Okay, if you are reading this you have either heard about Google Adsense smart pricing or you think it has happened to you. This phenomenon that Google denies existing has many of us Internet Marketers baffled.

Let me start by explaining what smart pricing is in the first place. As you probably know Google Adsense is a Pay Per Click program that Internet Marketers, Bloggers, and Webmasters use to monetize their web sites. There are many PPC programs available to Marketers but Adsense is by far the most popular and frequently used.

Here's how Adsense works.

• A company decides that they would like to advertise on the Internet.
• The company signs up for an advertising program called Google Adwords.
• The company chooses a list of "keywords" that they would like their product ads to be associated with. Basically, they want their advertisements on "blue light bulbs" to show on web pages when potential customers search Google for the keyword "blue light bulbs".
• Since it's likely that more than one company will want to use the keyword "blue light bulbs", there is a bidding process for the keyword. Each company will bid the maximum amount that they are willing to pay Google if a customer clicks on their ads. The company with the highest bid gets their ads to show up first and more frequently on publishers web sites.
• When a customer or web browser clicks on the ad, Google gets payed a percentage of the cost of the click and the Adsense web site publisher get's paid a percentage.

Let me now explain the "theory" behind the mysterious beast called smart pricing. It's really quite simple. Google wants to keep their customers happy. Google's customers are most happy when potential customers click on their ads AND buy their product. This is called a "conversion".

If 100 people click on the advertisers ads from a particular website and only 1 customer buys the product, the company wouldn't be too happy. The wont be getting a very good return on investment on the advertising money they are paying Google.

Guess what happens when the company isn't happy with the results that they get from Google? They stop advertising with Google and consequently Google doesn't make money.

The theory is that Google introduced a program called smart pricing to compensate advertisers for poorly converting ad clicks. If a website publisher get's lots of clicks to the advertising company but those clicks have a very low conversion rate, the company only pays a fraction of their bid amount for the click. Therefore the customers advertising dollar goes farther, they remain a happy Google Adwords customer and Google continues to make money.

This may make the customer happy but it can end up costing the Adsense website publisher a lot of money. This can be extremely frustrating. Those who have experienced smart pricing claim that they will go from receiving one dollar clicks on their superstar websites to five cents or a penny overnight.

That's not the worst part. It has been reported that Adsense website publishers are not only penalized with low paying clicks for on their poorly converting sites but on every site that they have Adsense advertisements on.

The theory continues to speculate that Google is doing this to encourage site publishers to optimize their sites in ways that will help advertisers convert more sales.

Unfortunately there are thousands of what are called MFA's or "made for adsense" sites out there. These sites are spammy junk sites with no or very poor content. When a potential customer comes to one of these crappy sites they aren't likely to buy from the advertiser if they should happen to click on their ads.

Google has made an official statement claiming that there is no such thing as smart pricing. Thousands of Internet Marketers who have experienced this phenomenon with their Adsense sites just aren't buying it.

There are ways to avoid smart pricing.

1. Follow ALL of Googles Terms Of Service Policies. Read them, study them, memorize them, LIVE BY THEM. There is no room for deviation here. You will surely get smart priced and you'll to be likely to be banned from Adsense all together.
   
2. Only put quality content on your sites.
3. It's common for people to focus on getting web traffic by inviting others to view their websites on social networks such as Myspace, Facebook, or one of the many other alternatives available on the internet. Don't do this! Studies have shown that customers who find your website through the Google search engine are much more likely to buy from your advertisers. If they are more likely to buy, the advertisers stay happy, and you don't get smart priced.
4. Only put one or two Adsense blocks on your site at the most. I personally have seen this to be true. One day, I read a blog post from some random blog on optimizing your Adsense sites. It encouraged me to put the maximum number of ad blocks that Google would allow on my sites. More ads = More clicks, right? Well you might get more clicks but for some reason the amount that you get payed per click goes way down. When I did this so called "optimization". My average click payout went from 40 cents per click to 5 cents per click across all of my sites. If this isn't smart pricing, I don't know what is.

Many have claimed that you can "reset" your Adsense account by completely removing all Adsense blocks from each of your websites. Some say to remove them for a week. Some say two weeks. It's common to see "20 days" on the Internet. Some even say to remove them for one month.

Google is very secretive about this phenomenon so no one but them actually knows how long to remove the ads or if this even helps at all.

When you do put Adsense blocks back on your sites, only put them on sites that are well done and contain quality content. How do you know if your site cut's the mustard? Easy, if your site is on "red bricks" and the ads that are showing on your site are for "telephone books", the people who click on your ads are not likely to buy telephone books, your sites will poorly convert, and you'll be back in the smart pricing pit.

If the ads on your site are not relevant to your sites content, remove the ad blocks OR optimize the site with relevant keywords so that the ads that show on your site will mirror your content. Here's an example of how things should work the best.

1. A person searches Google for "pizza recipes".
2. They click on a website that comes up in the Google search engine results that is about pizza recipes.
3. They see an ad on your site for pizza recipes and click on it.
4. When they get to the advertisers website, they purchase a book that is all about pizza recipes.

Only put one or at the most two Adsense blocks on your sites.