If you're committed to consistently spending time growing your Etsy business in 2011, make sure to spend some time working on tags. Tags are the lifeblood of your Etsy shop: if you aren't using the right tags, your potential customers will never find you. While every single Etsian seems to have his or her own theory about how to use tags most effectively, one thing's certain: you gotta have tags to make the sale.
First and foremost, don't use inappropriate tags for your items. If you are selling a pair of rainboots, don't tag them with the word "umbrella" in the hopes that someone looking for an umbrella will find them. While that could work, you're more likely to find your item getting flagged for having bad tags. If, on the other hand, you are selling a painting that includes a girl holding an umbrella, by all means, use the word "umbrella" as a tag.
So how to figure out the best tags to use for your items? First, think like a buyer and imagine that you wanted to buy your item. What words would you search for to find it? Try the search and see what comes up. If you find a bunch of items that are close to yours, you are on the right track. If there's nothing close, you are either completely unique and original (which is possibly, but honestly, unlikely) or you need better tags. Ask your friends and family what words come to mind to describe your items. Try searching for those.
Learn from others. Find someone selling an item similar to yours and see what tags that are using. I'm not saying you should completely copy someone else's tags, of course, but you might get inspired by seeing how someone else described a similar item. A word of warning though: just because someone else is using those tags doesn't make those tags automatically the best tags to use. Use your best judgement.
Speaking of tags, don't always use the same tags. You can use the same basic tags, but mix 'em up a bit. You'll find that some items get lots of views and some don't get any. When you sell an item, analyze your tags to see how they differ from the items that keep getting relisted without selling. If you offer free shipping, use a tag that says free shipping. (Don't use that tag if it's not free shipping though!). Use the most relevant tags you can. Not sure what tags to use? I keep a "tag recipe" next to my computer, use these in order as relevant to your item:
Try to think of other words that people might use to describe your item. Sure it's a purse, but maybe it's also an evening bag, a hobo slouch, or a wristlet? If one of these "ingredients" isn't relevant, skip it and add something that is. I try to use a lot of different color names, if I can. It's not just pink, it's salmon pink. It's not blue, it's cerulean or turquoise. Using good colors seems to get my items into a lot of treasuries, too.
One final thought: Etsy allows you to include 14 tags with each listing. Use 'em all! Do your best to come up with as many good tags as you can. Analyze every little detail about your item so that you can use tags to your best advantage. Check out Craftopolis to track what tags people are using to find your items. Stick with what works and find something new to replace what doesn't.
Want to learn more about tagging? Check out the Etsy forums and you'll find LOTS of information from lots of sellers. Here's a great post with 6 tips for tagging. Here's the official Etsy tagging rules.