What is smart-pricing?

[knights1]

The title says it all.

[wheelie34]

G's way of determining wether the traffic you provide is turning into sales for the advertiser.

Lets say you have a specific advertisers ads appearing on your pages over and over, they get a high ctr example 500 visits from your domain, but the advertiser doesnt make 500 sales, G gives the advertiser a discount on their eCPM so they spend less and of course, you get less per click.

Just how G can decide is beyond my comprehension, I run a tourism site and the people advertising sell beds basically, now, how can G decide if each visit has turned into a bed booked?

I know advertisers can create special landing pages for their ads then monitor the surfer that way, but G cant, so how does G decide to cut the PUBLISHERS earnings, personally I think its bull.

[moneyraker]

When discussing smart-pricing, I always read that G checks the publisher's conversion and gives advertisers th applicable discount if the conversion is poor. What does conversion in this context mean? I would guess that it is the publisher's ability to convert their ads into clicks, not the ability of the advertiser's landing pages to convert clicks into a sale.

Conversion into clicks is within the publisher's control (by writing his text as a presell to the ads), but conversion into sale should be the advertiser's accountability (woe to him if he makes bad landing pages). Given this, I think it is but fair for G to base the discount on CTR, not conversion to sale (and right, how would G know the conversion to sale data?).

[carguy84]

Google can track conversions by having the advertiser put some google code on the thank you page or the last page of what ever process makes the clicker a conversion.

[RonPK]

From the horse's mouth: smart pricing announcement [adwords.google.com].

Basically G estimates how likely it is that a click will turn into conversion for the advertiser, using the conversion tracking mentioned above. Clicks on pages that convert well cost more than clicks on 'bad' pages with the same ads.

[joeking]

"Google can track conversions by having the advertiser put some google code on the thank you page or the last page of what ever process makes the clicker a conversion."

that would only track a certain number of conversions - ie the ones placed via the website.

Often customers will phone for more information or order by post or require a site visit, etc.,

[kwags]

They can't really put stock into an img that people can optionally put into their own webpages.

There are no rules for Adwords advertisers in the way they use the conversion tracking code (that I've seen?) and if an Adwords Webmaster wanted to, they could simply show Google's conversion tracking code on half of their "conversion" pages, thereby artificially creating a 50% lower false result. Based on the smart pricing concept as described by Google, that would get them a lower CPM cost and Google would have no means to determine or prevent that.

If you watch your stats, it "feels" much more like Smart Pricing watches your CPMs and does it's best to normalize them in a down fashion over the longer term.

(Just my own conspiracy theory, of course.)

[moneyraker]

Thanks for the link, RonPK. Now it's clear - the conversion really refers to 'business' conversion, not click conversion.

[... are constantly analyzing data across our network, and if our data shows that a click is less likely to turn into business results (e.g. online sale, registration, phone call, newsletter sign-up), we may reduce the price you pay for that click.]