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How Smart Pricing Effects Adsense (tm) Publisher Revenues
By Dave Lavinsky, Sat Dec 10th
I constantly receive phone calls from clients, prospectiveclients and reporters asking the same question – what percent ofthe keyword price does Google pay (TM) publishers. Whilethe Standard Terms and Conditions explicitly forbiddisclosing such information, the range I often give is 20% to50% based on numerous conversations I have had with AdSensepublishers. While the precise percentage is not clear, what is evident isthat the percentage that Google pays publishers has gone downsignificantly since April 2004. It was at this time that Googleannounced it would be lowering the price of ads (i.e., chargingAdWords(TM) clients less) that appear on the sites of AdSensepublishers. Susan Wojcicki, Director of Product Management forGoogle, stated that this change came from requests ofadvertisers who wanted different pricing on clicks from searchand content ads. Google stated that it considered search-based ads more targetedthan content ads, and that they therefore generated more clicksand revenue for advertisers. However, Google did realize thatsome content ads perform as well as search-based ads. As aresult, “Smart Pricing” was born.
Smart Pricing adjusts the value of clicks based on a number
offactors such as time of day, type of content, and conversiontracking. The latter, conversion tracking, measures how often aclick on an ad produces a desired action for the advertiser,such as a product sale, newsletter signup, etc. The exampleGoogle gave for Smart Pricing was that “a click on an ad fordigital cameras on a web page about photography tips may beworth less than a click on the same ad appearing next to areview of digital cameras.” While web forums are filled will publisher complaintsabout Smart Pricing, it is actually a fair system – publishersget paid based on the quality of the traffic they provide toGoogle advertisers. While the switch to Smart Pricing has decreased revenues formany publishers, there is still a massive opportunity togenerate significant revenues via the program. The keyis to identify valuable/expensive keywords, attract qualifiedcustomers to your site, and provide compelling text that getsvisitors really interested in a product or service. This willensure that the visitors click on the appropriate adsand buy that advertiser’s product or service. A truewin-win-win. About the author:Dave Lavinsky is the President of TopPayingKeywords.com, a firmwhich tracks and publishes databases of the 15,000+ mostexpensive PPC keywords. http://www.toppayingkeywords.com
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