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What is smartpricing?

Discussion in 'AdSense' started by limbic, Dec 18, 2006.

  1. #1
    Hello to everyone at the DP forums.

    Just having completed my registration here, I would like to ask about a topic which has been discussed in many threads related to adsense.
    The reason I am asking about smartpricing is that I´m still not sure how it works and what it is.

    I am not looking for answers like "if clicks from your site do not convert you´re smartpriced ..." - "it´s an instrument for advertisers to get control about the quality of the sites displaying their ads" and "everyone has to face it".. and so on..

    In a recent tread here one user, Sem-Advance, gave the following definition: "Smartpricing enables advertisers to pay the least amount possible and still have there ad displayed."
    SEMrush
    I am not an adwords user and I´m not familiar with any feedback tools giving Google feedback how the clicks adwords users must pay for convert into sales.

    Also I´m not an adsense guru, I´m just a hobbyist webmaster displaying adsense on a hobby site.

    If I missed a definite explanation of smartpricing in one of the threads please apologize.

    If I was an advertiser I would definitely be interested to pay the least amount possible and still have my ads displayed. Google knows less about the real conversion rate at an advertiser´s site than we know about the percentage of Google´s payout per click to the publishers.
    So what if as an advertiser I gave feedback of a low conversion rate anyway?

    So as an advertiser would I have to expect my ads disappear? Or would I have to expect the positive effect my ads getting cheaper? (the publisher be "smartpriced")?

    So are there any objective measures Google could use for a fair smartpricing? And how long "smartpricing" should last?

    Does real smartpricing exist? Or is "samrtpricing" maybe mixed up with the effect that Google rewards "laser targeted" relevant ads with low CPC (ads which naturally will lead to a higher CTR)? (Which I definitely have been observing on my site with increasing numbers of MFA-sites diplaying ads)

    Sorry I am so confused, please help.
     
    limbic, Dec 18, 2006 IP
    SEMrush
  2. tlainevool

    tlainevool Guest

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    #2
    For general info I have a smart pricing faq that I just created.

    I'll try to answer some of you specific questions:

    Google compares the conversion from your site (or sites like yours) against other sites to see which click can be smart price. If a advertiser has a low overall conversion, no smart pricing is going to happen to everyone. Think about this example, advertiser #1 is selling Lamborghini's, the conversion rate for this ad is going to crap, let's say 0.01%. Someone else has ads to join a free newsletter about saving money, the conversion rate is going to be good, lets say 10%. So, just because the guy advertising Lamborghini's conversion rate is 1000x lower than the newsletter guy, doesn't mean his click price is going to be reduced.

    It's adjusted every week, so it lasts forever.

    According to Google, yes it does. They coined the term "smart pricing" and talk about it in the AdWords help pages.
     
    tlainevool, Dec 18, 2006 IP
    AdsenseChic likes this.
  3. limbic

    limbic Peon

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    #3
    Thanks a lot for the detailed answers, and the link to your FAQs.

    But there was still something I was wondering about - let me put it in slightly different words: Is Adwords conversion tracking safe for adsense publishers in terms of possible unfair advertisers who dishonestly produce lower conversion data which might result in lower cost/value per click?

    I mean is it granted the Google conversion tracking couldn´t be misused to negatively influence click value and leading to false "smartpricing"?
     
    limbic, Dec 18, 2006 IP
  4. tlainevool

    tlainevool Guest

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    #4
    That's what I was trying to explain above with the Lamborghini/newsletter example. Let me try again. If an advertiser reports low conversion for all of their visitors from AdWords, they will not benefit from smart pricing. Smart Pricing is a relative thing, if visitors from site X usually convert at 10%, but visitors from site Y convert at 1%, click from site Y will be discounted. If visitors from all sites always bring 1%, there will be no smart pricing taking place.
     
    tlainevool, Dec 18, 2006 IP
  5. brainet

    brainet Active Member

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    #5
    i think its smart for google, but its not really smart for publisher
     
    brainet, Dec 18, 2006 IP