The fact that Etsy surpassed its financial goals in 2019 should have been the biggest news coming from the company’s fourth-quarter earnings call last week. But the changes it’s making to offsite advertising have stolen the spotlight.

As of April 14, all sellers will be automatically enrolled in a new offsite ad program that Etsy describes as “risk-free.” Sellers will only pay a fee — 12% of the sale if you’re a top seller, or 15% if you sell less than $10,000 of product annually — if a purchase results from someone clicking on a paid ad to your product within 30 days. That fee is capped at $100 per order. If you sell more than $10,000 in merchandise in a year, you can’t opt out of the program.

CEO Josh Silverman said on the earnings call that the ads program launched last summer had delivered “positive returns for sellers and solid revenue growth for Etsy,” but as many sellers see off-site advertising as a risky investment, “we could see that it was going to take longer than anticipated to scale the program,” he said.

The idea of letting Etsy consolidate and handle paid advertising efforts makes sense from a strategic standpoint: The ads program introduced in August required more attention from individual sellers, and it was limited by their ad budget, with no guarantee of sales. Now, Etsy’s taking on the risk of advertising and passing on a fee to you only when a sale actually happens.

“If somebody clicks on a listing and doesn’t buy, there’s cost in that, and Etsy might absorb better that,” Silverman said. “The idea that we are chipping in together with sellers to make this a great program, we think, is important.”

He predicts that the Offsite Ads initiative could drive 10% of all sales on the site. “We’ll leverage our performance marketing budget and expertise to drive traffic to sellers’ shops,” he said. “For Etsy, this means that we can rapidly scale our off-site advertising program without any budget limitations.”

While the cost of individual product ads is mostly moving to sellers, Etsy is spending more of its marketing budget on raising brand awareness with TV campaigns. “We always start with, ‘What do we think is in sellers’ best interest?’” Silverman said.

“Under $10,000, you have the ability to opt out of the program because we’ve seen some sellers who’ve said that growth is actually something that they’re not necessarily ready for,” Silverman said. “By the time they’ve hit $10,000, we see that growth is something they’re typically ready for. … It lifts up the whole program to have all of the larger sellers in the program.”

Offsite Ads backlash

It’s not clear how many of Etsy’s 2.7 million active sellers surpass that threshold. It also remains unclear whether all sellers will automatically have product ads created on their behalf by some kind of automation or if Etsy ads team members will be selective in creating the ads. And Shopify is apparently actively courting Etsy sellers.

A commenter on Ycombinator’s forum who said they formerly worked on Etsy’s ads team wrote: “I have no idea what the hell they’re thinking with this. This is downright hostile to sellers.”

One seller on Reddit’s Etsy forum suggested people who don’t like the plan put their shops in vacation mode en masse as protest. Another seller wrote: “Drop this f***ing charade, Etsy: We all know the purpose of this is to get sellers to fund your advertising directly so you can eliminate that expense and appear more profitable. It has nothing to do with benefiting individual shops.”

Etsy team members were addressing questions in a forum thread, but the answers mostly consisted of restating the basics of the program. The company has put up a survey for sellers to weigh in on the new offsite ads program. 

Aware that the changes were likely to cause concern among sellers, Silverman said on the earnings call, “We don’t want them to jump to conclusions around things before they have a chance to experience it. We’re also going to give them a couple of weeks of sort of free trial period, where they will actually get to experience it.”

Financial results for 2019

The Offsite Ads bounties will be another boost for Etsy’s revenue, which reached $818 million in 2019, up 35.6% from 2018. Gross merchandise sales reached nearly $5 billion in 2019, up 26.5% from last year.

Chief Financial Officer Rachel Glaser noted that Etsy’s take rate — the percentage of gross merchandise sales the company takes in the form of fees and services — was about 16.7% in 2019, and they expect it to reach 17.5% in 2020.

For comparison, eBay’s take rate for 2019 was under 12%. Sellers, of course, would prefer that a company siphon off less of their merchandise sales with fees and services. But companies might want to increase the take to have more money to invest in the platform.

In the fourth quarter of 2019, Etsy’s active buyers grew 17.5% to 46.3 million and active sellers grew 27.6% to 2.7 million from last year.

For 2020, Glaser said the company is forecasting gross merchandise sales growth in the range of 25% to 28% and revenue growth of 27% to 30%, which would put GMS around $6.3 billion and revenue around $1 billion.


Grace Dobush

Grace Dobush


Grace Dobush is a Berlin-based freelance journalist and the author of the Crafty Superstar business guides. Grace has written about business and creative entrepreneurship for publications including Fortune, Wired, Quartz, Handelsblatt and The Washington Post. 

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