AdSense Success and Smartpricing
765 words | Last Updated: February 17, 2009 |
People who want to make money online with AdSense eventually come to terms with something known as smartpricing. What exactly is it, and why can it lower your online earnings? On the other hand, how can inordinate fear of smartpricing rob you of even more profits online? Here's the inside take...
Based on the experience of some people, smartpricing happens when you send visitors to a merchant (via that merchant's ad), but those visitors end up not buying anything. As a result of that poor conversion rate, you get smart-priced and the merchant ends up paying less for ads that appear in your site.
It makes sense, right? Why would an advertiser pay you premium ad fees for visitors that do not produce enough sales?
Now here's where it gets interesting: if you have a network of sites, and ONE of those sites gets smart-priced, then ALL of your sites will also suffer smartpricing.
Is that for real? Well, that has been the experience of some bloggers who are making money fast and easy from AdSense. That's why they remove ads from their under-performing sites, so that their winner sites end up earning even more for each visitor they send to online merchants.
Please take note: That is their experience. It is not the experience of everyone.
In the case of other bloggers, they have seen that some of their sites get smartpriced, while other sites remain unaffected. Why is their experience different? It relies greatly on the advertisers.
INSIGHT: Advertiser #1 is not Advertiser #2.
There are advertisers who will continue paying you top dollar for your visitors in Site #1, even if your visitors in Site #2 are not exactly online shoppers. Afterall, why will they penalize your superstar Site #1 and run the risk of a competitor offering more ad revenues, right? Wouldn't it make sense to reward the sites that get results?
Advertisers also have different products. What if Advertiser #1 is selling a product that sells for $50,000 and has discovered that one sale is made for every 1000 visitors you send to their site. If they pay you $5 for each visitor you send, that means they will spend $5,000 in advertising to make a $50,000 sale.
Now let's take the case of Advertiser #2 who is selling a $50 ebook, and who knows that for every 1000 visitors you send to their site, 2 people will buy the ebook. In this example, the conversion rate is two times better than in the case of Advertiser #1. Yet the most that Advertiser #2 will be willing to spend is sales from two ebooks or $100 divided by 1000, which comes out to just ten cents per visitor.
Given the above, Advertiser #1 is willing to pay you $5 per visitor and still make a profit, while Advertiser #2 will pay a maximum of US$0.10 per visitor and break-even (at best).
Then there's also the case of Advertiser #3 who is more interested in online visibility (particularly in your site because you attract their target market), rather than in selling a product online. They're mainly after "top of mind" and prefer to spend on advertising for the top spot in your ads. In such cases, how can you be smartpriced, if there's no measurable conversion issue to speak of?
In the end, while there are different types of advertisers, diverse products and profit targets, as well as various objectives (i.e., visibility vs direct sales online), you will need to fearlessly test different scenarios in your numerous blogs or sites.
If you do experience network-wide smartpricing, then adjust and remove the ads from the non-performing sites. On the other hand, if your winner blogs are not affected by your low-earning sites, then there's not enough reason to de-monetize the low-earners, right?
There are people who claim they earn over $4,000 a month (in AdSense dollars) from their free, Blogspot blogs. These same people have experienced smartpricing, removed the ads from their other blogs (and simply transformed those into sources of backlinks), and seen their total earnings rise (in spite of the removal of ads).
And yet--and this is important--they continue to experiment and test this concept of smartpricing. Just because a single site produced a network-wide form of smartpricing in the past does not mean the same thing will happen again six months down the road. Afterall, it is possible that a new advertiser with different objectives will enter the picture.
The key lesson here is to fearlessly test. Learn from the experiences of others, and test if it actually applies to you. Only then will you know if you are maximizing your online revenues. Here's to your continued success! 
"AdSense Success and Smartpricing"
First Posted: February 17, 2009 | Filed in: Make Money Online
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I think there are not many advertisers using adwords looking for sales. They want to promote their products, showing their face to public. Had they wanted to make some changes they instead would use CJ or GAN right?
Having said that if any advertiser gets a sale through adwords campaign, its truly bonus for him..
having my Adsense account integrated with Google Analytics, I see more data now. I can say that smart pricing is not even sitewide in my case, rather on per-page basis. I've got pages with an average as little as [data hidden to comply with AdSense TOS] and some pages having as much as [data hidden]. My blog, as you know, talks about a wide range of topic targeting different keywords. Wide range of topics means wide range of advertisers too. Some advertisers might not be happy with the traffic my blog pages are sending, while some are happy. I think, Google's Smart Pricing now are smarter than before.
That somehow ties in with other publishers who have not experienced a site-wide or network-wide smart pricing penalty.
Here's an experiment to try, though... If you remove ads from the low-earning pages, see if the performance of the higher earnings per click pages increases even more.
Anyway, it is important to test because different publishers have different experiences.