A few days ago I attempted to explain Adsense Ad Click Value Variations (or why sometimes clicks are worth a lot and other times they are not). A number of readers emailed or instant messaged to say that I’d forgotten to mention ‘Smart Pricing’ which many believe is another factor that impacts Adsense click values.
Smart Pricing is an attempt by Google to give Advertisers value for money and to guard against click fraud. One of the dangers of Adsense is that publishers set up temporary, trashy and/or un-authoritative pages of content on topics that they know attract high paying ads. Clicks on such pages (whether fraudulent or not) are not really good value for advertisers.
Smart Pricing sets a click value for each ad clicked based upon a variety of factors – none of which have been made public. There has been much speculation by publishers about what these factors might include – guesses as to what is included that I’ve seen in forums include:
• site relevance (ie is the whole site dedicated to a topic or just one page?)
• Impressions (is the site well trafficked – which could indicated authority)
• site size
• Page Rank (another indicator of authority)
• Age of site (some believe that click values go up over time once Google determines whether your site is in it for the long haul)
• Inbound Link Relevancy (if lots of other sites link to you with the keywords relevant to your content – and the ads)
These factors are educated guesses – Google itself gives a little away in its statement announcing Smart Pricing to advertisers back in April 2004.
‘We’re introducing automatic price adjustments for certain clicks you get from the Google Network. Google’s smart pricing model has always provided better placement for better performing ads, and reduced the cost of a click to the least amount possible to stay above your competitor’s ad. And now, with no change in how you bid, Google may reduce the cost for a click if that better reflects the value it brings to advertisers like you.
How smart pricing works
We are constantly analyzing data across our network, and if our data shows that a click is less likely to turn into business results (e.g. online sale, registration, phone call, newsletter sign-up), we may reduce the price you pay for that click. You may notice a reduction in the cost of clicks from content sites.
We take into account many factors such as what keywords or concepts triggered the ad, as well as the type of site on which the ad was served. For example, a click on an ad for digital cameras on a web page about photography tips may be worth less than a click on the same ad appearing next to a review of digital cameras.
Google saves you time and hassle by estimating the value of clicks and adjusting prices on an ongoing basis. With improved smart pricing, you should automatically get greater value for clicks from ad impressions across our network, all with no change in how you bid.
This statement indicates that site relevancy is definitely a factor which gives even more reason to develop niche blogs rather than general ones. I noticed the power of this when I first started niche blogging – my click values over time went up because ads were appearing on a site totally dedicated to the topic of each post rather than one page showing ads on one topic and another ads on another topic.
So what is the take home advice for bloggers using Adsense? Mine would simply to be aware of Smart Pricing and keep on developing quality blogs with quality content on niche topics. All of the hints that Google have given us about Smart Pricing indicate that they will only charge advertisers the higher click values when they come from relevant, quality sites – which gives a pretty good indication to me as to what type of blog I should be creating.
Just would be nice to get some clicks .Oh well
[…] But the statement may be effected by smart pricing. So, increasing the ads exposure (more pages) must be done properly and taking the smart pricing into consideration. “Multiple ad units can help optimize your performance by leveraging our large inventory of ads.” […]
Great overview of Smart Pricing Darren. The concept is a difficult one to understand, but very damaging to one’s AdSense earnings. But, as an AdWords user as well I suppose it is good for me in that way.
It could be extremely interesting to see the exact development in average add price over time.
Anyone knows where to find for example a graph or similar showing average add price two years ago, one year ago, a month ago, etc.?
If site relevance is such an important factor in smart pricing, one has to be very careful with section targeting.
[…] Just discovered this article over at Problogger.net from a year ago which explains the effect of Smart Pricing in Adsense. I think this could be the reason why Punk Hair Styles and Emo Hair Styles are registering such low PPC’s. I’d honestly never thought about this possibility and it makes sense I guess. […]
Hmmm….I was wondering why the value of my clicks in Adsense have decreased drastically recently. I’ve got a bit of work to do before the prices go up again I think…
For blogs that have been running for a long time plus is filled with the same niche throughout it’s content, i don’t think they will experience a significant drop in earnings. IMHO, personal blogs are most effected by this Smart Pricing :-)
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On one of my sites, recently, I got smart priced as in my earnings plumited despite the same numbe of clicks and impressions. One thing that I had changed was to add two ad units side by side on some pages (to get more above the fold ads for advertisors to bid on). 2 days later, the smart pricing kicked in.
Over the next 5 days, my earnings plummited from $20/day to $3.25/day. Removing the second ad unit on some pages to increase my CTR reversed the change over a period of about 3 days. One thing I noticed was that my eCPM went very low during smart pricing, as in down to less than $/CPM, but returned to it’s normal once I was outside the smart pricing range.
Hope that helps someone out. The main thing I learned is that taking up googles offer of putting 3 ad units on each page may not always be a good idea, despite what the marketers often tell us.
[…] 3. Combat Smart Pricing I’m not entirely sure if YPN has “Smart Pricing”, but with AdSense if you are serving ads across multiple websites and one of the websites has clicks not converting as well as others, that website will drag down your revenue per click as a whole. See more information on “Smart Pricing” here or here. Many publishers who realize this and deactivate Adsense from their poorly performing sites see an increase in click payouts due to smart pricing. With RMX Direct, if you suspect that one of your websites may be hurting your overall revenue per click due to Smart Pricing, you can stop serving AdSense ads to that site with the click of a button. There is no need to take down ad code off the site since it’s controlled through the ad server. Then you can also turn it back on with the click of a button, switch it to YPN ads, or do something else with it. It’s much easier and quicker than jockeying code around all over the place. […]
Thanks for the tips on smart pricing. In February, my home recording site was averaging $0.35 per click. With no significant changes that I am aware of, I was paid $0.07 per click.
I’ve been totally white-hat with this site and have hand-written hundreds of articles.
I guess I need to start experimenting since I’m getting paid 1/8 of what I was making just a few months ago.
[…] Read Read. Read about adsense placement, beating the smart pricing, the TOS, the fine line between white hat and black hat, read about adsense. Knowledge is power, in […]
hm, so that’s why i get up to $2 for one single click and then 2 cent or even less sometimes…
Queer .. I didnt know Smart Pricing was introduced back in April 2004.. Till today,i thought it was a recent development..
I have noticed that when I promote my website using Adwords I get alot more clicks on my Adsense ads but get a lesser return on them they go from say 50 cents per click down to 4 or 5 cents…. This must be smart pricing….
So can anybody explain when I will be smart prices:
if I have CTR 1%?
Its not clear from your article.
Thanks a lot!
I came to know about smart pricing very late. My earnings are very very low now.
– Though CTR is okayish around 10% in a month
– The traffic is also good.
I think this is the content where I am lacking.
Thanks for the information.
This looks like a very good thing from advertisers’ perspective, especially with those ‘adsense arbitrage’ sites all over the internet.
I think 2% is the magic number (according to Courtney Tuttle)
I recently had some adsense on one site and I was getting $5 a day on average from around 7 clicks.
Since adding adsense to other sites that have a low CTR – this same site is now generating about $0.40 for the same amount of clicks.
i can only assume that the lower CTR of my other sites have affected this one – or am I missing something?
i do agree there are nice tips for pricing for ads as some people do not get output from adwords as compare to their investment, but i think they get advantage using this tips
Nice post, really my adsense revenue also decreased due to smart pricing, now i have to do some work to overcome this.
This is wt happen to my site day by day my earnings going down any one can tell me a solution for this :(
“Impressions (is the site well trafficked – which could indicated authority)”
Could also maybe be if a page gets lots of traffic but almost no clicks ever it could be deemed not relevant material so a click from it even if sparse would be of less value?
Hmmm…my earnings are very low now. This may have a connection with this smart pricing