Smart Pricing is an algorithm of Google which determines the health of clicks generated by any adsense account collectively. It was started by Google in 2008. The adsense account which generates more sales for the advertisers is given more weight age by the system. It is calculated weekly over all adsense accounts.
SMART PRICING OVER ALL THEORY
A lot of adsense publishers out there generate huge amount of clicks daily, but conduct only few sales (Thus providing more benefit to the advertiser). While on the other hand there are publishers which generate more sales, while receiving lesser clicks than the previously mentioned. What this all tells us about? The only answer is that the publishers who conducted more sales have more compelling content, on this websites. So if the revenue distribution of Google remains same, the publishers with compelling content websites will remain in loss, because although lesser clicks were generated by them but they conducted more sales. They proved more beneficial for the advertisers but ironically advertisers proved less beneficial for them in terms of revenue when compared with those who received greater clicks (while receiving the same amount per click) and conducting lesser sales. This is not all, additionally in the long run advertisers will also suffer because they paid the same amount per click to both type of publishers while receiving lesser output from the former one.
The publishers which contributed for fewer sales will earn more due to greater number of clicks. This overall scheme will in the long run, will cause a big loss to Google also. Not only this, also it will result in loss of interest of advertisers. This will otherwise end up in loss of trusted relationship between Google and its loyal advertisers. If we keep an eye on the whole game, we will see the publisher producing lesser clicks while more sales are also at loss. Though he may not know this but in the long run it may break the trust, between Google and him.
To overcome all this Google announced smart pricing system. Under this system greater amount of per click share is given to the publisher which generates more sales. And the one which produces lesser amount of sales is smart priced. It is evaluated weekly. So with the release of this system the goal of publisher which recently was to maximize the click thru rate has changed.
Smart pricing system changed the whole trend. Now the goal is to make the ads go more purposeful, and the content more compelling.
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