I know this post was from a little while but thought I'd chime in... Yes, some people do make money from ads. We've spent more than $160k on ads in the last 2 years, all at a profit. So blind advice to just turn them off is unsubstantiated.
I've had extensive conversations with Etsy's support and emails from their marketing team and they've both said the same. Switching off 'irrelevant' ads does nothing to influence who sees your ads. They use it to 'inform', but it does nothing to influence the actual placements. It's one of my biggest peeves with this platform - very limited control over ad spend OR targeting. Etsy is WAY behind most other platforms here - you can't control who sees your ads, you pay per click (so even if people don't buy it because they come from an irrelevant search term) and you can't determine which of your products is shown at any given time. In fact, on this last point Etsy actively pursues it's own interests here which is super frustrating and echoes a lot of sellers complaints that Etsy don't prioritise the interests of sellers on their platform. I'll explain...
If I have two colour variations (let's say Red and Blue), Etsy will prioritise whichever listing gets the most clicks (the metric that benefits Etsy most), NOT the one with the best ROAS (which would benefit us as sellers). As a result, in one month you might have stats that show Red, which gets a click through rate of 3%, gets shown to a 1 million people at a ROAS of 1.5, while Blue which gets a click rate of 2% (so less clicks revenue for Etsy) will only get shown to 25,000 people even if that smaller audience has a 5 ROAS.
The other thing to note for those interested in this subject... is that it's important to not measure using Etsy's ROAS measurement. They measure ROAS as (REVENUE / Ad spend), eg let's say $450 revenue/ $150 Ad spend = will report as a ROAS of 3. I'd say this is not a true reflection of your ROAS when you factor in your listing fees and costs for the platform (I'd wrap that into advertising costs). Etsy takes 10.5% (pay processing and listing) + $0.20. So for a $20 product call it around 13% to be conservative.
So your calc should then be (450 minus 13% / 150) = $391.50/150 = Etsy's plaftorm is giving you an actual return of more like 2.61. Then factor in any other material/production costs to work out whether Etsy ads are worthwhile for your situation.
I hate when people just say "Etsy ads don't work" or "Turn them off" without giving some actual data to back that up. They do work for some people, you just need to know how to interpret YOUR numbers. And if they're not worth running, buy all means turn them off and look at alternatives.
IMO (and what has served us very well), if you can run ads at break even then you're building a business and your reputation for free. And sales are the biggest single metric contributor to organic ranking so more sales (logically) = higher ranking. Even sales through ads. If it pushes you up, then you benefit in the long run. So run ads and test.
But also, take your time to build the best product your niche has ever seen.
Good luck out there 🫶
