Millions of businesses join advertising-supported digital platforms each year, yet their odds of success and how advertising affects entry are not well documented. Analyzing data from a major e-commerce platform in China, we find that fewer than 1% of newly registered and ID-verified sellers became small-to-medium-sized businesses. Records from consumer search sessions show that consumers are more likely to buy from entrants conditional on search, and that increasing exposure to entrants leads to more purchases, indicating an informational entry barrier. Finally, an experiment nudging some new sellers to advertise raised their traffic and revenues but also the rate of product returns, highlighting a trade-off between advertising’s ability to promote entry and its screening capabilities.