11/13/2005

Is Adsense Smart Pricing healthy for the web?

There has been some talk recently on a more esoteric feature of Google Adsense called Smart Pricing. Smart Pricing looks at tracking data gathered from Adwords, to determine how well a given sites Adsense clicks convert to actual sales and leads for the advertiser. The higher the conversion rate, the more the publisher gets paid per click (also taking into consideration the usual factors like keyword pricing or click through rate).
Now there is an interesting twist to this: As pointed out recently on JenSense, Smart Pricing does not effect a single site, but a publisher’s entire Adsense account. That means that if you have Adsense on a site with a poor conversion, this may actually hurt your Adsense earnings across all your site. Now everybody knows these »Made for Adsense« sites, that focus on high paying keywords and flood the search engines with mediocre content. I would guess that these are the exact sites with low conversion, albeit a high click through rate.
If this is the case, Google has a win/win situation with Smart Pricing: First, Adwords customers will have to pay less for visitors coming from such trashy sites, which may well improve Adwords reputation among advertisers. Second, running a poor website with Adsense might actually hurt a webmasters income if he also has well performing sites. So maybe there is an encouragement for publishers to build sites that not only generate lots of clicks, but also generate qualified clicks. In the long run, this may lead to less clutter on the search results. What are your thoughts? Might Smart Pricing actually improve the net, or is this just another confusion measure by Google, making it impossible to analyse your Adsense performance?