Google smart pricing - could anyone define the concept?

There is no better source than Google themselves:

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.

I like the way Jenstar clarified it over on DP:

Smart pricing is triggered by all sites/pages, and affects your whole account. So one site that is impacted heavily by smart pricing and another that is barely touched by it will balance out the overall impact. It doesn't just take the lowest/highest and use that.

and

Yes, smart pricing adjusts once a week.

Yes, your entire account is smart priced the same, it is not site by site.

EPC depends on the market area, not a fluctuation of site-by-site smart pricing. So because your EPC varies per site does not mean you are smart priced differently, it just means that advertisers are willing to spend a different EPC for each.

Originally Posted by Will.Spencer

There is no better source than Google themselves:

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.

Its a way for google to keep more money in their pockets is basically what it does.

Thanks for explaining. Had no idea that the term 'smart pricing' comes directly from Google.

Originally Posted by xboxundone

Its a way for google to keep more money in their pockets is basically what it does.

Google claims that the smart pricing discounts go directly to the advertisers.

Of course, there is no way to tell! :devil:

i'm such a google hater. i always give everyone the benefit of the doubt, sometimes to my despise, but google seems to screw the one's who make them who they are more than any other company. maybe if i start screwing people over and making it sound beneficial, i'll be rich? )

Originally Posted by Will.Spencer

Google claims that the smart pricing discounts go directly to the advertisers.

Well, no one can tell for sure but I see a major difference in my CPCs for Google Network ads versus Content network ads with the same rank/ position so it's fairly safe to say that some level of discounts get applied back to the advertisers.

Originally Posted by s0f13

i'm such a google hater. i always give everyone the benefit of the doubt, sometimes to my despise, but google seems to screw the one's who make them who they are more than any other company. maybe if i start screwing people over and making it sound beneficial, i'll be rich? )

How is it a bad thing that Google adjusts payouts based on your conversions? Keep in mind that if advertisers don't see a positive ROI, they don't advertise and you won't make a dime.

Yup thats the explanantion. Website don't convert into leads you get smartpriced.

sigh the **** smart pricing made my site go from 30 cents a click to about 6 cents a click.

Originally Posted by Ted S

How is it a bad thing that Google adjusts payouts based on your conversions? Keep in mind that if advertisers don't see a positive ROI, they don't advertise and you won't make a dime.

An excellent point. Money doesn't materialize out of thin air, it has to come from somewhere.

So essentially if an advertiser writes a misleading adword then has a super bad offer (landing) page then you can get smart priced because their ads aren't converting?

Originally Posted by Conan Stevens

So essentially if an advertiser writes a misleading adword then has a super bad offer (landing) page then you can get smart priced because their ads aren't converting?

I think they're smarter than that. It probably happens when the ad on your page converts less than it does on other places, so it's relative how the ad performs overall. This would make alot of sense because it again falls back to you and the quality of your traffic. Don't know this for sure, but I don't see why it wouldn't work like this, in principle anyways.

OK, that makes sense. I have also read on these forums about going and banning all the MFA sites and low payers - I think I might start having a go at that too.