Many publishers spend a lot of time driving traffic to their website in the hope that they’ll earn more money from the Google Adsense programme and then find out that something went wrong in their calculations.
Double traffic = Double revenue (more or less)
However this is not the case all the time because of what is called Google Smart Pricing! If we say that a click on Ad X yields 50 cents, then with smart pricing you might end up getting 2 cents when somebody clicks on the same Ad X. Now this is ridiculous because all your effort in increasing your traffic has been wasted because you will need much more traffic and lots and lots of clicks to receive what you were earning with the low traffic in the past. This isn’t fun at all, is it?
Well smart pricing occurs if the visitors you are sending to the advertisor does not convert. What is essentially means is that if the advertiser wanted somebody to buy his product and none of them (or only a tiny amount) are buying the product, then it is not profitable for the advertisor. So Google has introduced a Smart Pricing algorithm to protect the advertisor by lowering the cost of ads.
Smart Pricing affects the whole Adsense account – so if one website is not converting very well, then all other websites associated with this account will be penalised. Evil Google!!!
Forget about everything you’ve heard about Smart Pricing and just focus on this sentence taken from the Google Adsense Team to clear your doubts:
” 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.”
And here are the official sources to back up what i said: