Google Adsense and Smart Pricing

google adsense smart pricingSeveral of my little niche sites are structured somewhat along the lines of the xFactor Adsense model.  I say “somewhat” because I absolutely refuse to put out anything that is as hideously ugly as those old original ones were and I don’t have anything that has such thin content.

If you’re not familiar with an xFactor site, it is named after a guy name John who goes by the handle “xFactor” on the Warrior Forum.  In 2009, he posted an epic thread on his strategies for reaching $300 per day in Adsense (you can still read it here.)

That then spawned an Adsense Masters ebook, a membership site, and a recent updated version of new strategies.  

The hallmarks of an xFactor site was the dearth of content and the ugly black and green template with yellow links.  Of course, some people mix it up, but many people never did.

The one benefit of the Panda update is that a lot of these sites tanked in the SERP’s so a web browser is very rarely subjected to such ugliness anymore.

While some things he promoted either don’t work as well or don’t work at all anymore, the basic concept behind it is still sound. 

Find keywords that advertisers are bidding on and create content around it.

Advertisers bid to place their ads in the Google Adwords program.  Most people are familiar with the sponsored ads down the right hand side of Google’s search results.  But advertisers also have the option to place their ads in the content network, and this is where Adsense publishers come in.  

adwords advertiserLet’s say Sara has an estore, or even just an Etsy account, selling baby blankets.  She has awesome blankets, but she isn’t ranking organically in the search results.  

And we all know that no traffic = no sales.

So she goes to Google Adwords and decides to place a campaign to try to drive traffic to her site.  She decides to run her ads both on the search pages as well as the content network.  She decides to try $1 maximum per click.

Tammy has a mommy blog on baby items, and she is wants to try to make a little money online with her blog.  So she signs up for an Adsense account and ads the code to her pages.  Ads that are created in an Adwords campaign that opt into the content network are then displayed on her site.

Adsense and Adwords are two sides of the same coin.

The cool thing about Adsense as a publisher is that you don’t have to track down advertisers or even try to determine the best ads for your posts and site as you would with a standard affiliate program.  Google will send the ads that are most suited to your content.

adsense publishers

So Sara’s baby blanket Adwords ads start showing up on Tammy’s baby blanket site.  If someone clicks on the ad on Tammy’s site, Sara pays Google $1 and Google then pays Tammy $.50 (roughly, Google doesn’t say exactly what the split is.)

It’s pretty simple.

Personally, I think this is one of the easiest forms of web publishing to get started with.  Google Keyword Tool or the free version of Market Samurai makes it really easy to analyze keywords, put up a site, write content, sign up for Adsense, and put a block of ads, and work on getting traffic.

Targeted Content + Targeted Traffic = Clicks => Cash

The Bane of Adsense Publishers: Smart Pricing

Beyond getting their account banned, getting “smart priced” is the most dreaded by Adsense publishers.  

There are a lot of theories, but without getting all complicated, if over time your site doesn’t perform well for the advertisers, the amount you earn per click will be less.

For example, let’s say Sara is running her Adwords campaign and it is not only showing up on Tammy’s blog, but Cindy and Susan’s as well.  Sara is bidding up to $1 per click for the campaign as a whole.  

But over time, Google notices that the clicks coming through from Cindy’s site don’t seem to perform as well as those from the others.  So they “smart price” Cindy’s Adsense account.  Meaning Sara may still be paying $1 per click for those coming from the search pages as well as Tammy and Susan’s site, but if the clicks come from Cindy’s, Sara will only be charged $.60 because visitors from Cindy’s site are flakes.

. . . or something like that.

That’s a very simplistic explanation of smart pricing.  Google doesn’t say specifically how it determines who to smart price and they don’t tell you when you are.

The only way you would know is if you have a history of traffic, clicks, and earnings, and you can see the change in your account.

The other thing to remember is that if your account gets smart priced, it affects your whole account, not just a particular channel on your account or the clicks coming from a particular site.  

How to Tell if You’ve Been Smart Priced

Just because your earnings per click (EPC) has dropped, it doesn’t necessarily mean that your account has been smart priced.  There are several other things that could be going on.

It could be that there just aren’t that many advertisers competing for those keywords at the moment.  If your sites are focused in a specific niche, you will probably be able to see a pattern over time.  On some of mine, I can tell that the advertisers all run their campaigns per calendar month because at the end of the month, the EPC tanks because they’ve run through their budget.

Conversely, on my community site, I can always tell when there is a new local business that is experimenting with Adwords.  They don’t know what they are doing and end up paying way too much per click.  Once they learn the ropes, the earnings drop back down to a more normal level.

It can also be that your content is SO niched that the advertisers are running very targeted campaigns for those keywords with a lower price per click.

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