So yesterday the AdWords team announced that it was extending its landing page quality checking to include the Google content network, i.e. AdSense. Please take a minute to read it.
What they're doing is applying the same kind of rules to ads shown on the content network that they already apply to those on the search network (the search results pages, primarily). The quality of the landing page — the URL to which a visitor is sent when they click an ad — is now being factored into the pricing equations for the ads. Advertisers who send the clicks to high-quality pages (see Google's landing page guidelines) will pay less, perhaps much less, than advertisers who don't. As well, the minimum bid price for low quality ads will increase, probably pushing out some advertisers entirely from the bidding process.
Google is clearly doing this to limit the amount of AdSense arbitrage going on. AdSense arbitrage means buying low-priced clicks via AdWords and sending them to pages filled with higher-priced AdSense ads. If you do it right, you can make money on the spread between what you pay for the clicks to the pages and the money you get from Google for the clicks on the pages. Sites that do this are commonly referred to as “made for AdSense” (MFA) sites. Not all arbitreurs run spammy sites, however, so it's not fair to lump them all into the MFA category. But the vast majority of arbitrage sites are MFA sites, so that's probably why Google is adopting these measures.
This affects AdSense publishers in three ways. First, it shrinks the pool of advertisers using the content network. The pool shrank before when Google separated search network bidding from content network bidding, and now it's becoming even smaller. Second, it lowers the average cost for the remaining advertisers, hence lowering the average per-click earnings for AdSense publishers.
The third thing it does is make it easier for an AdSense publisher to be “smart priced”. Smart pricing refers to the discounts that Google gives advertisers for ads shown on poorly-performing AdSense sites. (See JenSense's previous discussion for more info on smart pricing.) Those discounts are based on how well an ad converts into a sale or some other action (like signing up for a newsletter) for the advertiser. If an ad on a particular site doesn't convert well compared to the same ad on other sites, smart price will downward adjust the fees the advertiser pays for those poorly-performing clicks.
Now you're probably saying that this only works if the advertiser uses Google's conversion tracking code, otherwise how will Google know if things convert or not? And you're right. But you know what, now they have added incentive to do so. By using the conversion tracking code they can reduce their advertising costs, since Google rewards advertisers with well-performing ads with lower prices. Oh, and if advertisers go to the effort of creating good landing pages in order to increase their quality score, chances are they'll be using the conversion tracking code on those new pages. And if the ads on even one of your sites aren't performing well, you'll get smart priced and your earnings will tank.
There's also a good chance that AdWords advertisers who are also AdSense publishers (but not necessarily arbitreurs) will get hit more now if they create poor ad campaigns to drive traffic to their sites. Smart pricing is surely easier to trigger now for these publishers.
What do you do if you get smart priced? Well, look closely at the sites on which you're displaying AdSense ads. Try removing the ads entirely from iffy sites and wait a week — smart pricing is adjusted on a weekly basis. If that doesn't work and your earnings are still in the tank, send an email off to AdSense support and see if they can help you track down the problem. But smart pricing may not be the issue, it may just be that the ads your site targets are just paying less now, through no fault of your own. Expect a hiccup on this one, but let's hope we can recover from it over the long term.
Build quality sites if you want to stay in this game. Abandon the sites full of pre-written and duplicate content. Use whitehat SEO techniques. It's what you have to do to survive…
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Eric Giguere is the contextual advertising expert who wrote Make Easy Money with Google and Uncommon AdSense. If you like this posting, why not ask Technorati to fix their broken tracking system!