Forum Moderators: martinibuster
By making it totally risk free for the advertiser, google is losing the equivalen of the underwriting premium in insurance world.
This is definetly bad for publisher and Gogole. This is not sustainable in the long run.
This is not sustainable in the long run
Overcharging publishers for non-performing web space is what's not sustainable and Google was smart enough to realize people don't mind paying if they get some value for their money.
Some web sites may be worth $0.25/CPC and some $0.05/CPC - with smart pricing AdSense bridges that gap of disparity automatically for the advertiser instead of making them either overpay or bid per web site.
I know from personal experience selling direct ads on my site that there is a sweet spot that encourages all sorts of people to buy ads. If it's priced too high the little guy can't afford to advertise and if it's too cheap higher end advertisers won't buy as the perception is it has no value. You have to strike just the right prices where everyone feels they are getting a good value for the ad money spent otherwise advertisers sample it and move on after a month.
Take a look at the wide range of pricing on AdBrite in a single category, some web sites charge a real premium and some are fire sale prices. Imagine that you add all those various priced web sites together and call it a content network and you get an idea what smart pricing is attempting to do, whether or not it does it well.
I think the smart pricing aims to take away all the risk for an advertiser.
All advertising involves risk. Google doesn't attempt to remove that risk; Google merely merely wants to ensure that the advertiser receives full value for each click. If a click isn't likely to convert, then it isn't worth as much as a click that is likely to convert, so it's only reasonable for the advertiser to receive a discount.
If Google were to abandon smart pricing, something else would have to take its place, such as:
- A purge of sites with low conversion rates; or...
- PSAs on pages with low conversion rates.
Smart pricing is only necessary in the take-it-all-or-leave-it-all environment of the content network.
No argument there.
As advertisers get more opportunity to selectively bid(such as they are now getting with CPM bids), smart pricing will become outdated and counter productive.
Not necessarily. It will merely be one approach (as it is now, where--as you point out--advertisers have the option of using site-targeted CPM ads).
Only advertisers know the true value of a click from a specific site.
Not necessarily, if they're using Google conversion tracking. And remember, smart pricing doesn't have to be exactly right for a specific site, page, or type ofcontent. Google merely needs to convince advertisers that, overall, they're getting good value from content ads. (If an advertiser overpays slightly for site A and underpays slightly for site B, the differences come out in the wash.)
