There are Etsy ADs and then there are Offsite Ads. Two different programs and they both work differently.
Etsy ads are internal ads that appear on search pages on the Etsy site. You set a daily budget that you are willing to spend for these ads and are charged per click regardless of whether a sale occurs from the click. Many people use them very successfully, others not so much, but they rely heavily on your SEO being up to scratch. Etsy Ads are entirely optional.
Offsite ads are external ads appearing on search engines and social media sites across the internet. Etsy submits all our listings to the external sites for potential ads, and the sites decide which items to show to potential buyers based on each buyer's likes, dislikes and search habits. Etsy pays the external sites per click for these ads, but only charges us when a sale occurs from a click on one of our ads. IE you only pay when they work, but you pay 12% or 15% on top of the normal fees on sales from ads. f you have never hit $10K per year in sales, pay 15% and you can opt out of these ads, but once your shop revenue in any twelve month period reaches $10K in a year, you will be opted back in and pay 12%, but cannot opt out again, ever.
For many people the Offsite Ads are more effective and cost less when you consider the cost as an overall business expense instead of looking at it in relation to the sale it occurred on. You can average the cost across all sales and cover it with a small global price increase of 2-3% based on the % of sales that come from ads, multiplied by the 12% or 15% you pay. IE If you get 20% of sales from Offsite ads, 20% x 12% =2.4%. Buyers won't notice that small a price increase and every sale gives you a little extra to cover the ad fees on the 20%.
