Google AdSense 'Smart Pricing' is believed to be a factor that has a direct and substantial impact on AdSense Publishers Cost Per Click earnings (CPC). Smart Pricing could be considered Google's attempt to give AdWords Advertisers the best value for their investment while helping protect the Advertiser from click fraud and from garbage pages with minimal authority.
'Garbage pages' are pages full of rich keyword content that has no flow or meaning to the visitor. Clicks made on these pages might not be the best value for AdWords Advertiser. Hence it is felt that they shouldn't pay as much for the Ad.
An Idea on how Smart Pricing Works:
Through the implementation of Smart Pricing, a maximum 'Capped' click value could be set by Google for each ad clicked. The Smart Pricing model is most likely based on many factors. These factors might include such things as:
- Number of impressions and CTR
- Authority and size of Site
- Age of Site
- Page rank
- Incoming Link Relevance
Although most of the information on how Smart Pricing works is hidden from the public, here is what Google has to say about it: Quoted From HERE
"How smart pricing works
We are constantly analyzing data across our network, and if our data shows that a click is less likely to turn into business results (e.g. online sale, registration, phone call, newsletter sign-up), we may reduce the price you pay for that click. You may notice a reduction in the cost of clicks from content sites.
We take into account many factors such as what keywords or concepts triggered the ad, as well as the type of site on which the ad was served. For example, a click on an ad for digital cameras on a web page about photography tips may be worth less than a click on the same ad appearing next to a review of digital cameras.
Google saves you time and hassle by estimating the value of clicks and adjusting prices on an ongoing basis. With improved smart pricing, you should automatically get greater value for clicks from ad impressions across our network, all with no change in how you bid."
