However, Google has revealed the factors that it uses to price an ad. These factors are as follows:

• The advertiser’s bid
• The quality of the ad
• The other ads competing for the space
• The start or end of an ad campaign
• Other advertiser fluctuations

Google will also take into account the following factors when it determines the price of an ad:

• The keywords or concepts that trigger the ad
• The type of site on which the ad was served and clicked
• Conversion rate of advertiser AdWords advertising campaign

Google recognizes that clicks from its content network have different values. It constantly analyzes the origin of a
click. The more relevant of the site which the ad was served and clicked to the AdSense ad, the more value it is for a
click.

Google provide a tool that can track a conversion of a contextual click. Every time an AdSense ad is clicked, Google will place a conversion tracking cookie on a user’s computer. The conversion tracking cookie will be stored in the user’s computer for 30 days. It is used to track a conversion for Advertisers.

Google Smart pricing system will use the information it gathers to make price adjustment for an ad. When the click
generated from its contextual network is less likely to turn into business for advertisers, the smart pricing system will
reduce the price advertiser pays for that click.

So How Does Google Smart Pricing Affect AdSense Publisher?

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Unfortunately, smart pricing is not just affecting publisher’s earning on one AdSense site, it affects the entire
AdSense account. Regardless of the high performance of other AdSense sites across the AdSense account, if one of your AdSense sites is smart priced, all of your AdSense sites will be affected.

AdSense publishers are earning less because of the low eCPM. You could find AdSense publishers revealing their eCPM in a forum when their accounts have been smart priced. They normally have low eCPM ranging from $1.50 to $5. However, low eCPM does not necessary implied that your account has been smart priced. AdSense sites in lower earning niche generally have lower CPM.

What can AdSense publishers do to avoid being smart priced?

The best way to ensure your AdSense site is not affected by smart pricing is to create a good environment for advertisers and your readers. Creating compelling content for your targeted readers is as important as providing good user experience on your site. The more targeted traffic to your AdSense site, the better quality clicks for advertisers.

Some AdSense publishers maintain good quality AdSense sites as well as “less than quality” sites under a single AdSense
account. They are facing higher risk of getting their AdSense account smart priced because any of the “less than quality” AdSense site does not perform well could be smart priced easily. The increase in revenue of putting these “less than quality” websites could be less than the loss of revenue due to smart pricing on the entire AdSense account.

The smart pricing system should not only be viewed as a system to protect the interests of AdWord advertisers. It is
also a system that indirectly benefits quality AdSense sites in the long term. The smart pricing system could force some AdSense publishers to drop those ‘low quality’ sites. Perhaps with more quality sites, this could boost the advertisers’ confidence to advertise in Google content network. Hence, it will bring more competition for keywords. Eventually, AdSense publishers will benefit from the high paying keywords.

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