Back in april 2004, Google introduced what they call “Smart Pricing”.

Before that, advertisers had to pay their bid price for each click, regardless of whether they made money (ie, a sale) from that click, which means some of them were receiving tons of clicks, but not so many sales.

So, in order to avoid people fleeing from Adsense and moving into other platforms (Yahoo back then [Bing Ads these days], now Facebook, etc), they did the following: for pages that were giving advertisers few sales, they lowered the price of each click, which means that advertisers pay different prices depending on where the click comes from.

Before Smart Pricing came in, the only thing us (publishers) had to focus on is sending as many clicks as possible, but after that, we need to take into account the quality of those clicks if we want to get paid more, simply put.

The thing is, since Google is so opaque most of the times, we don’t know for sure what affects Smart Pricing, so the only thing we can do is try to get quality traffic. However, these premises seem to be correct:

• Smart Pricing is calculated across the whole Adsense account,  so if you have some high quality sites mixed with low quality, your ad prices might go down overall.
• Smart Pricing is evaluated on a weekly basis, which is good, since that means that if you fix what needs to be fixed, your earnings can go back up quickly.
• Smart Pricing is tracked with a 30 day cookie, so sales for an advertiser can come within 30 days (the visitors don’t need to purchase straight away).

So what can you do if your earnings are getting lower (with a similar amount of clicks)? I can recommend 2 things:

• Try to see if one or more of your sites (or pages) might be causing this. If so, temporarily remove ads and see if after one week your revenue goes up. If this does not help, check with other pages, until you find the culprit, then remove ads from that page altogether.
• If you are driving paid traffic to your sites, stop that for a week and watch again your revenue.

Here are some tips on how to prevent Smart Pricing

• The main thing is, try to keep advertisers happy. If they make money, you make money (and Google on the side), everybody is happy.
• Make sure to have high quality content on your site (which is likely to attract “better” visitors)
• Try to get most of your traffic from high quality sources (search engines being the best)
• Keep your content relevant

So that’s it! Since Google does not give away too much information, we can just guess, and do trial and error.