This scheme has been around for quite some time and many webmasters did make quite abit of noise when it launched. Personally I didn’t feel much, may be because the reduce in revenue is not significant enough, that’s why I have not really spend time study what is Adsense Smart Pricing. Yesterday I decided to browse around for some information because some of my experiments caused the Adsense earning to be down and the reason seems to coincide with what other webmasters are speculating.
Explanation from Adwords Team:
Google’s smart pricing model has always provided better placement for better performing ads, and reduced the cost of a click to the least amount possible to stay above your competitor’s ad. And now, with no change in how you bid, Google may reduce the cost for a click if that better reflects the value it brings to advertisers like you.
How smart pricing works
We are constantly analyzing data across our network, and if our data shows that a click is less likely to turn into business results (e.g. online sale, registration, phone call, newsletter sign-up), we may reduce the price you pay for that click. You may notice a reduction in the cost of clicks from content sites.
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. For example, a click on an ad for digital cameras on a web page about photography tips may be worth less than a click on the same ad appearing next to a review of digital cameras.
Google saves you time and hassle by estimating the value of clicks and adjusting prices on an ongoing basis. With improved smart pricing, you should automatically get greater value for clicks from ad impressions across our network, all with no change in how you bid.
Explanation from Adsense Team:
1. Many factors determine the price of an ad
More than conversion rate goes into determining the price of an ad: the advertiser’s bid, the quality of the ad, the other ads competing for the space, the start or end of an ad campaign, and other advertiser fluctuations.
2. Clickthrough rate doesn’t affect advertiser return on investment (ROI)
The percentage of clicks that convert for an advertiser is the most important factor in an advertiser’s ROI, so it’s not only possible, but common, to have a low CTR and a high advertiser conversion rate. It’s also possible to have a high CTR and a low conversion rate. Don’t remove the AdSense code from your site just because it has a lower CTR – it may be one of your best converting sites.
Although Adsense Team clarified that CTR is not one of the factors that will affect the pricing, I think there is still come co-relations. Imagine if a website with all sort of traffic but none of them can convert into ads clicks, then something much be wrong, and even they can be converted into ads clicks, the sales conversion for advertiser will be low as well. For example if traffic came from low quality source, eg link farms, new blogs, MFAs, etc, and the visitors are less likely to be interested in any form of advertisement, not interested in buying anything etc. Even if webmaster manage to convert them into a valid Adsense click, advertisers will be very unlikely to convert them into any form of sales.
Apart from CTR, I think factors like
- Traffic quality(search traffic is good)
- PR of the site
- Content of the site, site relevance
- Size and age of the site
will affect how you get smart priced as well, these factors sort of become rules of google dominated internet world? I believe how your site ranked in SEs also affected by similar factors.
One important information I gathered is : smart pricing will affect the whole account, not by site, not by channel, is the whole Adsense account. So if you want to put Adsense ads into some new, not performing sites, you might want to think twice. I just removed the ads from most of my not performing sites as my earning really drop after I added Adsense to those sites. I also remove extra ads from some of my performing sites for another experiment –> to boost the CTR, and also I try not to display ads with lower bid as my visitors might click on them instead of ads with higher bid.
Hopefully I can boost the CTR in 2 months time. Anyway, I’ve removed Adsense from all not performing site except this blog, as I find that the ads are pretty relevant and useful.
June 7th, 2008 by fred | No Comments »