Smart pricing has been around for some time now. I am relatively new to adsense, so am not sure if it really affects my earnings a lot or not. This is from Apr 2004 https://adwords.google.com/select/news/sa_mar04.html
Smart pricing is Google determining how much a click is worth for an advertiser on your page.. it will then charge the advertiser accordingly. The more relevant or targetted your page is to their advert, plus other factors including where the visitor came from and how well your page converts for similar/other advertisers, the closer you are to recieving the maximum cost per click the advertiser has chose, minus Googles cut. Pete
'Smart Pricing' is just a term that some webmasters came up with to describe abnormally low click values. For example, your site on mortgages may only be paying .05 or .10 a click eventhough the average price for the topic is more than 100x that amount. Speculation says that Google is doing this to try to stop spammers.
Speculation that it has anything to do with putting off spammers is just hairy bollocks. What it does is create a more efficient and versatile advertising network for advertisers. If you're selling a guide to buying a porsche, you would be willing to pay more to have that in Porsche Monthly rather then Car Magazine, as the first is far more targetted thus worth a lot more. Working on smart-pricing, you would pay more per reader to advertise in Porsche Monthly then you would for Car Magazine. It's common sense and it's just taking advertising to a new level by automatically determining the value each site holds to the advertiser depending on the web site and the advert. Obviously other factors are involved - keywords in the advertisers setup, keywords on the page the adverts displayed.. the theme of the page relative to the advert.. conversion rates based on how similar ads perform on your page (and pages similar to yours).. blah-de-blah. It certainly has nothing to do with putting off spammers and all to do with AdSense being the number 1 PPC advertising network on the web and Google lining their pockets. Sure, it makes the click costs for us publishers low in some cases, so make sure your pages are highly relevant with a large pool of advertisers for the exact topic of your site/page. If you want to factor in conversions, design your page so that you spark the reader in to not just clicking a relevant advert, but taking further action once clicked, ie. Many web sites on the Internet offer free trials of Blah Software Packages which help you determine the right one for you before purchase. The reader may then click the advert for Blah Software and be actively looking to sign up for a free trial. If they don't find one, they may click back, click another of your Blah Software adverts until they do. Bingo, your site has just converted for Blah Software and now any adverts for Blah Software that appear on your page are worth a lot more to advertisers of Blah Software thus your cost per click rises dramatically. Pete
It shouldn't matter if the site is "porsche monthly" or "car monthly", if someone clicks an ad, obviously it is of interest to them. The difference I see is "porsche monthly" may get a higher CTR becausee it is more relevant.
Once or if 'smart pricing' hits your sites, forget about adsense earnings. Mine was struck with it on Oct 1, since then ads that used to earn me $1.00 or more now may earn 25 cents, and almost all of my site(s) ads now earn me 3 cents per click, maybe 5 cents, some as low as 1 cent. Also, you can see the 'smart pricing' algorythims working throughout the day, for instance almost everyday now by 3 pm I will have earned a nice sum, then by midnight my actual earnings has decreased by as much as 40% as the 'smart pricing' system deducts the values from the earnings from clicks and sends it back to the adwords advertisers accounts. 'Smart Pricing' has a LOT to do with adsense, it can make or break you.......
In a move intended to "normalize" per-click prices based on the value clicks deliver to advertisers, Google will overhaul its AdWords pricing system for contextual ads. The company plans to eventually roll the pricing model out across its paid search listings, too. The system, known as "smart pricing," assigns each click a value based on a variety of factors, according to Google. Variables include site on which the ad appears, and the portion of the site where the ad appears. The company won't divulge the exhaustive recipe for its "smart pricing" secret sauce, saying only a number of variables will be considered. Advertisers will still be ranked by relevance and bid price, but will pay less for some clicks than for others. "Advertisers bid just like they're bidding normally," explained Susan Wojcicki, director of product management at Google. "After the auction, if we determine that a type of inventory, or a part of a site, or a site are worth a different amount, we'll apply an adjustment to that inventory, to that click. For every click, we say, 'what do we expect the value of that click to be?' We'll then adjust the CPC." Adjustments will only lower, not raise, the amount paid by the advertiser. The dramatic move reflects both Google's determination to continue to introduce different types of inventory (such as contextual ads on its upcoming Gmail service) and its intention to keep things simple for advertisers. Rather than giving advertisers the option to tweak bid prices by site, type of site, etc., Google makes that decision on their behalf. "We may determine that a click on an ad for digital cameras on a Web page about photography tips is worth less than a click on the same ad appearing next to a review of digital cameras," explained a Google spokesperson. "Sometimes advertisers will say to us, 'we want separate bidding, we want separate CPCs. We don't want to have to have an ad on that site,'" said Wojcicki. "Our goal is we just want to be able to do this for the advertisers dynamically. They should be able to just bid." The approach differs markedly from that of chief competitor Overture. Back in January, that company decided to let advertisers bid separately for search ads and contextual ads. Earlier both Google and Overture let advertisers opt-in or -out from contextual ads, but they couldn't bid separately. Though Google says its pricing change is in advertisers' best interests, some marketers feel they'd be better off if their hands were on the controls. "I prefer to have a situation that puts the marketer and their agency in control of price they are willing to pay as it results in better efficiencies than a closed system," said Kevin Lee, CEO of search marketing firm Did-It.com. Search marketing has become so popular with advertisers that engines have rushed to expand inventory through new distribution methods and types of inventory. The difficulty for marketers is that different distribution vehicles provide differing results. Therefore, they're willing to pay more to appear on one site than on another. The last few weeks have seen a flurry of different potential advertising vehicles from Google, each presumably delivering a different return on investment for advertisers. The company most recently announced tests of a free Web-based e-mail product, Gmail, which will carry ads targeted based on the content of the e-mail. A local search service is beta testing. The company counts Blogger, Google Groups, Google News, and Froogle among its wholly owned distribution vehicles.
From Google AdWords News Archive Conversion and keywords or concepts are the two important factors that decide the cost of the click on a given site. Higher CTR may possibly lead to a lower conversion and hence lesser CPC.
I got sick of the smart pricing and went to Chitika. 60% flat rate payout, no guessing whether or not you are getting the shaft.
I think google is going to loose out bigtime to YPN and Chitika. Obviously they have advertisers willing to bid a certain amount per click, so why not let them? It might give them more ad inventory, but I don't think many publishers will think twice about using what pays them the most. I'm now 90% Chitika and 10% google, I get higher CTR and more money per click, only wish I could have made the change before.
Competition drives higher payouts, hope Yahoo and MSN comes out faster. AdSense is my only option for now, I have no alternative!
if my site is hit by smart Pricing ? My Traffic/Earnings went up quite a bit during October, so i would like to keep it that way! DKM
I applied to the Yahoo beta program twice since March, and never heard anything back yet (yes, I live in the states). I appled to the 'Chitika' program yesterday (sun).... If I get accepted to any of them I am jumping ship also.