Etsy is crafting a new marketing strategy, and it doesn't include one big promotion of the Etsy brand. The 12-year-old company, which has seen its share of financial missteps in recent years, reported positive second-quarter earnings Thursday after new leadership helped to trim costs. The Brooklyn-based brand saw a 19.1% increase in revenue over the year-earlier period to $101.7 million, along with net income of $11.7 million, compared with a loss of $7.3 million last year.
Etsy, which went public two years ago, has 1.8 million active sellers and 31 million active buyers in its marketplace. In May, the company brought on former eBay executive Josh Silverman, who immediately began shaving expenses by laying off 245 workers, or 23% of its workforce. While marketing costs for the quarter were up 60% over last year at $28 million, consumers shouldn't expect to see more branded campaigns like last fall's global "Difference Makes Us," which was created with New York-based agency Office of Baby.
Etsy executives said on a conference call that the brand plans to pause its investment in brand marketing for the remainder of the year -- those dollars will be redeployed to digital user-acquisition marketing to drive greater returns, according to Rachel Glaser, who joined as chief financial officer in April. Silverman said the company has added payment safety guarantees to reassure buyers, and started personalized push notifications to encourage repeat visitors. The company wants to give sellers the tools to acquire more buyers on their own.
"We need outstanding marketing capabilities to amplify the voice and relevance of our sellers and get buyers coming back more often," said Silverman on the call.
Some experts applauded the strategy.
Agathe Blanchon-Ehrsam, chief marketing officer of brand strategy firm Vivaldi, said Etsy shouldn't invest in branded camaigns with large media buys. "Etsy should focus on its customer experience and in-product marketing that will create scalable interactions, drawing in new buyers and sellers through network effects," she said.
But despite Etsy's upbeat quarter, the brand still has to contend with Amazon, which recently introduced its own Handmade unit to compete for Etsy's artisans and individual sellers.
"With Amazon's handcrafted market now in play Etsy will need to come in strong if they are going to remain a major player in the space," said Maddison Tailor, director of marketing at Ansira, a data marketing agency, noting that Etsy has an edge in its craft community. "But Etsy does much more than provide a handmade product, they provide an experience, a platform where buyers and sellers can connect and create relationships."