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How Does Smart Pricing Work?
Discovering Ways AdSense May Determine Earnings Per Click
jonaspersson75




msg:3256027
 12:48 pm on Feb 18, 2007 (gmt 0)

how many publishers give googel data from their sale through rate? and they could be lying.

i dont see how smart pricing works. please explain.

 

Pengi




msg:3256034
 1:03 pm on Feb 18, 2007 (gmt 0)

As I understand it:

Some advertisers provide Google with data on their conversions. I think this is entirely through Analytics, but i don't know for sure.(I've no idea what proportion of advertisers provide data, but I would expect it to be pretty low. Nor do I know how well Google check out the validity of the data.

I believe that Google then analyses this data to form a "view" on the type of sites, and various parameters of those sites, whose leads convert poorly for advertises. (E.g. clicks from sites that have X amount of content, Y keyword density, yellow backgrounds and domain names containing the letter z convert badly for advertisers). This "view" is then applied to other sites to "guess" whether they are likely to convert well or badly. If the "guess" is that they will convert badly, smartpricing is applied.

I don't know if Googel advises who to avoid being subject to Smartpricing (I really ought to find this out). But if so, this would provide clues as to what is currently within their smartpricing model.

Excellent question. Lets hope that a quality debate here will help educate all of us.

sailorjwd




msg:3256046
 1:35 pm on Feb 18, 2007 (gmt 0)

I think google also classifies the type of visitor that is clicking on the ad. As well as the click through rate (CTR). I believe some of this is done nearly instantaneously.

For example: I'm able to increase visitors to a particular page by 4x simply by adjusting adwords bids by 2cents. When I do this the amount I get per click quickly plummets to pennies.

Some characteristics of these new visitors are:
1) they are ad clickers since they clicked one to get to my site (typically ctr goes up a little)
2) they are often non-usa visitors.
3) They come from adwords ads.

So some aspects of smart pricing may not have anything to do with a site.

dollarshort




msg:3256632
 7:43 am on Feb 19, 2007 (gmt 0)

I never really believed smart pricing, it would be way too complicated to implement in adsense as there are too many variables. Smart pricing is for adwords where you pay 2 cents more than the next lowest bid, much like proxy bidding at ebay.

europeforvisitors




msg:3256868
 3:20 pm on Feb 19, 2007 (gmt 0)

I never really believed smart pricing, it would be way too complicated to implement in adsense as there are too many variables.

Are you suggesting that Google is lying to publishers and (more important) to advertisers?

Smart pricing doesn't have to be complicated to implement; it can be as simple or as complicated as Google chooses to make it.

potentialgeek




msg:3256977
 4:57 pm on Feb 19, 2007 (gmt 0)

I believe I finally defeated Smart Pricing. For the last two weeks or so, at least. (I understand SP gets weekly updates.) Man, this feels good. It's like a curse was lifted.

It's so humiliating to be smartpriced. Like your site is so bad, you don't deserve much per click!

Don't ask me how I did it. I don't know for sure. What did I do? Removed ad blocks from huge swaths of the site where nobody clicked on them (hardly anyone).

Less is more.

p/g

benevolent001




msg:3256979
 5:02 pm on Feb 19, 2007 (gmt 0)

As of date smart pricing is there and will stay..

here is what google says for this

As an example of smart pricing, consider two websites, each related to digital photography. The first page features digital camera reviews, while the second offers photography tips. Clicks from the page of photography tips might be charged less, because they are expected to convert into sales less frequently, resulting in lower value for advertisers. Google data determines that clicks from the digital camera reviews convert better, so clicks from this page are not discounted.

this is smartpricing in context for adwords users , so you see which website you have , what type of content is there , we can think we have got good price for clicks but in actual things are much different then they appear to be

smart pricing is there till now

FourDegreez




msg:3257322
 11:10 pm on Feb 19, 2007 (gmt 0)

Some advertisers provide Google with data on their conversions. I think this is entirely through Analytics, but i don't know for sure.(I've no idea what proportion of advertisers provide data, but I would expect it to be pretty low. Nor do I know how well Google check out the validity of the data.

Actually, advertisers can track their conversions directly through AdWords. It's easy to set up, and I have to imagine many advertisers use it. The more who do, the more accurate smartpricing can be.

It's understandable that smartpricing is not popular among publishers. Who wants to be told their clicks aren't worth as much? But if it's honest-to-God true, you're clicks simply don't convert as well as clicks from other sites, then smartpricing is perfectly fair. In fact, it keeps the program strong.

dollarshort




msg:3257644
 12:06 pm on Feb 20, 2007 (gmt 0)

Europeforvisitors, I respect your views on many subjects but I do not agree on this. I myself use adwords and in order to collect conversion data it would require modifying the shopping cart code, Although I did, I really don't think many sites went through the trouble. Other variables include what if a site simply does not convert well for various reasons? Why should publishers be penalized? How about poor targeting still not publishers fault. The whole idea just seems a bit funky.

Scurramunga




msg:3257657
 12:20 pm on Feb 20, 2007 (gmt 0)

Other variables include what if a site simply does not convert well for various reasons? Why should publishers be penalized?

To expand further; what about advertiser landing pages that don't load properly or not at all? I have blocked quite a few advertisers for this very reason, the mosty recent was yesterday.

FourDegreez




msg:3257801
 3:21 pm on Feb 20, 2007 (gmt 0)

I have to assume that the smartpricing algo compares how your site's clicks convert relative to clicks coming from other sites. So if your site's clicks convert poorly, but everyone else's do, too, there is no penalty. Google is smart enough to know that the advertiser doesn't convert clicks well. But if your site's clicks covert 5% of the time while most other sites' clicks convert 15% of the time, you're going to be smartpriced.

ronburk




msg:3258071
 7:44 pm on Feb 20, 2007 (gmt 0)

i dont see how smart pricing works. please explain.

Google collects conversion data from a variety of sources. They are dedicating millions of dollars to increasing the volume of those sources. Consider that Google is currently processing CC transactions for free for vendors that use Google CheckOut, and that Google is currently paying customers to sign up to start using Google CheckOut to process their credit card transactions.

Once they have a reasonable sample of conversion rate information, the rest is data mining, which is where Google's traditional expertise is. Your website doesn't supply Google with conversion information? No problem. Google can see if your website content contains key factors that data mining reveals are correlated with better conversion rates on other sites.

SmartPricing is exactly analagous to getting high rankings. You can either moan and complain and continually search for "tricks" to outsmart Google's ever-changing algorithms, or you can assume that Google's going to keep getting better at actually estimating value, and focus on changing your content accordingly.

In the case of SmartPricing, that means studying your advertisers and their products, and then trying to only show their ads to reasonably qualified customers that are good candidates to buy those products. A quick scan of this forum will show you that most folks are dedicated to the moan/complain/tricks approach :-).

dollarshort




msg:3258529
 4:22 am on Feb 21, 2007 (gmt 0)

Sorry, I really don't see how publishers can be penalized on sparse and unreliable data. Conversion ratio data collected from credit cards? Are you serious? How does google determine what kind of site I run? Do they catagorize it during the approval process?

europeforvisitors




msg:3258569
 6:02 am on Feb 21, 2007 (gmt 0)

Sorry, I really don't see how publishers can be penalized on sparse and unreliable data.

Nobody is being penalized. And Google has had the opportunity to gather a LOT of data over the last 3-3/4 years.

martinibuster




msg:3258589
 6:58 am on Feb 21, 2007 (gmt 0)

Time Spent on a Site
How about time spent on a site once a user has clicked through, including click-back data?

Keywords Used to Access Your Site
How about keywords used to access your site? Could Google have a database of keywords likely to convert based on historical data from sites that use Google analytics?

Is it possible that some keywords or keyword components are likely to convert and vice versa?

Possible Keyword Whitelist
What are possible possible whitelist keywords used to access your site and likely to raise your EPC?
Cheap
Affordable
Buy
Store

Is it possible there are whitelists and blacklists that trigger smartpricing? What kinds of words could be added to those lists?

Possible Blacklisted Keywords Likely to Drive Down EPC
What are possible blacklist keywords used to access your site and likely to lower your EPC?
Free
Pics
Photos
Forum

Possible Topic Blacklist
Are academic & scientific topics smart priced or is that a function of low advertiser demand or bidding habits?

Possible Format Blacklist
Are blogs and forums scored negatively as likely not to convert based on historical data or is that a function of advertiser bid rates?

Is Smart Pricing Applied per Page or Sitewide?
I notice that some pages in a site have high EPC while some have low EPC. But honestly, I think that's a product of poor targeting, not smart pricing.

What do you think? Is smart pricing sitewide or on a page level?

What Other Data Points are Possibly Being Used?
No one outside of Google, including myself, can say with certainty what data points are being used to identify web pages likely or unlikely to convert. We're all just making stabs at what can possibly be behind smart pricing. But we have many smart people in this forum who can suggest possible scenarios. This is a great discussion so far. Keep the suggestions coming!

oddsod




msg:3258678
 10:02 am on Feb 21, 2007 (gmt 0)

Great points, MB. Here's one more:

The pressure on Google to reach a particular earnings target for the quarter.

Scurramunga




msg:3258686
 10:19 am on Feb 21, 2007 (gmt 0)

Call it smart pricing when talking about Adsense or click auditing when it's Chikita. I guess that it could be put down to as an adjustment in payout based on a 'evaluation' made regarding the 'worth' or 'validity' of a click from an advertisers point of view. I don't know much about Chikita, however I would imagine that if they disclose the amount discounted in the publisher stats then it would be relatively easy to determine how much is actually been discounted However in the case Adsense, the publisher ends up speculating on whether or not clicks have been discounted via smartpricing or otherwise.

Sztraik




msg:3258751
 12:38 pm on Feb 21, 2007 (gmt 0)

My question maybe is naive, but are advertisers also getting this discount or is it a discount only for G?

Scurramunga




msg:3258757
 12:50 pm on Feb 21, 2007 (gmt 0)

are advertisers also getting this discount or is it a discount only for G?
According to google smartpricing is for the benifit of advertisers. There has been some arguement on this board suggesting otherwise, however I am not sure how well founded those arguements are.
trinorthlighting




msg:3258759
 12:58 pm on Feb 21, 2007 (gmt 0)

I would have to say smartpricing goes along with where your getting your traffic from.

Juan_G




msg:3258789
 1:55 pm on Feb 21, 2007 (gmt 0)

martinibuster wrote:

Time Spent on a Site
How about time spent on a site once a user has clicked through, including click-back data?


Yes, perhaps they also take into account the bounce rate (quick click on the back button).

What do you think? Is smart pricing sitewide or on a page level?

Both.

Page, site and, in addition, there seems to be a secondary account-wide smart pricing effect. All at the same time.

jason207




msg:3258880
 3:17 pm on Feb 21, 2007 (gmt 0)


What do you think? Is smart pricing sitewide or on a page level?


Page, site and, in addition, there seems to be a secondary account-wide smart pricing effect. All at the same time.

from what ive seen with my account with multiple sites, i don't think its account wide, as some of the clicks i get
from one site are too high for smart pricing to be present, while another site is im sure smart priced (i would smart price it, the traffic there
isn't the buying type).

i cant really tell if its site wide or not, but if i was to guess it would be page wide as it simply makes the most
sense to me. As google also looses money if a click is discounted and why shoot yourself in the foot

i also wonder if it may even break down to the actual ad itself, as on more than one occasion when copying and pasting
ad code from one site to another site instead of logging into adsense and creating an ad. What happens is that ad's history carries over
and displays ads targetted for the site the code was copied from. ie on a site about a college, an ad was "college name mascot ringtones"
this showed up on the new site as well that had nothing to do with the college at all. I use url channels and not custom channels
so its not using anything on my end doing it and its not always the dynamic insertion ads that do it either, they are just the most noticable.
of course its same server, same ip block if not same ip, but new code generated from adsense control panel doesn't do it.

aleksl




msg:3259034
 5:06 pm on Feb 21, 2007 (gmt 0)

martinibuster:

Is Smart Pricing Applied per Page or Sitewide?

or maybe per channel?
We are running a Forum on one of our sites, and I see consistently low eCPMs on it. Yet, there are sections of the same site where eCPM and earnings occasionally "explode".

OldWolf




msg:3259119
 5:56 pm on Feb 21, 2007 (gmt 0)

Ive been been smartpriced 7/20/06 .I asked G last week if there is anything more i can do for review my site beside adding more content , here is the answer i get

<no emails thanks>

If the advertiser not happy with my site (or your site) cant they use filter? may be that advertiser compliant about me /you and later stop using adwords or filtered me but im still smartpriced :-(

[edited by: jatar_k at 6:08 pm (utc) on Feb. 21, 2007]

MikeNoLastName




msg:3262373
 4:58 am on Feb 24, 2007 (gmt 0)

From my experience/analysis (covering over 2 years and many millions of impressions and 50K clicks each month) I would venture the following:

I would say smart-pricing is totally automated and applied based on each advertiser in each ad unit position. If THAT spot does not produce for THAT advertiser, then HIS price for that spot is reduced.

HOWEVER, if there is another UN-smart-priced ad (say a new advertiser which has never been in that position before) that is bidding higher (than the prior ad WITH smartpricing invoked) and appropriate for that spot, the old advertiser will stop showing (as much, or at all) and the new one will start in that spot at a penny over the prior ad's smart-priced value.

IF an ad is finally found which DOES do well in the spot (both on the basis of higher clickthru and presumably better reported sales - remember bidders vote with their bid amounts as well. If they aren't making as much they can't afford to pay as much.) then the smart-pricing starts swinging back up the other direction. This same procedure appears to take place based on keywords as well (G tries focusing on various keywords on the page to see which perform best in the position as well).

Eventually an equilibrium is reached. This process is most apparent in the first 6 months-year of an ad position's life. After that it seems to be more buffered against drastic change and get more consistent with fewer wide swings. Overall G always strives to optimize for the highest CPM for each ad unit taking into account smart-pricing, targeting options, etc.

It was more obvious to track back when there weren't site targetting stats to get in the way. Somestimes, it does appear mussing things around and changing ads or keywords, may restart the process and get you a temporary UN-smart-pricing, but it could just as easily start anew at the low end as well if you're already at the top of your smart range.

Someone mentioned about the source of visitors to your site. Despite a note from an adsense rep some time ago insisting that they DO NOT track the referrer for your page, I noticed some drastic changes one time when we were temporarily dropped from G rankings for a couple weeks during one of the re-indexings, and most of our traffic was coming from Y and MSN.

The CTR stayed constant but the PPC and thus CPM rose dramatically, dropping back immediately when we started getting G traffic again. This would lead me to reason that either Y/MSN searchers really did convert better, OR G is tracking referrers and considers visitors from off-network (that get to your site from somewhere other than G sources) MORE VALUABLE!

If this is true then buying clicks from Adwords would effectively reduce your smartpricing for recycled outgoing clicks. Thus, WE only buy traffic from OTHER sources.

[edited by: martinibuster at 6:09 am (utc) on Feb. 24, 2007]
[edit reason] Added paragraph breaks for readability. ;) [/edit]

egurr




msg:3268596
 2:30 am on Mar 2, 2007 (gmt 0)

Here is what I don't understand. A click is a click, why does it matter where it comes from? Google is making money. My site runs adsense, and I pay for ads with adwords in the same exact space. My clicks (What I get) Is almost exactly 1/10th of what I pay. I see my ads on other sites, right next to the ads that are on my site. I'm trying to get in to YPN as I get a good amount of pviews, A bit under 1 million per month, but good for me. Can someone explain this logic to me?

europeforvisitors




msg:3268630
 3:17 am on Mar 2, 2007 (gmt 0)

Here is what I don't understand. A click is a click, why does it matter where it comes from?

It matters because audiences and audience motivation matter. Some clicks are less likely to convert than others are, and advertisers won't keep on buying AdWords ads if they're paying full retail for poor leads by the carload.

Pengi




msg:3269167
 4:43 pm on Mar 2, 2007 (gmt 0)

A click is a click, why does it matter where it comes from?

Put your self in the position of the advertiser selling widgets.

If someone clicks on the widget Ad showing on site X they get to the widget landing page and 50% go on to buy a widget.
If someone clicks on the widget Ad showing on site Y they get to the widget landing page but only 5% go on to buy a widget.

Clicks from site Y are not worth as much as those from site X

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