Sunday, January 6, 2008

What Exactly is This Google Smart Pricing? - by Rebecca Game

What Exactly is This Google Smart Pricing?

If you are experienced in the Adsense arena, then you know that Google has now developed a new way to decide how much you earn through your Adsense ads with their new Smart Pricing formula. What is the formula? No one knows exactly. There is a theory though…

It involves their formula for the alogorithm that determines if the visitor who clicked on one of your ads is a good customer for the advertiser. This means the “clicker” should be interested in the product advertised and make a purchase from the advertiser. How does Google get this information? They don’t actually.

Avertisers who work with Google through Adwords are not required to share their conversion rates from click-to-purchase. Some advertisers do share this information since Google has a way for them to share it, while most advertisers don’t share this info. If the advertisers don’t share this information, then how does Google decide how clickers are converting to sales? Hmmmm… they must have to guess, (or use one of their famous formulas).

The new Smart Pricing equation being thrown into the Adsense income mix has a lot of web site owners upset. They have seen their sales drop dramatically even though they are showing the same amount of ads with the same amount of monthly clicks on average. Google won’t share what they are doing because then people can “beat the system” and cost Google and their advertisers money that is not actually earned through honest site optimization.

What can you do to help your site with this new change? Well one of the things that Google does is decide if the ad showing is in “theme” with the page it sits on. Your site should contain a consistant theme throughout. You can still use related keyword optimized pages AS LONG AS your site is also related to the same subject.

If you are going to do tracking, then only change ONE thing at a time. You should monitor the change and it’s results. If the change brings you a larger income, then stick with it. IF it doesn’t then change it back and change a different element. Then monitor those results. Keep doing this until you have your own perfect formula for surviving the Smart Pricing alogorithm.

Having too many different subjects on your web site can actually get your clicks penalized and you will be paid less. It’s wise to have different web sites that focus on each individual subject with different related keyword optimized pages. The more you “niche” your site the better. A niched site relating to one major theme will get you a higher payout on your Adsense income.

What part of this new Smart Pricing is unfair to publishers? My own theory is crummy landing pages. If you have an ad show up and your visitor clicks on that ad and then get sent to a crummy landing page and leaves. You have just been penalized because the customer did “not” convert to a sale and it’s not your fault.

The other down side is Adword advertisers who are buying keywords not even related to what their web site sells. This is another lost customer who didn’t convert to a sale and you might be penalized instead of the advertiser who actually gets money back from Google because of their low conversion rates.

Whether you like it or not, and even if it’s not the “smartest” of Google’s new changes, it’s already in place and you are already a participant if you serve up Google Adsense ads. It seems that the ones paying Google, (the advertisers), are going to have a little more say than the publishers naturally. If they are complaining about click fraud or bad conversion rates, then their voices combined are what makes Google change.

Since Google likes to make money, I am sure they have several bean counters going all the time to find out if the changes have hurt their bottom line, or helped it. We can probably expect these changes often. Google promises that it tries to make you the most money as an advertiser because then they make more money.

I do know this….

In April 2005 I was making over $3,000 a month with Google Adsense. In March 2006, I am making around $750 a month with Google Adsense yet my traffic has increased since last year. If I am making less, then Google is making less from me. I have a high traffic web site and yet my Adsense earnings have plummeted.

How do you fix the problem when you are not privy to the conversion rates for the ads showing on your site? How do you know which are the bummer ads compared to high converting ads. With this knowledge you COULD apply Google filters weeding out the bad advertisers who have a problem converting sales once their visitor has landed.

The only thing we can really depend on is that Smart Pricing is fairly new and maybe Google will get it all ironed out in the end. Did I say “end”. Google never ends, it just keeps on going and going and going….


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