What Is Google Smart Pricing?

Google Smart Pricing system is designed to help AdWords advertisers to improve their return on investment (ROI). Google smart pricing system is basically a system that will adjust contextual click costs for Adwords advertisers automatically based on a set of values. Google does not disclose much about the values it uses for its smart pricing system. The mechanism of smart pricing system remains largely undisclosed.

However, Google has revealed the factors that it uses to price an ad. These factors are as follows:

- The advertiser's bid
- The quality of the ad
- The other ads competing for the space
- The start or end of an ad campaign
- Other advertiser fluctuations

Google will also take into account the following factors when it determines the price of an ad:

- The keywords or concepts that trigger the ad
- The type of site on which the ad was served and clicked
- Conversion rate of advertiser AdWords advertising campaign

Google recognizes that clicks from its content network have different values. It constantly analyzes the origin of a click. The more relevant of the site which the ad was served and clicked to the AdSense ad, the more value it is for a click.

Google provide a tool that can track a conversion of a contextual click. Every time an AdSense ad is clicked, Google will place a conversion tracking cookie on a user's computer. The conversion tracking cookie will be stored in the user’s computer for 30 days. It is used to track a conversion for Advertisers.

Google Smart pricing system will use the information it gathers to make price adjustment for an ad. When the click generated from its contextual network is less likely to turn into business for advertisers, the smart pricing system will reduce the price advertiser pays for that click.