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smart pricing uses flawed logic
when compared to print media
Publisher




msg:1348201
 1:37 pm on Mar 27, 2006 (gmt 0)

As I understand it, smart pricing reduces the payout for ads that are clicked but are not converted into some defined action at the advertiser's site.

That is like a magazine telling an advertiser that "you run your ad in my magazine and if you don't make sales I'll reduce your cost". I don't know of too many magazines who do that.

The program puts the onus on the advertising medium to generate the sales. What if the advertising website is pushing a unwanted offer, or the site is poorly designed, or cumbersome to use, etc. There are a million reasons why a website doesn't convert and very few of them are the fault of the adsense publisher.

 

mzanzig




msg:1348231
 2:14 pm on Mar 28, 2006 (gmt 0)

But there's no "in between": Publishers can't choose to use AdSense and determine rates. That isn't going to change.

Well, if the contextual advertising market opens up, I could imagine a situation where Google Adsense might face serious competition and sees established publishers leaving for other systems. At this point, Google might consider:

- to enforce the Adsense quality guidelines
- to offer publishers to set a minimum price for ads
- to provide bigger and better blocking lists
- to provide detailed statistics to publishers
- to properly communicate with publishers

While I agree that this appears to be highly unlikely today, I would never say that things can never change.

europeforvisitors




msg:1348232
 2:39 pm on Mar 28, 2006 (gmt 0)

Therefore it's very simple, Smart Pricing must be pricing the payout down to maximize the profit to Google

1) Smart pricing is about pricing, not payout. (According to Google, anyway, and I don't see any way of questioning that without accusing Google of outright lying.)

2) Google's quarterly earnings reports show that the overall publisher payout percentage is far higher than traditional ad networks pay, so it's a stretch to suggest that Google is maximizing profits at the expense of publishers.

Smart pricing isn't likely to go away, simply because advertisers aren't going to pay full retail for every kind of click from every type of content from every Tom, Dick, and Harry's Web site. Indeed, with the explosive growth of made-for-AdSense sites by button-pushers and illiterates who dream of easy riches, smart pricing is more necessary now than it was when it was introduced nearly two years ago.

birdstuff




msg:1348233
 3:05 pm on Mar 28, 2006 (gmt 0)

...smart pricing is more necessary now than it was when it was introduced nearly two years ago.

An effective and accurate smart pricing scheme is indeed an excellent idea. One that works as poorly as this one helps no one, especially not Google and their shareholders in the long run.

A common mantra here is that smart pricing doesn't have to "work" in order to be effective. All that's required is the "perception" that it works. Going down this road will eventually result in the "perception" that Google is either dishonest or simply has no idea what it's doing, and either way such a perception will not be a good thing.

passingthru




msg:1348234
 3:18 pm on Mar 28, 2006 (gmt 0)

1) Smart pricing is about pricing, not payout.

There is nothing stopping Google passing on part of the reduction to advertisers. The two are not mutually exclusive, so Google does not have to be lying to be pricing down to the competition.

2) Google's quarterly earnings reports show that the overall publisher payout percentage is far higher than traditional ad networks pay, so it's a stretch to suggest that Google is maximizing profits at the expense of publishers.

John Battelle could only get them to confirm that overall they pay out is more than 50%, other PPC networks pay 65-70%. If the other networks could increase their CTR and advertising choices to match Googles then Google would have to payout more or it would lose the space.

Smart pricing isn't likely to go away, simply because advertisers aren't going to pay full retail for every kind of click from every type of content from every Tom, Dick, and Harry's Web site.

They'll pay the market rate for that site, as will Google. They won't pay more than market rate for the site, so why do you assume Google will pay more?

europeforvisitors




msg:1348235
 3:49 pm on Mar 28, 2006 (gmt 0)

There is nothing stopping Google passing on part of the reduction to advertisers. The two are not mutually exclusive, so Google does not have to be lying to be pricing down to the competition.

You seem to be confusing smart pricing with compensation. They're different animals: Smart pricing is an advertiser discount based on Google's assumptions about the likelihood of conversion; the compensation formula can take any number of factors into account, and whether conversion is one of those factors is anybody's guess.

John Battelle could only get them to confirm that overall they pay out is more than 50%, other PPC networks pay 65-70%. If the other networks could increase their CTR and advertising choices to match Googles then Google would have to payout more or it would lose the space.

Overall, Google pays out slightly more than 78.5% of AdSense revenues to publishers. You can confirm this be reading Google's quarterly earnings reports. This doesn't mean every publisher is getting that percentage (nor should it).

They'll pay the market rate for that site, as will Google.

Advertisers don't have the ability to determine what they pay for an individual site when buying contextual CPC ads. At least, not yet. (Perhaps we'll see "site-targeted contextual" advertising from Google at some point.)

passingthru




msg:1348236
 5:40 pm on Mar 28, 2006 (gmt 0)

You seem to be confusing smart pricing with compensation.

Not at all, I'm saying they are linked and Smart Pricing is to maximize the gap between buy and sell price.

Overall, Google pays out slightly more than 78.5% of AdSense revenues to publishers.

John couldn't get them to confirm they would pay him (a major site owner) more than 50%. What they pay AOL, Ask or Mozilla is unimportant to him.

Advertisers don't have the ability to determine what they pay for an individual site....

On Google Adwords no, on others yes.
Google is vying for the same space it has to pay a price competitively priced up to the competition.
Since its vying for the same advertisers, it has to resell the space competitively priced down to the advertiser.

This is Smart Pricing, given those two conditions they maximize the gap between buy and sell price to maximize the profit to Google.

This means that when you have no visitors Adsense will pay out almost nothing, if you are a review site with visitors, you can get good affiliate conversion, so you get more from Google too. Not because you are a better site, but because if Google doesn't pay you more you will switch that space to pure affiliate banners. As you exceed FAST's minimum visitor level, Google raises the target CPM to exceed FAST's CPM payout rate.

On the sell side, if an advertiser can buy space on your site cheaper via another method than Google Adwords, then Google prices it down to remain competitive.

europeforvisitors




msg:1348237
 5:53 pm on Mar 28, 2006 (gmt 0)

Not at all, I'm saying they are linked and Smart Pricing is to maximize the gap between buy and sell price.

That's not what Google says, and if you're going to assert that, you should provide evidence.

John couldn't get them to confirm they would pay him (a major site owner) more than 50%. What they pay AOL, Ask or Mozilla is unimportant to him.

Google's unwillingness to tell him what percentage he's getting means nothing except that Google likes secrecy. He could be getting more or less than 50% (and whatever percentage he's getting means nothing to me--or to AOL, Ask, etc.).

This is Smart Pricing, given those two conditions they maximize the gap between buy and sell price to maximize the profit to Google.

Again, we have to assume that you're making that up unless you can provide evidence.

This means that when you have no visitors Adsense will pay out almost nothing, if you are a review site with visitors, you can get good affiliate conversion, so you get more from Google too....

We don't know how Google determines compensation, but it certainly stands to reason that different publishers get different payouts depending on any number of factors. That doesn't mean your speculation is correct, and it certainly doesn't mean that smart pricing and compensation are related (except to the degree that they affect the publisher's bottom line).

jomaxx




msg:1348238
 5:57 pm on Mar 28, 2006 (gmt 0)

Look, Smart Pricing is, by definition, a discount given to advertisers. Period.

If you're talking about Google paying webmasters different percentages of the gross, that is something else but not Smart Pricing. It's possible that Google pays different webmasters different percentages, but we have no knowledge whatsoever of what criteria they would use to make that determination. You can have that discussion all day, but you are arguing in a vacuum and you are not talking about Smart Pricing.

passingthru




msg:1348239
 7:13 pm on Mar 28, 2006 (gmt 0)

EFV, Google have never denied they pay different percentages to different publishers, even if you exclude the special deals, they have never denied it. As Jomaxx pointed out they may choose to call it something other than Smart Pricing, but I'm pointing out why it must be the same calculation done with the same data.

I don't see why there is a controversy, I know many of you had Adsense before smart pricing came in, but any new publisher with a new adsense account can verify that the payout gets better as your page views get above the threshold for competing adverts.

europeforvisitors




msg:1348240
 7:20 pm on Mar 28, 2006 (gmt 0)

EFV, Google have never denied they pay different percentages to different publishers

Of course, because--as I pointed out--it's reasonable to assume that they do (and should) pay different percentages to different publishers. But that's an entirely separate issue from smart pricing.

passingthru




msg:1348241
 7:34 pm on Mar 28, 2006 (gmt 0)

Of course, because--as I pointed out--it's reasonable to assume that they do (and should) pay different percentages to different publishers. But that's an entirely separate issue from smart pricing.

Then lets agree to disagree.

You believe they are separate.
I believe they are both simply based on what buy and sell price Google competitors are offering for the same space.

danimal




msg:1348242
 1:20 am on Mar 29, 2006 (gmt 0)

>>>In other words, Google is not using flawed logic. It differetiates between branding and call to action. Plus it takes a widely used concept in the media and opens it up to all media buyers - something that is not practical in tradional media.<<<

best post in this entire thread, thank you.

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