europeforvisitors - 5:27 pm on Mar 27, 2006 (gmt 0)

I think several things are being overlooked here:

1) Smart pricing may take known conversion rates for individual publishers into account, but such data isn't essential. When Google announced smart pricing, it mentioned the type of content as a factor: for example (and this was Google's example), a click from a page of photo tips would be less likely to convert than a click from a review of a digital camera, so it would have a larger smart-pricing discount.

2) A "conversion" doesn't have to mean a sale. It can be any business action defined by the advertiser (or by Google): e.g., an inquiry, a newsletter subscription, a registration, etc. In other words, AdSense ads can be (and often are) used for lead generation, not just for e-commerce transactions.

3) While it's true that the quality of the advertiser's Web site, offer, etc. will influence conversions, it's equally true that the quality of the advertiser's ad will influence clickthrough rates. So, if you dislike smart pricing because you don't want an advertiser's incompetence hurting your revenues, you might want to rethink participating in AdSense or other cost-per-click ad networks (as opposed to CPM networks) for the same reason.