Wednesday, September 21, 2011

Defining Ad Terms

Etsy is launching their new search ad program but there seems to be a lot of confusion about some basics on online advertising so here are some definitions of common ad terms. Etsy's new ad program works a lot like Google's Adwords search ads so you can apply a lot of information about Adwords to Etsy Search Ads.


Impression - When your ad is seen. So 5,000 impressions means your ad is seen 5,000 times.
Click - When someone clicks on your ad. 5 clicks means 5 people have clicked on your ad and viewed the page it is linked to. Etsy uses the term view for this on your shop stats page.
CTR - This stands for Click Through Rate it's a percentage arrived by dividing the number of ad clicks by the number of impressions. If an ad is clicked 8 times and has 300 impressions it has a CTR of 2.6%. Generally a CTR of >1% is considered good.

How Search Ads Work
When someone searches using a keyword (say "silver necklace") ads using that term are displayed. The price of that ad depends on several factors: frequency it is searched and competition for the search term. So a term that is searched 500 times a day and is being bid on by 30 ads will have a higher price than a term with 1000 searches and 30 bidders. Likewise a a term that is searched 500 times with 5 bidders is going to be less than a term with 1000 searches and 50 bidders. Thus a popular term can actually be quite cheap because it searched thousands of times a day and even though it has a lot of bidders there's enough rotation for everyone.

Etsy has a list of estimated prices per 1000 impressions for keyword on this page but expect it to change once the ads go live based on demand for keywords and changes in what people are searching for.

Etsy Ads or Google Adwords
This isn't an either/or question, nor should it be. The fact is that Etsy Search Ads, Google Adwords, and Project Wonderful (another fantastic ad network) all serve different audiences and can all be part of an overall advertising plan. Adding a new advertising option may require that you shift your advertising budget around a little bit to make room for the new expense (though if you were a frequent relister on Etsy you can put some of the money you are now saving on listing fees towards advertising now that relisting isn't as useful a strategy). If you don't currently have an advertising budget you really should have one, marketing is a vital part of business and as much as I'm a fan of marketing that costs time not money (blogging, social media, etc) traditional advertising is still important.
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