Saturday, October 29, 2005

What is AdSense Smart Pricing

I know many of you don't have time to do in depth research, and many have asked what about this AdSense "Smart Pricing"? First, what is it and how may it affect me?

You and I both know that some of the most fascinating and creative code comes from behind closed doors of Google, Inc. Smart Pricing is no different. Automatically adjusting the cost of a keyword-targeted content click, you gain less when data shows that a click from a content page is less likely to convert to a sale.

Recently, while trying to convince a former AdWords account to return from Yahoo's Publisher Network, it was reported that a Google team member gave insight to how the program may really work.
  • Smart Pricing affect your entire AdSense account, not just one page.
  • This means one poorly converting site can impact your whole account.
  • Smart Pricing is re-evaluated each week. You can improve your numbers in as little as a week by removing low converting AdSense blocks.
  • Smart Pricing is tracked with a 30 day cookie.
  • Smart Pricing affects both text and image ads.
  • Publishers earn less because the advertiser pays less than their minimum bid.
So what should you do? Look at your low converting pages and remove your ads? Would the loss of revenue be made up by higher "Smart Pricing" from your other sites and pages?

And really, how can you tell which are low converters? Quite possibly the lower converters are simply lower earning niches. If you dropped them, you could really foul things up.

Here's what I thought when I learned this: what about swapping Yahoo Publisher Network ads for my AdSense ads on the lower converting sites?

Well, even before I had the chance to plug in code, Google sent out this information in an attempt to clarify the stories floating around about "Smart Pricing". Read on.

The facts about smart pricing

We've noticed a lot of talk recently about the phenomenon commonly referred to as 'smart pricing'. There are some misconceptions out there about this, so we wanted to provide a few facts about smart pricing and how to ensure you're maximizing your revenue.

1. Many factors determine the price of an ad

More than conversion rate goes into determining the price of an ad: the advertiser's bid, the quality of the ad, the other ads competing for the space, the start or end of an ad campaign, and other advertiser fluctuations.

2. Clickthrough rate doesn't affect advertiser return on investment (ROI)

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. It's also possible to have a high CTR and a low conversion rate. Don't remove the AdSense code from your site just because it has a lower CTR - it may be one of your best converting sites.

3. 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. Ultimately, this leads to higher payouts for publishers by drawing a larger pool of advertisers and rewarding publishers who create high quality sites.

4. Remember the old chestnut: "Content is King"

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.

Keep in mind that like most Google technology, our system for calculating advertiser pricing gets updated regularly. We're constantly improving our ad products to benefit both the publisher and advertiser communities; what benefits one side ultimately benefits the other.

Well, even still, it is tempting to experiment. What are you going to do with this information?

Wednesday, October 26, 2005

How to Make More Money with AdSense

It's been quite a week for us here in Southwest Florida. Category 3 Hurricane Wilma struck on October 23rd, 2005, at around 6 AM. The Naples Daily News headlines read, "Lucky No More". But as we all knew, nothing could have been further from the truth.

Not only were we "lucky", (a term I don't believe in), we obviously had God's favor.

Sure, some people lost a lot. But the majority did not suffer much structural loss. The power was out for a few days, and pockets didn't receive power until later in the week. Comparatively speaking, we were "blessed".

As the clean up continues after a major event like this, you find yourself diverting from your norm. Today you need milk, so you jump in the car and head off to the supermarket. Quickly, you remember there are three trees still down on the road you routinely travel.

With a grumble, you turn the car around and head back two blocks to catch Airport Road to take you on a slight detour to the supermarket. What is no doubt a few miles longer turns out to be... wait!! You realize you actually made it 5 minutes quicker going this way!

Can that be? You check your watch again, but sure enough, the new found route - even though it is longer in miles - is faster than the way you've been going for years. But what made us change?

Well, in this case, it took a major hurricane.

If you've been in the Google AdSense program for any length of time, chances are you have been displaying them the same way practically since the beginning. You glance every few days at your AdSense totals and smile. A few people are actually clicking on the ads and you're making money from a source you had not made money from before. Life is good.

Then, through some enlightened way, you land on this page, read the story about the hurricane and decide that a change must be made (at least some experimenting at different ways to display your ads).

For me, it took a road blocked by downed trees. For you, let this post shake you into AdSense experimentation.

Try the large block in the top left corner of your site, above the "fold". Let it run for a week. Track your findings. Keep a journal of what you find.

Most of you will move the ads around, see the results change - possibly down - and yank them before giving them a fair shake. In addition, I've found that 95% of my readers never bother to track their findings. Fewer still keep a journal.

Make a commitment to experiment. One change could double your earnings. Keep content fresh and current. And let me know how you're doing.

I found a quicker way to the supermarket. I also make a nice living with AdSense.

Join me.