Smart Pricing Changes AdSense Payouts

Garrett · #1 (**permalink**) 04-07-2004, 09:04 AM

In all the Gmail flurry last week Google sent around an email to their AdSense providers alerting them to a potential change in payouts known as "Smart Pricing."

The day after this email announcement Google released news that they would separate bidding between their search and contextual ads, a long awaited decision that has been a point of contention with Google's advertisers since AdSense debuted.

Smart Pricing, through undisclosed means, adjusts the value of clicks based on a number of factors such as time of day, type of content and conversion tracking.

The example Google gave in their email was, "a click on an ad for digital cameras on a web page about photography tips may be worth less than a click on the same ad appearing next to a review of digital cameras."

The pricing change should, according to Google, reduce the cost of clicks that are less likely to deliver business results.

Some content site owners who run AdSense ads complain about Google's lack of communication regarding the pricing shift, and the fact that Google offers no information on how they determine pay rates and ad performance.

Many AdSense providers who post in WebMasterWorld have reported declines in their revenue, while a few reported an increase.

Google's quote in the email about the value of an ad next to product review content is likely to spawn many new review sites as content providers scramble to cash in on the AdSense pay adjustment.

Garrett · #2 (**permalink**) 04-07-2004, 09:13 AM

Google AdWords™ Announcement:
Improved Smart Pricing & Expanded Content Network

Hello from the Google AdWords Team:

We're pleased to introduce two improvements to AdWords that will help improve your ROI and help you reach additional targeted prospects. First, we're adjusting the price of certain clicks based on expected value to help ensure better performance for advertisers. Second, we're extending the reach of contextually-targeted advertising to ads in approved email programs, including Gmail and HTML newsletters. Keep reading for more details.

Improved smart pricing
We're introducing automatic price adjustments for certain clicks you get from the Google Network. Google's smart pricing model has always provided better placement for better performing ads, and reduced the cost of a click to the least amount possible to stay above your competitor's ad. And now, with no change in how you bid, Google may reduce the cost for a click if that better reflects the value it brings to advertisers like you.

How smart pricing works
We 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. You may notice a reduction in the cost of clicks from content sites.

We take into account many factors such as what keywords or concepts triggered the ad, as well as the type of site on which the ad was served. For example, a click on an ad for digital cameras on a web page about photography tips may be worth less than a click on the same ad appearing next to a review of digital cameras.

Google saves you time and hassle by estimating the value of clicks and adjusting prices on an ongoing basis. With improved smart pricing, you should automatically get greater value for clicks from ad impressions across our network, all with no change in how you bid.

Content network expands to email
The Google Network already includes such sites as USATODAY.com and over 50% of the Media Metrix Top 100 that show advertising—sites that reach over 80% of U.S. Internet users. And now, we're adding more ways for you to reach prospects interested in your products or services: email and newsletter ad placements. Just as when your ads are shown alongside Google search results, your contextually-targeted ads will now show alongside approved newsletter and email content, such as iVillage newsletters and our new Gmail. [Learn more...]

As we're still growing inventory of email pages, email will likely remain only a small source of additional clicks for some time. You don't need to do anything to participate in this opportunity. To view your selected preferences, simply visit your Campaign Settings page.

We look forward to providing you with the most effective advertising available.

Sincerely,

The Google AdWords Team

Garrett · #3 (**permalink**) 04-07-2004, 11:21 AM

Of course the WebProWorld members were on top of this before I got to it... Here's what they're saying about the AdSense changes:

http://www.webproworld.com/viewtopic.php?t=16982

debtfree95 · #4 (**permalink**) 06-07-2004, 04:59 AM

gmail was changing many functionalities and adsense notification was just one of them.

Dave Hawley · #5 (**permalink**) 06-07-2004, 06:50 AM

Quote:

Many AdSense providers who post in WebMasterWorld have reported declines in their revenue, while a few reported an increase.

Sounds like it's been a success then.

snovak · #6 (**permalink**) 06-14-2004, 11:32 AM

Quote:

Originally Posted by Dave Hawley

Sounds like it's been a success then.

So far, I think so.

bhartzer · #7 (**permalink**) 06-15-2004, 04:46 PM

Looking at this about two months after they rolled out Smart Pricing, I have to admit that at first I was a little worried about the potential for a decline in revenue.

However, two months later, I am glad to report that I really haven't seen any differences in revenue. It's about the same.

Has anyone seen a decline?

cbp · #8 (**permalink**) 06-15-2004, 05:33 PM

Quote:

I am glad to report that I really haven't seen any differences in revenue

ditto

CBP