Wednesday, September 06, 2006

First Step To Fixing The "Smart Pricing" Problem

I've seen some scuttlebut online regarding "Smart Pricing" affecting publisher's and their Adsense income. I've been affected a couple of time from the Smart Pricing problem, and this is my two cents on the deal.

For those of you that are unfamiliar with Smart Pricing click here. My quick and nasty explanation is simple. If your Adsense account has sites that recieve alot of traffic that just that does not (or deemed not to) convert well for Adwords advertisers, Google Adsense will start putting cheaper ads on your web site. This is all to protect the Adwords advertisers that spend some bigger bucks for their traffic. Keep in mind that Adwords is Google's bread and butter, so they are trying to protect advertisers as much as possible.

My speculation? We can only speculate how their system of Smart Pricing works, as there are many variables that will effect what the ads placed on your web pages, but I believe it's the following; (in order of importance)

1) Where your traffic is coming from. If the traffic you recieve to your pages is from a high grade source, such as the top of MSN, Yahoo!, or Google search results, Googles algo see this pattern and will award you with better paying ads. On the contrary, if your traffic mostly comes from crappy third tier traffic sources, the ads fed to your pages will pay less. If your traffic is mostly from emails, or forums, perhaps this also effects your Adsense dollars. Speculation yes - but I've tested it and it rings true.

2) Conversions for advertisers. If Adwords advertisers are seeing a high ROI (return on investment) from your traffic, you will be awarded with better paying ads.

3) Your CTR (click through rate) If your Adsense account CTR is higher, I believe the better paying ads will be placed on your pages. BUT only if speculations 1 & 2 are positive as well. If you have crappy traffic that won't convert for the Adwords advertiser, it won't matter what your CTR is - you'll still see low paying ads on your site.

4) My solution? How to keep the high paying Google ads on your site and avoid the Smart Pricing crunch. Work on the three positives above. Try working towards recieving the higher quality traffic, setup your pages for high CTR, and don't display Google Ads on your weaker, more pathetic sites. Use some other sort of monetizing on your lesser sites that get sporatic and fickle traffic. Keep only your premium sites in your Google account. This is also speculation of course, but the above worked for me.

Focus on more quality content and natural linking, to keep the Google bots loving your site(s) or blog(s).


1 comment:

Scott said...

Hey Kenny,
I wonder if that's what happend to me? I was testing an arbitrage site with adwords to adsense. All of a sudden this week, most AS clicks are only paying .07 to .21 per click. I was getting .80 to $2.00 per click before.

How can they judge the "quality" of the traffic? If I sent it there with relevant keywords, then they just might really be finding what they want in the AS ads. right?