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this is known as smart pricing
The percentage of clicks that convert for an advertiser is the most important factor in an advertiser's ROI, so it's not only possible, but common, to have a low CTR and a high advertiser conversion rate.
I had wondered about this so it's good to see it in print. I was about to take the AdSense off of my husband's hobby site as the click rate was so poor.
joined:May 2, 2005
If Google-Publisher is some kind of partnership, and it makes less money when you're smart priced, you'd think it might show a little bit more foresight to keep you from getting smart priced, and/or direction to get un-smart priced.
"Google doesn't make money from 'smart pricing' . . . In fact, we make less money, since the cost to advertisers is reduced in order to provide a strong ROI."
Fine. So provide examples of ad layouts etc. which you know lead to smart pricing.
This is about the depth of Google's advice on the subject. What could lead it to losing (through many accounts) a lot of money is reduced to these few lines:
"The best way to ensure you benefit from AdSense is to create compelling content for interested users. This also means driving targeted traffic to your site -- advertisers don't gain as much ROI when paying for generic clicks as they do for quality clicks that come from interest in your content. Good content usually equals a good experience for user plus advertiser, which can be much more valuable than CTR."
Is that the best Google can do?
"We're constantly improving our ad products to benefit both the publisher and advertiser communities; what benefits one side ultimately benefits the other."
And constantly updating its advice and wisdom page on smart pricing?
The least Google could do is automatically inform you if you've been smart priced. Why does it have to be silent? If Google tells you that you've been smart priced, you make changes, or build a better site. Win-Win? How does Google benefit from not informing you as soon as you've been smart priced?
P.S. Google should add another column to its data sheets. To the current Channel, Page Impressions, Clicks, Page CTR, Page eCPM, and Earnings, add: Average Earnings Per Click or AEPC.
joined:May 2, 2005
The least Google could do is automatically inform you if you've been smart priced.
You are asking too much. Google does not need to inform you about any changes to your account. Google does not need to share any info regarding doing business with you. Google does not need your opinion or cooperation! All they need is your website to place the ads on. So take it or leave.
I don't know how accurate it is but anything that will encourage advertisers to include the content pages and not just search is a good thing for all AdSense publishers. If fewer advertisers are bidding our earnings will be lower.
joined:Oct 27, 2001
Google is extremely primitive with its smart pricing. It provides very little guidance if any about how to avoid smart pricing, so you're left to guess, and it won't tell you if you've been smart priced.
Why would Google want to help you "avoid smart pricing"? The whole point of smart pricing is to bring the net price per click in line with actual value to advertisers.
Also, it isn't Google's job to teach AdSense publishers how to succeed in the publishing business. For one thing, not all AdSense publishers are driven by a desire to maximize their AdSense revenues, so it would be presumptuous of Google to suggest (for example) that a publisher should focus on writing content for readers who are researching ways to spend their money instead of writing news stories, hosting forums, describing the life and philosophy of Mahatma Gandhi, publishing photos of vintage railroad trains, etc.
Suppose you sell cow semen for breeding prize bulls. Radio station A comes to you and wants you to buy 100 30-second spots at $80 apiece. Radio station B wants $80 apiece for the same deal. When you look at the demographics, you find that radio station A is broadcasting to the heart of cattle country in the Texas hills, while radio station B is an NPR station in Austin.
So, you wisely say to radio station B, "Look, I can get these ads for that price right in the Texas hills, so there's no way I'll pay you $80 to play'em in Austin." The radio station can take it or leave, but there's no way you're going to be stupid enough to pay them the same price for a less qualified set of listeners.
Now suppose you sell cow semen with AdWords. Before Smart Pricing, Google sez "Hey, you can run your ads for as low as $.05 per click." You sign up, and you can't believe your eyes when you discover your ads popped up on website devoted to vasectomies for men. "Hey, you didn't charge me the same rate for putting my ad on a vasectomy site as you did for putting it on a cattle breeder site, did you?" And Google says, "well, our algorithms must have determined some men getting vasectomies start to think about cattle breeding -- and yes, we did charge you the same."
Smart Pricing is Google changing their tune to "No, we didn't charge you the same per-click for putting your ad on that vasectomy site. Our super-duper algorithm guesstimates those clicks are about half as likely to get anybody to buy your semen, so we only charged you half for that." Meanwhile, the vasectomy site webmaster is somewhere posting about how his clicks are down to about $.02 now -- but unaware that if he starts blocking the cattle semen ads, he'll make even less money (if Google's algorithms are right -- which they sometimes are).
Of course, to work, Smart Pricing needs lots and lots of data about who buys what after seeing what pages. That's why they are pouring massive millions into "Google CheckOut" (believe it or not, they are eating all processing charges and fees for merchants who use GCO in 2007, and giving customers who sign up $10). If they can get GCO widely used, it will give them information about what/when/where is correlated with converting visitors into purchasers for a wide variety of products.
joined:May 2, 2005
That's why they are pouring massive millions into "Google CheckOut"
Yes, they do, it is valuable info and will allow them to run CPA and affiliate programs. At the same time they should also review at least my home page and assign keywords so I donít get 90% garbage ads on my websites. IT would increase the CTR and we both would benefit from that.
I know that they cannot review every page but they should at least for publishers with some reasonable amount of page impressions. 1M perhaps? They had time to call me and beg me to put AdSense on some of my other websites so while they are trying to sign up new publishers they could at least review our websites and assign us some quality score or keywords. After all AdSense algo is far from perfect for many of us.
How does Google benefit from not informing you as soon as you've been smart priced?
From what I can see, Google is quite reluctant to provide tools that *might* be used to game their system, and I'm sure that they view the information you describe as just such a threat.
That seems to be at least one factor behind much of G's lack of transparency.