Smart Pricing

If you have noticed a significant decline in your Adsense earnings recently then you may be a victim of smart pricing. Smart pricing is a system introduced by Google to give publishers better ROI and make their advertising program more efficient and accurate. The general idea behind smart pricing is that not all ad clicks are equal and so Google wanted a way to make the money paid for ad clicks a more exact reflection of the benefit given to an advertiser. For example, if a site displays ads that are not relevant to its content or a site is considered to be spam etc then chances are any ad clicks from that site will not be likely to convert to sales for the advertiser and so the Google algorithm may smart price the ads on those sites. It basically means that they pay out less per click because the people coming to an advertiser’s site from such places are probably not going to buy anything because they have arrived by accident. The smart pricing system is a clever way to protect advertisers participating in the Adwords program.

I agree with Google’s reasoning for this, but obviously it can have quite a serious effect on publishers that happen to own network of smaller sites. Smart pricing affects your Adsense account as a whole so if you have several high quality websites and one or two small low quality in progress type sites without much relevance then you may get penalized quite heavily and the smaller sites can significantly drag down your earnings across your whole network. If you are a publisher that relies heavily on Adsense for income then the effects of this can be disastrous, as one poorly performing website can drag your overall earnings down by a significant margin.

Yesterday I checked my Adsense account to find that five ad clicks on one site had only converted to around $0.10 which is absolutely shocking and obviously something is going wrong. Ultimately the blame lies in my own hands because a lot of the sites I have built recently that contain ads are unfinished, lack content and don’t provide much value at the moment because they are still being built. I think the harsh message to learn here is that if you own a several websites you should avoid putting Adsense onto the smaller sites until they are finished, have a good amount of content and are of a high quality. Building websites is a long term process and so it can take several months or even years before you create a site the content and traffic to create lasting value for visitors and advertisers.

I think the days of small niche sites being able to make a decent profit are fading quickly and only bigger, well established sites will be able to make any kind of decent money from the Adsense program. If anything the smart pricing idea means that the days of building a niche website, sticking up some Adsense code and hoping to turn a profit are well and truly numbered. I guess you should take all those “get rich with a niche website” books and start burning them because things are rapidly changing and the ability to make serious money with Adsense on hobby sites is becoming nothing more than a dream for the typical webmaster.