AdMoolah News and Views

Google has posted an entry about smart pricing on the Inside AdSense blog.

A lot of it is in line with my last post about smart pricing.

Here are their main point along with some of my own commentary.

1. Many factors determine the price of an ad

This is one thing that makes it so hard to determine how much smart pricing is affecting your earnings. The algorithm for determining CPC is so cpmplex that it is almost impossible for a publisher to know that they have been “hit” by smart pricing. See my post on Why Do AdSense Earnings Vary for more details.

2. Click-through rate doesn’t affect advertiser return on investment (ROI)

This is a mistake that I have seen many people on the forums making. They think removing their low CTR ads will mean they will do better with smart pricing. It is impossible to determine conversion percentage based on CTR, there is no relation between the two numbers.

3. Google doesn’t make money from ‘smart pricing’

As I mentioned in my last post, Google doesn’t use smart pricing to pocket money on the transactions. It provides for better ROI for advertisers, making the system better. A better system for advertisers means they will spend more money, meaning there will be more money to be made for publishers.

4. Remember the old chestnut: “Content is King”

This is something I am constantly saying. Building good quality sites not only brings visitors back, but they will also be genuinely interested in the subject of your site, meaning they will be more likely to click on the ads, and also more likely to converted by advertisers.

One interesting omission from this list is the possibility that smart pricing performance on one site can affect all of the sites in an account. This leads me to think that this might be true. I think it is this fact that has most publishers upset. It doesn’t seem quite fair that they would penalize all sites across an account because of one bad apple. Since Google has all the data it is hard to tell what they are thinking. It could be that the statistics show that if one site in a publishers account does not convert clicks well that it is generally true that the other sites do not convert well either.

One possible solution to this is for publishers who are large enough to open multiple AdSense accounts under different company names. This will allow the to try to segregate poorly performing sites from better ones. The problem with this strategy is that it is still almost impossible to determine which sites convert well. Publishers just don’t have the data.

It’s good to see a little more information on this. I just wish we had some more specifics about what does go into the smart pricing algorithm. I realize this would make it easier to game the system, but it would also relieve some publisher frustration.