Forum Moderators: martinibuster
I have this friend, who has a site of same niche. He, to, has relevant visitors, steady volume, and good payouts (indicating probably decent conversion rates for Google advertisers).
We meet and get to thinking... what if, on a lark, he were to place a link to my site's comparable page, and I a link to his? What if we did this in an alternating fashion... first he sends me traffic, and then I send him some, and we see what happens to AdSense payouts. Of course we do it in a way that induces click thru to the other's page, sans an AdSense opportunity on the refering page. Of course we stagger it randomly throughout the day, over several days, on both sides.
So my N clicks per M impressions historically paying $X average per click goes to roughly 2N clicks per roughly 2M impressions, and pays what? And his N clicks goes to roughly 2N, while his M clicks go to 2M (roughly)... what do we see with his payout?
I bet you can guess. And when we revert back to normal, without any cross links? I bet you can guess that as well. Stood up to a time test as well.
How can this be fair? How can this be "smart pricing" for anyone but Google?
But, perhaps,it could be done so that smart pricing doesn't depend on the absolute effectiveness of the advertiser's page at all. Here's how:
The advertiser is responsible for the absolute conversion rate. Different publishers will receive varying prices for their traffic relative to how their traffic converts compared to other publishers (or perhaps search engine results can be used as the standard to compare by). So a terrible landing page could produce low conversions all around, but hey they value the traffic at the amount that they bid. Google shouldn't try to second guess the free market about how much a click is really worth. So poor absolute conversion is the problem of the advertiser. But if a site is sending traffic that converts far less than the average publisher's traffic then that traffic should be discounted.
Maybe the traffic from the two sites isn't identical, and people who get funneled from one site don't tend to click on the other site's
yes, (it was also stated differently by someone as recycling visitors) that is understood to be minimal for this "test", as one one site generated leads offline via direct mail (not email) and newsletters, and the other via AdWords. The odds of recycling traffic seemed to be too low to be a major concern, and adwords tracking was in place.
The whole reason we did the test was because our page copy was almost identical, for the same niche and that was funny. Once "discovered", we started chatting, and then swapped traffic.
...maybe AdSense portions out clicks so that not too much of an advertiser's content traffic comes from a single site....
Maybe. But then I want a refund for the traffic I sent to AdSense, since AdSense unilaterally decided it didn't want it. It's absurd to discount it and share the revenue with the advertiser.
Maybe when there is a sudden spike in traffic, the extra clicks are charged to advertisers at the lower rate. Then if traffic stays at a high level and the "quality" of the higher level of traffic is established, rates would go up.
Yeah, and isn't that also cheating the publisher? If an actor has a secret wedding, the next day's traffic for gossip sites surges. Does that justify Google and the advertisers geting a larger share of the pie? And what about effective PR? Last thing I need is a "partner" who decides unilaterally to take a larger percentage of the pie any tme I spend a ton of money on promotion and advertising (to get traffic).
My take in the whole smart pricing situation is that its inner workings are more dependent on your own website and content than on the conversion rate achieved by the advertiser. I understand that some particular ecommerce niches would have googles of conversion data. However, this is surely not the case with all.
IMHO, the Smartbot algo is more like:
- Theme out of whack (-)
- Poison key words ie: free (-)
- Good keywords (+)?
- Type of site (+)?
- other links in the page (-) or (+)
just thinking out oud here
Even assuming conversion rates are factored into EPC which has never been demonstrated, Google doesn't know any advertiser's profit margins and therefore has no idea of the "true" value of a click.
The "true value" of a click isn't how much revenue or profit it generates for the advertiser--it's what the advertiser is willing to pay for that click. AdSense is an advertising network, not an affiliate program.
Smart pricing is simply an adjustment mechanism for bringing the click price into line with what an advertiser might be expected to bid in a free market. Conversion tracking may a factor in Google's smart-pricing algorithm, but only to the degree that it's used for statistical modeling.
BTW, I like Loanuniverse's observations, which show clever thinking about smart pricing.
Smart pricing is simply an adjustment mechanism for bringing the click price into line with what an advertiser might be expected to bid in a free market. Conversion tracking may a factor in Google's smart-pricing algorithm, but only to the degree that it's used for statistical modeling.
That's what "smart pricing" is about IN THEORY. In PRACTICE it doesn't work very well, according to my testing.
In my post
[webmasterworld.com...]
msg #30
So, looking at my logs, a visitor from United Arab Emirates on a page about oil refinery, clicks on an ad of Shell on improving refinery plant performace and on another ad on oil pipe hangers and supports. And those clicks earn a few cents.
I give a very specific example, which in my opinion leaves no room for other interpretations about whether it's a good biz lead or not, which I noticed two days ago.
It's not a single case, I have seen other similar ones in my logs, which I wrote about, without giving details, in previous reports e.g.
[webmasterworld.com...]
msg #13
Just because "smart pricing" works for you sofar, doesn't mean that it works well in general.
If the "smart bot" thinks as you say, why decrease payout as traffic goes up?Payback: I do not believe that you have proven anything with your experiment.
First, traffic was not the only thing that changed in the pages. You also changed the pages by adding and removing links.
Second, I will grant you that a significant traffic increase in a short period of time could be a trigger for lower payouts, but some of us have experienced a more gradual increase over months and have not really seen affect EPC or earnings negatively. {Of course I am talking on a rolling basis with samples big enough to smooth one day abnormalities}.
Finally, someone already mentioned that the close link that you established amongst the two pages {albeit in separate domains}, could have a discount effect on visitors clicking ads on both pages. Could another part of the Smartbot algo be the following:
1 - Determine value of click #1 by calculating discount from SERP CPC or {discount}
2 – Apply discount to click = {discount} X SERP CPC = Content CPC
3 – If visitor clicks on second ad then double the discount or halve the base SERP CPC?
Once again thinking out loud.
So, looking at my logs, a visitor from United Arab Emirates on a page about oil refinery, clicks on an ad of Shell on improving refinery plant performace and on another ad on oil pipe hangers and supports. And those clicks earn a few cents.I give a very specific example, which in my opinion leaves no room for other interpretations about whether it's a good biz lead or not, which I noticed two days ago.
If for example, the CPC to be on the 6th position is $1.00 {which sounds reasonable for a UAE targeted campaign or at least one that isn’t solely US}, then that guy could very well be shown as a top two in content paying a diminished rate.
”Why look at the top 6 positions?” Because a couple of advertisers could have content turned off and this would push #6 guy to #4.
”Why use CPC for a worldwide campaign or one directed to the UAE” Well some advertisers are not very smart, and most adword advertisers restrict their ads to US visitors. Also the UAE is very small, right? I know they are swimming in oil, but how many refineries are there?
Finally you would have to deal with the Smartbot dampening effect as well as the cut that Google takes off the top. Overall, I would not think that this particular keyword with this particular visitor would bring much money to a publisher. Granted a good lead could be worth tens of thousands or even millions to an advertiser, but is the demand there? Is it competitive enough? How many players are out to get that kind of business "that use adwords"?
IMHO, this topic is five years ahead of its time.
Just because "smart pricing" works for you sofar, doesn't mean that it works well in general.
I don't think anyone here has said that smart pricing works well. (I personally don't believe that it can work well, but that's a topic for another thread.)
The point I'm making is simply that smart pricing is a bid-adjustment mechanism, not a form of CPA or even an evolutionary step toward CPA.
Finally you would have to deal with the Smartbot dampening effect as well as the cut that Google takes off the top. Overall, I would not think that this particular keyword with this particular visitor would bring much money to a publisher. Granted a good lead could be worth tens of thousands or even millions to an advertiser, but is the demand there? Is it competitive enough? How many players are out to get that kind of business "that use adwords"?
In this "oil refinery" case, I gave just one example, a crystal-clear case which everyone here would easily understand.
I have many similar cases in my logs, from other industrial sectors, but one would have to know the biz to estimate whether a lead had a good potential or not.
Once competition begins between Google and ValueClick for AdSense customers will we begin to see in truth where this is all going to end up.
As it stands it's a system in flux and you're just trying to pin down a moving target.
If you are concerned about the flakiness of AdSense, I really advise you to diversify your publishing income..
The reason why I think that the value assigned to a click in a content page works mostly based on the price of keywords is that one area that Google has a lot of easily available data is in the price that advertisers are willing to pay for words and phrase variations. The competitive bidding information is staggering when compared to the small amount of “conversion” information.
IMHO, keywords and phrases are at the heart of the Smartbot’s algo with a few other things thrown in. I would never underestimate the ability of a computer oriented person to complicate things more than they need to be so I am going to say that the whole pricing adjustment algo probably has a half dozen factors that could be be taken out.
Personally, I still get roughly the same EPC that I got a few months ago. It could go 20% either way from month to month, but I learned not to sweat it too much. If I had seen a 50% to 80% reduction in EPC like some people are reporting then it would be a whole different attitude.
A lot of these conversations are temporary and irrelevant until CJ Evolution comes out full force.
LOL, not too many oil refineries running affiliate programs at CJ.
1 - Determine value of click #1 by calculating discount from SERP CPC or {discount}
This is what I don't understand... I though this was a bid system, where advertiser place their bid on AdWords, and we show the ads on AdSense. The advertisers decide the price.
However, there is a significant enough set of main stream advertisers in CJ to create competitive pressure which will help evolve a real context advertising solution, and not just this one 10 tonne elephant solution we have now.
The problem people complain about here is not Google's implementation. Lets face it, 99% of us would all tip the scales in our favour as well if we were in their shoes.
No, the problem here is that Google doesn't face very real competition for your contextual advertising space..
