Many people seem to think that "Smartpricing" is something that Google does to draw people in to adsense and then drop them down so that they can take a larger portion of the money home with them. This is not the case. In fact, it is simply the way that Google's supply and demand structure between Adwords and Adsense works. In more niche markets, there may only be a few advertisers giving a limited amount to Google to display there ads, and if the number of impressions (and clicks) of those advertisers increases, the cost per ad will go down because they'll have to bid less for it. Meaning Google gets paid less, and in turn you get paid less. Additionally, it may very well happen that the advertisers that were blowing $1 per click run out of their advertising budget and as a result you have less advertisers and again, bids go down because there is less competition for the space. It's a simple issue of supply vs. demand, and in niche markets the ratios of advertisers and their budgets to websites displaying their ads is volatile, with a greater tendency to decrease over time as new competitors display the highly lucrative ads.
No. Smartpricing occurs when clicks from an AdSense account gets bad conversion percentages. They do this to protect the advertisers ROI. This has been explained many times in this forum already. Those things you mention do affect the price, but smart pricing is real.
To be smartpriced, an Adwords advertiser has to go to the trouble of tracking his ROI and conversion rate. Only a small fraction of advertisers do it. Therefore, smartpricing is given more credit than it is due. Most of what we think is smartpricing is simply high-paying advertisers either dropping out, blowing their daily budgets, or adjusting their bids down.
yeah smartpriced has owned my ass on two of my sites for ages. Took a steady monthly income of $100+ to about $60 with the same amount of clicks and CTR. So it is not a myth at all!
But it only takes seconds to set up urchin on a website and if you are an advertiser you can save $100,s of adwords costs with it.
I am not an expert, I just believe whatever Jack Burton says, lol. But, myth or real, it does kill you when the same number of clicks earns you three or four times less.
I just watched a site that does $40-$50 a day drop down to $15 in just one day with the same amount of clicks as ever. I took AdSense off to give YPN a try, since the swings like this are enough to drive someone mad.