Is it normal for Etsy Ads to take 50% of revenue for a new shop?

Hi! Ad spend being ~50% of the revenue attributed to Etsy Ads (ROAS ~2.0 / ACOS ~50%) can happen in a new shop, but it’s usually a sign you should tighten your approach unless your margins are very high. The key question isn’t “is it normal?”—it’s “is it profitable after all costs (materials, shipping, Etsy fees, and your time)?” If you can’t comfortably make money with ads at that level, you’ll want to change what you advertise, lower spend, or pause the weak listings.

A couple quick checks first (this trips people up):

• Make sure you’re looking at Etsy Ads performance, not Offsite Ads (different attribution/fees).
• Remember “attributed revenue” is based on Etsy’s attribution rules, so it’s directionally useful, but not perfect—still, if it’s consistently 50% ACOS, that’s meaningful.

How I’d decide what “good” looks like (simple math)

Pick a target based on your gross margin.

Example logic:

• If your gross margin (before ads) is ~60%, then 50% ACOS is probably too high, because it leaves little/no room after Etsy fees and overhead.
• If your gross margin is ~80% (digital products, very high markup), 50% ACOS might be acceptable while you’re building momentum—if it’s also increasing repeat buyers or add-on purchases.

If you don’t know your margin, calculate it per listing (price − product cost − packaging/shipping you cover − Etsy fees estimate). Then decide the maximum ACOS you can tolerate and still profit.

Which listings to advertise (what tends to work best)

Start by advertising only a small set of listings that already prove they can convert.
Good candidates:

• Your best organic sellers (or ones getting lots of favorites/visits already)
• Listings with strong photos, clear personalization options, and fast/credible shipping promise
• Items with healthy margin (you can “afford” the click cost)
• Listings with a clear keyword focus (not trying to rank for everything)

I’d avoid advertising (at least at first):

• Low-priced items with thin margins
• Anything with weak thumbnails or unclear value
• Very broad listings where you’re not sure what search term you want to win

Daily budget: set it to learn, not to “hope”

New shops often waste money because ads are spread across too many listings.

A practical way to set budget:

• Start with a budget that can buy enough clicks per day to generate data (not $1/day across 50 listings).
• Keep the number of advertised listings small enough that each one can get meaningful traffic.
• Don’t scale budget up just because you can—scale because the ads are hitting your profit target.

When to pause vs. scale (rules of thumb)

Because Etsy Ads is CPC-based, I’d use “clicks without results” and “profitability trend” as your triggers:

Pause (or at least stop advertising that listing) when:

• It’s getting clicks but no orders after a decent sample of clicks (the exact number depends on price/category, but if it’s clearly not converting, don’t keep paying for “learning” forever).
• It’s converting but your ACOS stays above your profit limit for a couple weeks.
• The search terms you’re paying for are mismatched (people click, then bounce because it’s not what they wanted).

Scale up when:

• A listing has a stable, profitable ACOS (or ROAS) after you account for fees and costs, and it’s doing so consistently (think weeks, not days).
• You’re regularly hitting your daily budget cap and the extra spend would still be profitable.

If you want, tell me your rough profit margin (or your price + product cost + shipping you cover) and whether these are physical or digital products, and I’ll help you pick a realistic target ACOS and a simple “keep/kill” checklist for your advertised listings.