As I have mentioned several times, I am a part of a great Etsy team:
Florida Etsy Street Team
we have some good discussions and share tips and ideas, a few weeks ago one of my super team members shared her views on the whole Etsy SEO topic and she is delightfully letting me share her thoughts here, so I hope it helps you as much as it helped me:
iWunder on Etsy - Hand Knit Items and Hand Dyed Yarns (she also has iWunderSews.etsy.com and iWunderVintage.etsy.com) says:
Since a lot of people are confused about the SEO thing, I waded through it and wanted to share what I've learned.
My take on the SEO thing, and what I've done about it:
Shop Title: Google searches your shop TITLE. We are limited to number of characters here, so use them wisely. Don't repeat words that are already elsewhere (in your section names or in your shop announcement). Don't put your shop name, etsy meta tags already do this. On google, your shop title is "iWunder on etsy - then whatever you put" so don't repeat your name. Use this space as ultimate keyword/tag real estate.
Shop Announcement: google searches the first 150 characters of your shop ANNOUNCEMENT. After that, it's dead zone. Again, use this as real estate for other key words or phrases you think people might be searching for. I played with my announcements until I got a word count of 150 or less (I did it in word so I could keep track of the character count) and made sure to put "international shipping" at the end no matter what. I used this space for more detailed keywords that are not in my shop sections or shop title.
Shop Sections: google searches your shop sections and calls them keywords. If you have funny shop section names, they are doing you no good. If you repeat the same word in each section (like jewelry) google may think you are filling your web page with spam and that's not good. So change your shop sections to be short, succinct, and exactly what you think the 6 billion earthlings are searching for.
Check out either of my shops if you want to see what I've done. Think about your etsy page like you think about tagging individual items, we all know how to do that now and we know to not repeat tags again and again in the same listing. Your etsy page is now like that. Don't have "hand knit" or "jewelry" or "vintage scarves" or "quilt" etc etc etc all over the place. If the main thing you do/sell is in ONE of the above places (sections, title, announcement), then you've got yourself covered.