AdMoolah News and Views

Smart pricing is a constant source of confusion and frustration for AdSense publishers. Although no one except Google know the details of smart pricing, this FAQ attempts to distill the AdSense community’s best guesses at what is going on. I’ll try to keep this post updated with the latest information.

What is Smart Pricing?

Smart pricing is an attempt by Google to ensure that AdWords advertisers are getting a good Return On Investment for their advertising. Usually when an advertiser places an add the y want whoever clicked that ad to take some action such as buy a product or sign up for a newsletter. Google tries to determine if a user from your site is likely to result in the desired action or not. If not, they lower the price of click from your site. Here is an explanation from Google (written from an advertisers point of view):

Google’s smart pricing feature automatically adjusts the cost of a keyword-targeted content click based on its effectiveness compared to a search click. So if our data shows that a click from a content page is less likely to turn into actionable business results — such as online sales, registrations, phone calls, or newsletter signups — we reduce the price you pay for that click

What Factors Effect Smart Pricing?

That’s difficult to say. Google gathers lots and lots of data, and they could be using any of it to determine how much smart pricing to apply. They did say this much: “We take into account many factors such as what keywords or concepts triggered the ad, as well as the type of site on which the ad was served.”

Does Smart Pricing Effect Just One Site or an Entire Account?

It appears that smart pricing effects the whole account. All of the sites on a single account are equally smartpriced. See One Poorly Converting Site Can “Smart Price” an Entire AdSense Account by JenSense for details.

How Do I Know if I Have Been Smart Priced?

There is no way to tell for sure. If you see a sudden drop in the CPC values you get over you entire account, this may indicate you were smart priced. However, a drop in earning doesn’t necessarily mean you been smart priced. Here are some other reasons why your earnings may vary.

Is Smart Pricing Permanent?

No, it’s not. Google readjusts the amount of smart pricing on an account once a week.

How Can I Get Rid of the Effects of Smart Pricing?

The type of traffic you get can effect smart pricing. Try to make sure the traffic on your site is in “buy” mode.

For example, take two different sites about digital cameras. If you have a site about photography tips, people are not really looking to buy cameras. They may be mildly interested in checking out new camera models, so they may click on ads, but they are really not ready to buy. However if you have a site about digital camera reviews, many of the people on the site will be actively looking to buy a camera. When they click an ad, there is a good chance they will be buying. The photography tip site may be smart priced because the traffic just doesn’t convert as well as the review site.

Also keep in mind that accidental clicks will never convert well. If a lot of your click come from visitors click on ads because of some “tricky” placement of ads on your site, you will likely be smart priced.

I Noticed a Drop in My Average CPC. Was I Smart Priced

Not necessarily. There are many reasons why average CPC can drop. Advertisers could be lowering their bids, a major advertiser in you niche may have dropped out of a bidding war, some CPCs vary seasonally, an ad might be displaying on your site that has great CTR but lower CPC than the average in the niche. With so many variances in CPC, it’s hard to tell what is really going on.

Please comment on this entry to let me know what is missing or incorrect.

You may have heard Pixelotto.com, which is set to launch tomorrow. If you haven’t heard, pixelotto is the next scheme from Alex Tew, who created the Million Dollar Homepage. This time he is doing something similar. He is auctioning off a million pixels worth of ads, this time at $2.00 a pixel. The difference this time is that there is a “lotto” attached to the page. Users who click on the ads have a chance of winning 1,000,000 dollars. That’s right, once the whole $2,000,000 worth of pixels is sold, some lucky user will get $1,000,000 of it. He is also giving $100,000 to charity. Leaving himself a tidy $900,000 minus expenses. Not bad, and I think it will work too.

The warning is for people who are considering buying advertising on your site. The traffic that you get from this is going to be pure garbage. People will be click the ads and not caring at all what is on the other side of the link. None of the traffic is going to convert. This will be the equivalent of the garbage traffic that pay-to-surf programs bring. If you are running an ad program like AdSense or YPN, there is a good chance you could get banned from attracting this type of traffic. So, if you do advertise with pixellotto, make sure not to put AdSense or YPN (or any other ad network that cares about quality of traffic) on your landing page.

Digg This!

On one of my sites I have been running Google Analytics and have some custom JavaScript installed to allow me to track which visitors click on the ads on my site. On this site I run a combination of AdSense and YPN ads. I have also been running some AdWords and Yahoo Search Marketing campaigns. Here is a chart showing the percentage of visitors who click on ads broken out by the major sources of traffic. Note that this isn’t a page CTR, it is the CTR of a user in the entire visit.

Not surprisingly, people who come to the site by clicking a YSM or AdWords ad have a greater tendency to click ads on the site. What did surprise me was the huge variance between the search engines. People coming from AOL are almost twice as likely to click on ads as people who use Google. MSN users are also as likely to click on ads as AOL users, while Yahoo users were similar to Google users in click behavior. I think this is because AOL andMSN users are not as Web savvy as Yahoo and Google users, and less experienced surfers tend to click more ads then experienced web surfers.

This data is important in running CPC advertising campaigns. I can easily figure out an average Revenue-Per-Visitor (RPV) for my site, but I had no idea how much more valuable visitors from pay per click campaigns were from regular surfers. I can now take into account how much more money I make from visitors from the ad campaigns to adjust my minimum bids. For example, lets say my RPC is $0.10 (it’s not). I also know that AdWords visitors are 20% more likely to click on ads then regular visitors, so I make an average of $0.12 from them. This allows me to bump up my minimum bids a little in AdWords while still being confident I am making money from them.

I’m also thinking that this type of data might be good for fine tuning ad placement. If AOL and MSN users are more likely to click on ads, why not adjust the placement and color of the ads to make them more prominent for these users? Since Google and Yahoo users are a little more ad phobic, it might make sense to make the placement and color of the ads a little more subtle.

Digg This

Publishers can now sign up for Turn’s advertising network. As I mentioned a few days ago, it might be good competition for AdSense and YPN. It’s a contextual ad network, but unlike their main competitors, it uses CPA instead of CPC. For publishers concerned about low revenues from CPA ads, they have this to say:

At Turn we want the ads on your site to perform as much as you do. So, unlike a traditional CPA network, Turn uses a unique bidded CPA pricing model with effective CPM (eCPM) ranking to ensure you receive the highest performing ads on your site.

What I assume that means is they take every ads payout, multiply it by the CTR and the conversion rates it gets, and the ads that come out the highest are shown.

I signed up for it, but haven’t been accepted yet. They don’t mention any acceptance criteria, but they did ask what sites you have and how many unique visitors and pageviews your sites get. I’ll be sure to let you know my impressions of it if I am able to use it.

In February, there was buzz that Turn.com was going to launch an AdSense competitor. They are going to have an official launch tomorrow at the Web 2.0 conference.

An Adweek article discusses some of the details.

San Mateo, Calif.-based Turn in recent months has attracted $18 million in venture backing from Norwest Venture Partners, Trident Capital and Shasta Ventures. Turn has about 1,000 advertisers in its system, which displays ads on approximately 30 sites.

1,000 advertisers seems like a pretty good size for a beta. Of course one of the keys to competing at the same level as Google is to have a lot more advertisers. Hopefully there will be enough buzz about them to get advertisers interested. There are some difference with AdSense that may be appealing:

Unlike Google, which charges advertisers on a per-click basis, Turn relies on a cost-per-action scheme.

and,

Turn has another key point of differentiation: It analyzes 60 factors to decide which ads to show users, weighing variables such as past behavior, publisher demographics, copy contents and brand quality.

These differences sound interesting enough to get advertisers to be interested.

Of course, it remains to be seen what the publisher side of things will look like. No word yet on if they will allow the same type of self-service system that ad networks like AdSense and YPN have. Hopefully we’ll have a good alternative very soon.

Found via: John Battelle’s SearchBlog

Search Engine Roundtable today had a post about some free coupons for CPC advertising.

Get $50 in your account when you sign up for a new advertiser at MSN’s adCenter and Google’s AdWords.

PDF file of $50 Coupon for adCenter. Note that these are good for US residents only.
Form to receive a $50 coupon for AdWords. I’m not sure what restrictions this coupon has.

If you’ve never tried advertising before, this is a good chance to do so. If you manage to get $0.05 clicks, you can get 2000 targeted visitors for $10.00. Not a bad deal.

Note that both adCenter and AdWords have $5.00 USD activation fees that need to be paid.

Google has announced a new Custom Search Engine.

Similar products have been available from other companies for some time. There is Rollyo, Eurekster’s Swicki and Yahoo Search Builder. They all basically offer a customizable search engine by allowing you to enter a series of URLs that will be searched. This allows for the building of verticalsearch engines. For example, if you wanted to build a custom search engine for remote control cars, you can enter the URLs of all you favorite remote control car sites, and the search will select pages just from those URLs.

Google’s offering has a pretty good combination of features, compared to the others, including:

• Unlimited URLs. You can enter in as many URLs to include in the search results as you like.
• The ability to monetize the searches. You can provide your AdSense publisher ID and the search will be just like AdSense for Search.
• It allows you to specify if you want to only search in those URLs, or gives those URLs preference over all the others.

For some more opinions on Google’s Custom Search Engine, see Matt Cutts, John Battelle, Aaron Wall and JenSense.

I originally posted my AdSense Revenue Sharing List back in February. Since then I have added at least a few more sites to the list every month. It has now grown to 50 sites. As usual, if you know of other, feel free to email me at tlainevool [at] admoolah.com

JenSense has the scoop on a new feature on AdSense for Search that allows you to open the search results on your own page instead of a page at Google.

This will be great for publishers who weren’t using AdSense for search because they didn’t want to send traffic off their own sites.

Google has a help page with the implementation details.

The ProductWiki Blog has an interesting post on comparing their revenue from AdSense versus their revenue from shopping.com affiliate ads. They found that the shopping.com affiliate program was 4.6 times more effective than AdSense was.

The lesson I take from this is that you should never settle for just on advertising source. See what else is out there and try it out. There are many different ad and affiliate programs, one of them could be making you a lot more money!

Found via Seth Godin’s Blog