.
We can't wait for ads to go live next week. Ultimately, our community of buyers and shop owners will be the arbiters of success. In the meantime, keep the questions and concerns coming!
Jason Davis, PhD, Computer Science
Director of Data & Search
Posted at 1:13 pm Sep 23, 2011 EDT
KoutureCrochet says
This i have a major problem with. FOR THE LOVE OF GOD we are adult business persons, not 3 year olds. it takes 3 seconds to figure out the auction process. you dont even need a tutorial. so either Etsy is saying that they think etsy sellers are too stupid to figure out what advertisers on google and facebook can or etsy is not being 100% honest about the reasons why it didnt do an auction model.
as someone who has run ads and figured out how to do a campaign on facebook without any help the bidding process is not about how much money ETSY gets per click, its about how much *i* am willing to pay per click. for example skinny tie might be cost the same per 1000 imps as crochet tie, but i will be willing to pay less for skinny tie than for crochet tie. to ME crochet tie is worth at least 2x as much per click.
and thats what this whole process has been. etsy thinks we sellers are too stupid to figure out what google adwords users are able to without any problems. the whole response was about what etsy wants. etsy wants this, etsy wants that. but not once did this reply or any single message from etsy about these ads take into account about what SELLERS want, not what etsy wants for sellers but what sellers want and need for themselves. WE are etsy's customers, and we should be treated respectful as such, not like children on disney.com who need to protected from themselves!
sorry for the rant its just soooo frustrating. to here this from a marketplace that could be soo much more. and i was soooo hopeful that we would finally get an business like ad model on etsy itself, only to be told. "no we dont think you are smart enough to do what facebook and google adwords users can" and "we dont think you are smart enough to know that all the choices we have made we are making to nickle and dime and not be accountable to you at the same time"
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This is incorrect.
Some people gravitate towards systems that are powerful, where you can make small adjustments however you want from among a horde of options, to have things -just- like you want them. Very often I'm one of those people, I love gadgets and options and switches and whatever else, though I confess to not wanting to sit down and take however long to fully grasp all of the possible options and shortcuts in my computer's operating system. If you're one of those people too, then I know where you're coming from.
One of our prevailing goals, however, was to make the process of participating in Search Ads as simple and straightforward as it can be. Here are your keywords, tell us what you want featured, how much you want to spend and you're done. And in case you're curious as to how much any given keyword costs, you can check it out on the list. Granted, this doesn't have a lot of dials to turn or switches to flip. But there are many, many, many people (I see some of them posting in the Forums sometimes, I imagine you do too) who would prefer something that isn't fiddly. That doesn't mean they're stupid, and certainly we don't think that. Many people who might be interested in using Search Ads might be too busy with other things in their lives or with making things to make best use of a tool as powerful and as complex as Google AdWords.
And so instead, we have what you see here. The feature is still in its infancy, and we're taking the Etsy community's feedback in account as we go forward, but we hope that even now it's accessible for anyone who might be interested in using it!
Posted at 7:12 pm Sep 23, 2011 EDT
EclecticArtElements says
Rob, people are reporting that the keywords they are presented with have nothing to do with their products and are not good search terms for their products.
A simple system is fine.
A flawed system is beyond my understanding at Etsy's level.
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And I have mentioned this to our Search Ads Team because I've seen reports of this as well. For the data that we have (which is good, but not based on a Search Ads program on Etsy) we are going to run every so often into cases where the keyword doesn't quite work with the item(s) advertised. We want to minimize this as much as possible, and as search ads go up, are clicked on and lead to favorites and sales we'll be able to provide better and better recommendations to sellers who elect to buy Search Ads.
In the meantime, I am stressing that point re: keywords in particular, and should we do anything that we think will remedy this issue in particular, we will make sure to let you know.
Posted at 7:42 pm Sep 23, 2011 EDT
Responses
Wow interesting and powerful, I'm so, so sorry now I bought an Ad and will say this, I will NEVER do so again.
Thank you for this post!
Posted at 5:21 pm Sep 22, 2011 EDT
Thanks for taking the time to carefully explain all that, very enlightening! Unfortunately I now feel even more pessimistic these ads will work for me. :(
Posted at 5:24 pm Sep 22, 2011 EDT
Thank you for writing this out! My husband told me not to do it, too. Maybe you guys are right? :)
Posted at 5:26 pm Sep 22, 2011 EDT
wow. Many of my own reservations are spelled out in this list. Didn't think it felt right. Thanks for the detailed post!
Posted at 5:27 pm Sep 22, 2011 EDT
I was surprised too that it was per impression rather than per click.
Posted at 5:27 pm Sep 22, 2011 EDT
