Explaining Adsense Smart Pricing

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If you join the Adsense Help Group for a while, then it is not hard for you to know that many people question about Smart Pricing. What is Smart Pricing? Why your earning per click seems to decrease a lot with time? In this post, I want to explain to you what Smart Pricing is and how it operates.

Recently, Google has developed a new way to decide how much you earn through your Adsense ads with their new Smart Pricing formula. There is a hidden formula by Google to calculate the revenue earned. Let's check it out.

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. Click through 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.

3. Google doesn't make money from 'smart pricing'.
In fact, we make less money, since the cost to advertisers is reduced in order to provide a strong ROI. Ultimately, this leads to higher payouts for publishers by drawing a larger pool of advertisers and rewarding publishers who create high quality sites.

4. Remember the old chestnut: "Content is King".
The best way to ensure you benefit from AdSense is to create compelling content for interested users. This also means driving targeted traffic to your site -- advertisers don't gain as much ROI when paying for generic clicks as they do for quality clicks that come from interest in your content. Good content usually equals a good experience for user plus advertiser, which can be much more valuable than CTR.

18 Comments

avg. rating

Anonymous says...

Great Information. My Blog began as general information, and my Google ads were not related.

When I wrote about health topics, I received health ads. However, when I wrote about "Health and Anger, the ads changed from health to law. Also, when I blocked ads, my ads content changed.

Thank you,
K. (Keenknowledge.blogspot)

26th November 2006 11:51pm

Adsense Hut says...

I know that it is more difficult for a blog to get targted ads, when compared with those that mainly focus on one topic.

In your case, Google will display ads that mainly depends on the keywords it crawls in each of your post. So, when you have a different topic for a new post, Google crwals for another new keywords that deliver another targeted ads.

Thank you so much for leaving comment here. Hope you find this site is useful to you and at the same time, subscribe it to get updated information for Adsense.

27th November 2006 2:21am

~rick says...

(newbie) Love your site, and this is valuable information..Two questions, among many, I have are about ad pricing. If you are new, do you receive less initially? Also, are bloggers penalized from deriving traffic from popular postings? For example, my site, lilsurfergirl dot com, has been up for almost a week. I generate traffic from posting on user provided content sites. Traffic was averaging about 300pv daily. I posted a story after day 3 titled "Amazing Underwear Facts" and received close to 35k pvs in the next 24 hours. My question relates to whether I am penalized for generating traffic in this manner. I don't believe my site has a ranking yet.

2nd December 2006 3:04am

Adsense Hut says...

For your question, I think the answer is the reverse of what you think. You will probably recieve more on your first few times, and get lesser and lesser on the clicks afterwards.

Generating traffic to your site is good, assuming that you does not get it from link or traffic exchange. Building traffic does not violate TOS, but rather, will lower your eCPM under the smart pricing system.

3rd December 2006 1:46am

Bart says...

This comment has been removed because it linked to malicious content. Learn more.

4th December 2006 2:16pm

Adsense Hut says...

You are welcome!! Justr feel free to ask me any question about Adsense, and I will try my best to answer you

5th December 2006 2:30am

Anonymous says...

That was very helpful. My ads certainly have had a rollercoaster in there pay. Let me know what you think of my site and the seasonal significants if you would like...

Thanks.

Information about Ancient Hawaiian Weapons, Culture, Gods and Warriors... and
Tikis!!!!!!!!

http://www.mythichawaii.com

16th December 2006 2:09am

Adsense Hut says...

You site looks spectecular!!
The ads are well blended with the background!!

Thank you very much in leaving comment in my blog and I hope you can subscribe my blog too!

17th December 2006 2:43am

Anonymous says...

This is very useful specially for mesince I started to blog lately.

Al
weblabs.notlong.com

18th January 2007 10:34am

Adsense Hut says...

Thank you very much, Al.

Please feel free to ask any question on adsense.

P.S. You are recommened to subscribe my blog.

18th January 2007 8:22pm

William says...

I don't get what you mean on the reply of building traffic from links- as a blogger usually traffic comes from other blogger's site when we discuss about similar topic. As I have seen my site's page impression has increased dramatically, I didn't see any increase in terms of revenue at all. What is the calculation basis afterall?

7th June 2007 11:03am

Adsense Hut says...

Hi William,

Thank you for your question. Though I forgot what reply I have given, I will try my best to answer you. As we all know, there is a general positive relationship between the traffic and revenue generated. But it is not a must. Some traffic may only want to get information from your blog, and not willing to click the ads, and hence no revenue generated. But afterall, even if there is no revenue generated in this moment, it is still worth to build more traffic to your site.

Please put a back link to my site to help more Adsense newbies.

7th June 2007 11:39am

Teza unica says...

Great Information. That was very helpful. I will stand by for more!

30th April 2008 10:11pm

Adsense Hut says...

Hi Teza,

Thank you for your comment, and I apprecate that a lot.

Please subscribe my blog to get updated Adsense Tips.

5th May 2008 9:32am

bacalaureat says...

Great post! I also think that Adwords campaigns help for Adsense account.

Keep up the good work!

6th May 2008 1:52pm

vinny says...

very useful information i must say..i am new to adsense and blogging. only one week old actually

could you have a look at my blog and comment please

thanks in advance

http://tipstoimpress.blogspot.com

11th May 2008 5:38pm

Adsense Hut says...

Hi bacalaureat,

You are right. Adwords can help to turn traffic to our sites, and generate revenues for us.

13th May 2008 11:23am

Adsense Hut says...

Hi vinny,

I visited your blog, and found there is far too little content in your blog, which cannot get you any revenue from Adsense. Consider putting more content there.

Also, please put a backlink to my blog as well. Thanks.

13th May 2008 11:26am