What is Google Smart Pricing? Are you being bitten by it?

Tuesday, October 9th, 2007 at 10:01 am | 1,871 views | trackback url

As I was looking for the REAL answers behind why my Google AdSense earnings had dropped over 80% in the last month, while my clicks, impressions and CTR tripled… I found this information:

Google smart pricing is a system that will automatically adjust costs of contextual click for Adword advertisers based on a set of values. Google Smart Pricing system designed to help AdWord advertisers to improve their return on investment (ROI). Google does not disclose many information about the values that being used for its smart pricing system. The mechanism of smart pricing system remains largely undisclosed.

The best way to ensure your AdSense site is not affected by smart pricing is to create a great environment for advertisers and your visitors. Creating unique contents for your targeted readers is as important as providing good user experience on your site. If you have more targeted traffic to your AdSense site, then it would be better quality clicks for advertisers.

Google Smart pricing system will use the information it gathers to make price adjustment for an ad. The smart pricing system will reduce the price advertiser pays for any clicks, when there are any clicks generated from its contextual network is less likely to turn into business for advertisers.

Google Smart pricing is designed to help advertisers to improve the effectiveness of their advertising campaign over Google content network. As a result, Google is making less money since the cost to advertisers is reduced in order to provide a strong ROI. Indirectly, smart pricing affects the earnings of AdSense publishers because they are paid lesser.

Some AdSense publishers maintain good quality AdSense sites as well as “less than quality” sites under a single AdSense account. They are facing higher risk of getting their AdSense account smart priced because any of the “less than quality” AdSense site does not perform well could be smart priced easily. The increase in revenue of putting these “less than quality” websites could be less than the loss of revenue due to smart pricing on the entire AdSense account.

Google provide a tool that can track a conversion of a contextual click. Every time an AdSense ad is clicked, Google will place a conversion tracking cookie on a user’s computer. The conversion tracking cookie will be stored in the user’s computer for 30 days. It is used to track a conversion for Advertisers.

The smart pricing system should not only be viewed as a system to protect the interests of AdWord advertisers. It is also a system that indirectly benefits quality AdSense sites in the long term. The smart pricing system could force some AdSense publishers to drop those “low quality” sites. Perhaps with more quality sites, this could boost the advertisers’ confidence to advertise in Google content network. Hence, it will bring more competition for keywords. Eventually, AdSense publishers will benefit from the high paying keywords.

Smart pricing is not just affecting publisher’s earning on one AdSense site, it affects the entire AdSense account. Regardless of the high performance of other AdSense sites across the AdSense account, if one of your AdSense sites is smart priced, all of your AdSense sites will be affected.

AdSense publishers are earning less because of the low eCPM. You could find AdSense publishers revealing their eCPM in a forum when their accounts have been smart priced. They normally have low eCPM ranging from $1.50 to $5. However, low eCPM does not necessary implied that your account has been smart priced. AdSense sites in lower earning niche generally have lower CPM.

Last Modified: Tuesday, October 9th, 2007 @ 10:01

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