Google Adsense Clarifies Smart Pricing

You read rumours about Adsense smart pricing – a feature that automatically adjusts the cost of a keyword-targeted content click. Now they officially clarify the issue…

Some valuable insights are provided by the Inside Adsense Blog post

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.

Read the full post to get more insights on smart pricing. The idea is that smart pricing is a very smart algorithm which is so complex and variable that few simple parameters like CTR and CPM do not provide sufficient information for you to remove particular ad units.