Still Dumb about Smart Pricing

[Joel Comm]

Back when I first started using AdSense, I didn’t realize that you could do so much with the ad units.

I guess we all have to start somewhere.

Today, of course, things are different. I know that to get the best results you have to blend the ads into the site, and I know exactly how to do it. I know which ad formats deliver the best results and I know where to put them on the page. I know how to get relevant ads that generate clicks. And I know how to collect and read all the information I need to keep my site running at the highest revenues possible.

It’s taken me a while, but I’ve cracked a lot of AdSense’s secrets. But there is one area that’s still a bit mysterious to me and, I think, to everyone....

Smart Pricing.

It’s a topic that has been largely overlooked by publishers. And I can understand why.

We know next to nothing about it.

Google have told us zip about how they do their Smart Pricing math. And even if they did, it wouldn’t help us much. We can tell how many of our users are clicking on ads, but we’ve got no idea how many of those users are doing something on the advertiser’s site that the advertiser wants.

In fact, we don’t even know what the advertiser wants them to do.

That means that we tend to put all our attention on the things that we can influence: making the ads attractive enough to click on. But that’s just not enough. You could build the perfect site, have a 100 percent CTR, but if none of your users is giving the advertisers what they want, you could still make very little money.

So if you’ve got no idea what your users do when they leave your site -- and you don’t even know what they should be doing -- what can you do to make sure that your Smart Pricing is giving you a high price?

The first thing you need to do is calculate the average price you’re getting per click and keep constant track of it. You should always be keeping an eye on that figure.

The second thing you can do is to target the sources of your traffic very carefully. If you know you’re getting traffic from a source that’s not very relevant to your ads, you might consider cutting it off for a while and seeing if that affects your price per click.

It sounds harsh, but if you’ve got users who are clicking but not buying, they could be costing you money. That’s something you need to know.

[gpdematteo]

Hi Joel,

I've been trying to find information on smart pricing for weeks. I run a very popular educational site. I purchased an earlier edition of your book last summer and increased my monthly revenue 10 fold from $xxx to $xxxx. March was my best month ever but April's revenues are only half of what I was getting during the first quarter. My traffic and CTR are the same. On some pages, the eCPM is incredibly high. However, my earnings have decreased dramatically. Earlier in the year, I was getting a substantial amount per click. Now I often get only a few pennies for many of the clicks generated on my site. Can I assume this is related to smart pricing?

I am totally in the dark about how smart pricing works. Not every advertiser is looking to make a sale. Some are just looking to attract traffic. Others just want to improve name recognition. I know I never buy anything after following an advertisement. However, I will go back to the site directly a few days or weeks later and purchase something I need. I can't believe Google can track that sort of behavior. Therefore the site that gave me the lead would not be credited for it. It seems to me that Google is favoring the advertisers over the publishers. When an advertiser uses traditional media such as newspaper ads, tv, coupons, etc, there is no guarantee that even one new customer or sale will result from it. I've spent up to $800 on a single newspaper ad and did not see anything come of it. That's the gamble you take when advertising. As an adwords user, I don't mind paying a set price for a click whether I gain a customer or not. At least one more person in the world was made aware of my service or site. Google needs to concern itself more with the satisfaction of its publishers.

Apart from complaining about smart pricing, I would like to find ways to reduce its disastrous effects. Does anyone have any ideas?

Greg

[DoxazoAdonai]

So is "Smart Pricing" something relatively new, and does it change anything about the profitability of AdSense overall, and/or how we approach it (as detailed in Joel's book -- do we need an update?)

Thanks!

Scott <><

[british]

Hi Joel,
As yet I have not had the opportunity to appraise smart pricing, since adopting your methods on adsense, my revenue increased over 1000% in the first two weeks, and now after only six weeks it has increased on the weekly basis to well over 3000%. Back to the smart pricing, I guess I will only be able to test that, once I have been going for a longer period.
British

[bwiemers]

Hi Joel,

I am at a total loss about Smart Pricing and it's existence. I don't
understand how Google can get any metrics on what actions my visitors take
after clicking on the advertisement without the assistance of some sort of
ad tracking metrics. Which I don't believe Google has in place.

The only thing I can think of is that Google must have some sort of
relevancy filter on their ads that check what sort of ads are showing on
your page and what your page is optimised for. The only other filter I
could think of is that they may punish sites that grow too rapidly (but
these are all just my theories)

As a publisher I cannot control what my visitors do, but I can attempt to
optimise my pages better and use the anti competitive filter to stop
certain advertisers that I don't want to be displayed on my pages. But, by
taking this action I can potentially be effecting my bottom line.

I do believe I am being affected by the smart pricing in a big way as my
earnings go though a cycle where the cost per click goes down for about 1 -
2 weeks, and then it will slowly climbs for another 1 - 2 weeks before it
goes down again. My click through rate has actually gone up in percentage
terms, but my earnings have gone down. For example, last week I was earning
well over $10 per day, this week I am lucky to scrape together $5 per day
for the same amount of traffic and clicks. However, I am at a loss to know
why.

The sceptic in me feels that Google is using this strategy to keep more of
the profits for themselves. However, this smart pricing is probably trying
to target all of the adsense sites that have been popping up all over the
place.

I also believe that if we are going to have a fruitful business partnership
with Google, they need to come clean with how the smart pricing works and
start trusting us a bit more.

After all, we can only get better through knowing the rules of the game and
then testing and measuring our results to improve our performance.

Does anybody know how Yahoo is going with their version of adsense? As I am very interested in testing the profitability with Yahoo compared to Google.


Regards

Bernie

[Chopped Liver]

Hi Joel,

...March was my best month ever but April's revenues are only half of what I was getting during the first quarter. My traffic and CTR are the same. On some pages, the eCPM is incredibly high. However, my earnings have decreased dramatically. Earlier in the year, I was getting a substantial amount per click. Now I often get only a few pennies for many of the clicks generated on my site. ....
Greg

Joel & Greg:

My experience in March vs. April is a carbon copy of what Greg mentioned. March was my best month ever, and April has been trailing. Obviously, we won't be able to compare apples to apples until the final bell for April, but my average revenue per day is lighter than last month. In fact, this month will be the first month since I started with AdSense (approx. 1 yr.) that my revenue will be lower than the previous month.

Like most everyone else is mentioning, I have no knowledge of how Google "shares" the revenue, and I know that many things can affect the CPC. It blows me away that I can begin the day with clicks that average one amount and by evening see that cut in half. I can only assume this may be because advertisers reached their cap for the day and are dropped from the ad inventory. My best guess...

Chopped Liver
Log Cabin Directory (http://www.logcabindirectory.com/) Log homes, cabins and timber frame information.

[aviener]

It might not be smart pricing killing your revenue! The other thing Google recently did was separate the bidding so it is now easier to bid less for your contextual ads where in the past you really had to bid the same for your contextual ads as your search ads if you were using the same ad group.

Many advertisers know and have known for some time that conextual ads convert less for them than search ads, and now it is much easier for the to set their bid prices lower accordingly.

I suspect this is trickling down to the adsense revenues we are generating from our sites.

Adam Viener
http://www.imwave.com
http://www.goyami.com
http://www.revenews.com/adamviener

[DoxazoAdonai]

It might not be smart pricing killing your revenue! The other thing Google recently did was separate the bidding so it is now easier to bid less for your contextual ads where in the past you really had to bid the same for your contextual ads as your search ads if you were using the same ad group.

Many advertisers know and have known for some time that conextual ads convert less for them than search ads, and now it is much easier for the to set their bid prices lower accordingly.

I suspect this is trickling down to the adsense revenues we are generating from our sites.

Adam Viener
http://www.imwave.com
http://www.goyami.com
http://www.revenews.com/adamviener


Sounds like we may need a strategy update...

Scott <><

[Cinneide]

Sounds like we may need a strategy update...
I haven't had a chance to read Joel's book yet (but have it printed to read on a loooong flight this weekend), but, with respect, if it doesn't include information about the effects of smart pricing and seperate bids on the content network by Adwords advertisers, then there is a chunk of information missing that affects potential Adsense earnings.

Smart pricing has been in effect for some time. Google certainly has the abililty to track the effectiveness of ads - I have seen popups asking whether I got the expected results after clicking ads - did I buy, do I intend to, mark the ad/landing page out of 5 for usefulness etc.

There's a long (7 pages) thread at http://www.webmasterworld.com/forum89/13357.htm titled 'How to make Smartpricing work to your advantage'

Lower bids of the content network has also had a big effect on earnings since being introduced many months ago. I can (and do) pay 10 or 20 times less to place ads on the content network.

Its vitally important to keep tabs on what's happening with Adwords, and issues effecting advertisers - after all its just the other side of the coin.

Niall

[bwiemers]

Hi Niall,

Thank you for your post and for the link to the other thread. I found it very informative.

Regards

Bernie

[mikem79]

I also saw my $/click drop about 30% overnight (literally).

I emailed Google about it and got back a "form letter" sort of response that listed every possible cause (all mentioned earlier in this thread) but they did not address my situation specifically.