passingthru - 2:10 pm on Mar 28, 2006 (gmt 0)

It's about the likelihood of conversion, and it's something you can usually control.

I think it is about the likelihood of conversion, but not in the way you think. Higher converting sights have more advertising options, they can use affiliate advertising if they are a review site so Google pays them more to outbid affiliate advertising money.

Google's overall advertising payout % has remained the same over the years, but the large publishers like AOL have been able to negotiate much better deals.

If Google has paid them more then it must be paying the smaller publishers less to keep the same approximate payout.

Therefore it's very simple, Smart Pricing must be pricing the payout down to maximize the profit to Google. Since Google makes its money on the difference between the buy and sell price.