Poshmark Eyes Ads As Revenue Solution In Wake Of Fee Update Debacle
As Poshmark tries to recover from fee update debacle, the pressure is still on to increase revenue - will expansion of Promoted Closets or other seller-funded ads be the solution?
Poshmark's short lived experiment with splitting fees between buyers and sellers received overwhelming pushback from users on both sides of the marketplace, with many savvy sellers pointing out the new fee structure was a significant increase on items under ~$90 compared to the previous flat 20% commission.
Liz Morton
The uproar was so strong, Poshmark reversed course after only 3 weeks and went back to the previous fee structure, but that doesn't mean the company isn't still looking for other ways to increase revenue and a recent LinkedIn post from Vice President Monetization / Ads Adi Thacker may hold clues as to how they plan to do it.
Hiring Alert! LinkedIn Network: Call for referrals!
I’m looking for product managers to join Poshmark’s rapidly growing ads / monetization business.
If you are a product manager based in the San Francisco Bay Area with 2+ years building ads or marketplace products, DM me!
Its an exciting opportunity to join a fast-paced team and drive business impact!!!
Oddly, this Product Manager position does not appear to be listed on Poshmark's corporate careers page which currently only shows 2 Product Manager roles - one in Core Experience, the other in Personalization - neither of which includes anything specifically about ads or monetization in the descriptions.
Unfortunately, buyers and sellers may not find the prospect of Poshmark rapidly growing their ads and monetization business to be such an exciting opportunity.
The platform has had an interesting history with both first party (seller-funded) and third party ads on the site.
Prior to being taken private by Korean internet company Naver in 2022, Poshmark CFO Rodrigo Brumana hinted to investors that some sort of seller paid advertising product could be an important strategy for increasing take rate.
Liz Morton
The acquisition by Naver was announced about a month after those statements were made, but while becoming a privately owned company meant Poshmark no longer had shareholders to report to, that didn't mean their new parent company wouldn't be just as interested as previous investors in how they could increase revenue through ads and other monetization schemes.
In fact, Naver is the #1 search engine in Korea and, just like with Google, advertising is a huge part of that business, so users were not surprised to see an increase in the amount of third party ads shown on Poshmark after the buy out, nor were they surprised at the introduction of a seller-funded first party ad offering, Promoted Closets - a cost per click advertising option that allows sellers to gain increased visibility for their items.
Liz Morton
While Poshmark doesn't publish a breakout of how much revenue they've earned from Promoted Closet in the year+ since launch, it would stand to reason they may not have looked to increase take rate through a new fee structure or exploring new ways to grow ads and monetization if seller adoption of the existing ad product was exceeding expectations for growth.
So what could they be considering as part of the exciting opportunity to drive business impact? Brumana's 2022 comments may be instructive.
Sellers love Posh because they know where they stand in terms of fees and they work around it, they set up their business knowing exactly what their take home is and how much their going to give.
That being said, we have not touched take rate...and that is very rare, other marketplaces essential doing a change rate almost like every year. I do believe that the opportunity is back to monetizing the engagement and bringing potentially a higher take rate in terms of the blended take rate, not necessarily the transaction.
Yes, can we move up, yes there is room. Can we have flex down for volume, yes but I believe that we are very well set there given the trajectory but the biggest opportunity for monetization might be elsewhere in our properties, especially give the engagement, given the captive audience and the stickiness of our cohorts.
That lead to a follow up question about creating ad offerings to add to that blended take rate, to which he answered:
We don't like to comment before we are ready to say something but I'm going to say looking at other more mature marketplaces is a good place to start in benchmarking us.
At the time I speculated the references "more mature marketplaces" might point to eBay's Promoted Listings program or Etsy's Offsite Ads as possible templates - and considering what has happened with ads on both sites in the last two years, Poshmark buyers and sellers should be wary if the company decides to go further down that path.
eBay now has both cost per sale and multiple cost per click offerings (including on site, off site, and store promotion) which have invaded search results, purchase history and watch list pages, and show hundreds of competing items on every listing page - not to mention the constant ratcheting up of minimum rates to squeeze more revenue from sellers.
Liz Morton
Etsy's Offsite Ads program continues with mandatory participation once sellers reach certain sales thresholds, but they're also increasingly finding ways to plug onsite ads into more places on the site to increase revenue.
Liz Morton
Could Poshmark create a cost per sale ad product like eBay has where sellers would choose an additional percentage (on top of the regular selling fee) to gain visibility for their listings, but only pay if/when a promoted view results in a completed purchase?
Or maybe they're working on an offsite ad program that would allow sellers to pay for promotion on Google and other search engines?
They already have a Search Visibility setting which allows users to opt in or out of having their items shown on search engines, so it may not be too far of a leap to monetize that feature in some way or offer "enhanced" visibility for a cost.
If so, that would be a page right out of eBay's playbook as sellers there have found Offsite Ads may just be a sneaky way for the platform to charge fees for promotion it used to provide for free.
What do you think of Poshmark's current Promoted Closets offering and how would you react to more/different ads being introduced on the site? Let us know in the comments below!
