Seth Godin May Be Costing You Money

This morning I noticed an entry on Sphinn highlighting GreyWolf’s Seth Godin Wants to Cheat Advertisers with Fake Clicks post. It discusses Seth Godin’s Ads are the new online tip jar post, which suggests that readers should click ads to reward bloggers for their writing. To quote Seth:

If you like what you’re reading, click an ad to say thanks.

GreyWolf condemns Seth’s advice and rightly points out that anyone following this advice is guilty of click fraud:

If you click on an ad and your purpose is to make sure the site owner or blogger gets money from the click, and you had no intent to buy or research, that is click fraud.

As you’d expect, given they are Internet Marketing / SEO communities, comments on GreyWolf’s post and on Sphinn strongly condemn Seth’s statement. The majority of commentators agree that this is click fraud. I concur!

However, what’s intrigued me is that no-one’s mentioned the effect this may have on a blog being smart priced by Google. Seth’s advice may actually end up costing bloggers who run Google Adsense.

This post really only applies to blogs running Google Adsense. Seth doesn’t mention Adsense in his post, but there’s no doubt that if people were to follow his advice, some of the ads they’d be clicking on would be Adsense ads.

I’m not sure why no-one’s mentioned this. It may be that most members of those communities fall on the advertising, rather than publisher, side of the fence. I’m definitely on the publisher side, so I’ll go ahead and explore the impact on smart pricing.

What Is Smart Pricing?

I’m not going to go into what smart pricing is in detail. That’s been covered before, both by myself in my How To Avoid Adsense Smart Pricing On Blogs post, and by better bloggers than me.

The short description is that smart pricing is a penalty applied by Google, resulting in the amount of money you receive when someone clicks an Adsense ad (on your site) being only a fraction of what you would normally receive.

If you want to find out more about smart pricing, the best description I’ve found is Grizzly’s Optimization Tips for Adsense. Read his long article in full for a good understanding, but here’s his quick summary of smart pricing:

If you are running ads on your blog that an advertiser has bid $0.50 per click on and your traffic clicks the ads and doesn’t convert well for the advertiser then Google will not pay you the usual $0.25 per click. They will likely give you $0.01 to $0.05 per click. This means you have been smart priced. This will also mean that you will receive lower payouts on every site you have Adsense on – not just the poorly converting site. This is a penalty because you are not optimizing your Adsense pages in order to give the advertiser the most bang for his or her buck.

So basically, if clicks from your site give advertisers a low conversion rate, you get a huge penalty on what you earn.

But It’s More Complicated Than That

There’s more at play here than what I’ve described above. Admittedly, no-one but Google really knows how it works, but Grizzly knows as much as anyone else and mentions targeted traffic.

Google considers where the traffic comes from and how much value traffic is to the advertiser. Even if the visitor doesn’t buy anything from the advertiser, if it’s targeted traffic, Google considers that you’ve delivered quality traffic to the advertiser. As Grizzly explains:

My best advertiser is looking for people looking to “make money online”. The ad says “Make Easy Money Online”. Most of my traffic – about 75% find my blog searching on Google for the term “make money online” or a long tail version of that term. If one of my visitors clicks on the ad they are most likely looking for what the advertiser has to offer and even if they don’t buy, Google can charge the advertiser full price because the visitor left a “make money online” trail. They found me using the term and they found the advertiser because of the term. That is as targeted as traffic can get and Google can charge the advertiser full price. If all my traffic came from stumble upon and clicked the ads then the advertiser wont get many conversions and Google can see where the traffic originated, knows it isn’t targeted and will penalize me and give the advertiser a rebate.

So you’re more likely to be smart priced if a high percentage of the visitors clicking ads, arrived at your site from a source other than a search engine.

Seth Godin Could Cost You Money

How can you avoid smart pricing? The answer: Try to ensure you’re delivering targeted traffic (ie from search engines) to the advertisers and that a good percentage of that traffic converts for the advertiser.

If your regular readers follow Seth’s advice and click on ads to reward you, you’ll get more clicks, but you won’t be delivering targeted traffic to the advertiser and only a low percentage of people will actually buy anything.

That puts you squarely in smart pricing territory. Thanks Seth!

If you only have one site, the impact may not be so bad: There’s no guarantee you’ll be smart priced and anyway, a lot of low value clicks may equal a few high value clicks.

However, the risk is not worth it, especially if you have other sites running Adsense. If you get smart priced on your blog, you get smart priced on all your sites. That could really cost you.

Final Thoughts

I’ve got nothing against Seth Godin – he’s obviously very well respected – but I think he’s wrong on this occasion. I’m far from an expert in this, but leaving the click fraud argument aside, it seems his advice, aimed at helping bloggers, could actually hurt them if they run Google Adsense ads.

As a publisher, I don’t want my normal visitors to click ads. When people choose to click ads on my site, I want them to be highly targeted search engine visitors, who’ll lead to a higher advertiser conversion rate and won’t get me smart priced.

Oh, if you came to this post from Sphinn or StumbleUpon, or you’re one of my regulars, and you’re wondering why you can’t see Adsense on this blog, well you can’t. Only search engine visitors see Adsense ads on this blog.

51 responses on “Seth Godin May Be Costing You Money

  1. POTPOLITICS@Best Blog in the Universe

    Hey Bud
    Just wanted to thank you for the plugin I’m about to install and say that although people may disagree with Seth’s premise that people click ads. I think bloggers and people in general should click ads.It’s a sad day when you get hundreds of bloggers coming through and you check your adsense acct and see zero. I click and read ads and I do sign up for many.So people need to know what comes around goes around.
    Don’t expect clicks comments or visitors if your not giving.I write about the “one way blogger’ often and it’s comforting to know and see their methods don’t work.
    Bloggers need to support and help each other anyway they can.
    Thanks awesome blog;)

    1. Stephen Cronin Post author

      Hi PotPolitics,

      I totally agree that bloggers should support and help each other. That’s the reason I disabled the nofollow tag on this blog.

      But if you get smart priced (talking about Adsense here) as a result of non targeted traffic clicking your ads (ie regular readers), you’ll need a lot of bloggers clicking ads just to make the same amount of money that one click would have given you.

      Might be okay for a single blog with lots of people clicking, but if you run Adsense on other sites, it will kill their income too…

      1. Abdul@Make Money on the Internet

        You got a point here, I remember when I was banned by Google Adsense just because of excess clicks by overture bot on the page (What an idiot!!), It has been 2 years since that and still no luck! hmmpphh….

  2. Jon@Beauty Salon Marketing

    Excellent points Stephen – and it’s a viewpoint that I haven’t seen on any of the other blogs that discuss Godin’s post.

    IMO I don’t think Seth was encouraging clickfraud, I just don’t think he had thought it through… which in turn suggests that he doesn’t understand the world of online media as well as he pretends to.

    (Will vote for your post on Sphinn)

    Cheers, Jon

    1. Stephen Cronin Post author

      Hi Jon,

      Thanks for the vote. I agree with you – I don’t think Seth was encouraging click fraud on purpose, but effectively that’s what he’s done. I need to go do some reading to see what his reaction to the ‘storm’ has been.

      Incidently, his post was great link bait. He’ll have got a ton of links out of this, so maybe he does know what he’s doing!

  3. Marketing Blog

    Click fraud is everywhere on the net and social networks such as Digg are known for that. What is Seth Godin doing can’t be worse than having a company pay users for voting on their clients’ articles and personally, I don’t see a problem with what Seth is doing if its done within the article. How many people don’t read the full article and vote for it? At least if they see that line Seth is adding it is most likely because they read most of it so it deserves to be rewarded.

    LINK REMOVED: because of failure to use KeywordLuv syntax (name@keywords)

    1. Stephen Cronin Post author

      Hi Marketing Blog (check out the KeywordLuv rules by the way),

      Sure, click fraud is everywhere, but you’ve missed the whole point of the post (you probably should have read it all!).

      This post is not about click fraud, it’s about the possibility that if people follow Seth Godin’s advice, then your blog may be smart priced by Google, which could mean that you actually lose money, rather than make it.

  4. peter@Peter Answers

    Very interesting. I had heard about smart pricing but I didn’t realize that it affected ALL of your sites under the program. That seems punitive to me. I have some sites that convert well and others that don’t (well convert isnt the right word, I mean CTR) – I guess for the ones that don’t I should go your route and remove ads for all but search engine traffic.

    1. Stephen Cronin Post author

      Hi Peter,

      Yes it is a bit unfair to punish all your sites if one is performing poorly, but that’s the way it seems to work. If you haven’t already, I’d recommend reading Grizzly’s article (link in post above), as he knows far more about smart pricing than I do.

  5. K-IntheHouse@MySpace Private Profiles

    Great point, Stephen!

    Yeah, if you are running Google Adsense this is definitely bad news as a publisher. It’s not good to have clicks originating from the same IP every time you publish a post!

    On another note, I was reading Grizzly’s post on how Google is going to view ad clicks for the new Adsense ads in Feedburner feeds. Google is going to see clicks only from my RSS subscribers and how would they determine click fraud in that case? We’ll have to see.

    (also when I try to submit a comment, I am being prompted for a username//password.. I am about to try again.)

    1. Stephen Cronin Post author

      Hi K,

      That’s another good point: clicks from the same IP address – that’s going to look like click fraud by Google and get you banned!

      I read Grizzly’s post too and I’m a little puzzled by Google’s move, as it seems to fly in the face of a lot of what we know (or guess) about providing advertisers with targeted traffic. Of course, Google never stands still, things are changing all the time, so perhaps this is just the start of a whole new chapter, which will result in new theories to go with it.

      Not sure why you were asked for user name and password. I have protection on the wp-admin directory which would require that, but it shouldn’t be invoked when adding a comment! Let me know if you have any problems in future. Cheers,

  6. Jason@Atlanta SEO

    Hmmm….click fraud! No way. Click fraud can only be committed by the person who violated the policy, i.e. the person who agreed to the terms and conditions of the adsense policy. The motive of the clicker, besides the one who featured the ads, is irrelevant.

    Secondly, Google’s technique is not meant to punish a blog, just be fair to the advertiser. If I have 100 people click on an ad and get paid $0.05 per click, it equals out to the same as four people clicking $0.25 four times and probably results in slightly higher number of sales.

    I do not make money from ads, but my point is that everything kinda works out in the wash. As for me, I make it a point to read the ads on sites that are dofollow, because typically I am interested in ads related to the blog. I can click these ads on the searches that brought me to the site, or I can click on the ads on the site, why not on the site?

  7. TR@Help An Alcoholic

    Wow, I am so glad you wrote this! I am going to have to see about getting out of the smart priced dog house – I know there are many times I will only receive a small percentage of the CPM, I thought it was just how Google took their share! This explains why sometimes I get a lot from a click and other times just a few pennies!

    I have to admit I kind of thought like Seth before, not now! (Though sometimes those adsense ads are interesting!) There are some wordpress plug-ins for this, but not sure what they are off the top of my head or if they actually work.

    Heading over to other posts you mentioned right now! Thanks again!

  8. Kermit@minneapolis real estate

    I’m not in total agreement that this is click fraud.

    I understand the game that is being played here with the “tip jar.”

    However, don’t we want visitors to notice our ads? His suggestion to click on an ad is essentially and ad for the ads. More than likely, the visitor will click on an ad that relates to his own interests. The visitor sees an ad and is encouraged to take action. This is not all bad.

  9. Rome@WoW Bot

    I didn’t know about that smart pricing thing before this post. I learned something new today. Thanks! btw, I don’t agree with clicking the ads for reward. Isn’t the visit to your site a reward already? :)

  10. Carl@Miami Cosmetic Dentistry Tips

    I agree with your assessment about Godin’s advice being click fraud. People clicking on ads but not buying anything is bad for the advertisers which in turn is bad for Google.

  11. Tara@Home Business Blog

    I am shocked to hear he is promoting clicking ad’s as I am pretty sure it is in the TOS that suggesting people click is against the rules.

  12. StatMan

    This seems totally like click fraud to me, to click on an ad because I was interested in a post and am asked to click on an ad because of that rather than because I am interested in the ad tiself. I’m sure it is working somewhat for Seth, but it really bothers me that it hurts us all in the long run. I had not heard of smart pricing before either, but it helps to explain some things that have been going on with Adsense for me. I appreciate your willingness to address this issue and share your insights. Thanks!

  13. Josh Smithyman@Toshiba 42XV505DB 1080p tv

    Does Google or anybody really have this much control over what happens on the Internet. If i want to click an add i will click an add and i need no justifiable reason to do so! How on earth can they keep track of this. Is the internet not a place that you can find almost anything you want, they cant stop you from clicking a dam add!

  14. Grizzly@Make Money Online

    Stephen,

    Just a quick note to say hi as I can’t recall if we have been formally introduced but I wanted to say thanks for the link luv and I like what you are doing here – great stuff.

    All the best

    Griz

    1. Stephen Cronin Post author

      Hi Griz,

      Thanks for stopping by. I’m subscribed to your feed and read it religously, but I only comment occasionally. I’ve also seen you around RT’s blog a bit.

      I’m a novice compared to you when it comes to writing about making money online, so when I do, I’m more than happy to point people your way, so they can get the really good advice. :)

      All the best.

      Stephen

  15. Jason@Ergonomic Posture Chairs

    Griz really knows his stuff you’re definitely pointing people in the right direction.

    This post is dead on – if the majority of your visitors are not coming from search engines than adsense is not for you – you’ll get smart priced and wont make any money, the only thing you will do is ugly up your blog and maybe lose readers

  16. Itsme@Greenville Collision Repair

    I know that this post is mainly about the smart pricing, but I want to comment on the click fraud.

    This is not click fraud. It is simply a weakness is Google’s business model that they correct for using smart pricing.

    I have no agreement with google. I can click on Google ads all day long if I want to. Google can choose what to do with those clicks, and I’m sure that if I click on enough ads in a day that they would stop paying anything on my clicks for a while.

    The person who places the ads has an agreement with Google. Clearly if they beg for clicks then they are violating their agreement and deserve to be penalized. For one person to suggest that some other person click on an ad on another site, when they are not going to directly benefit is not click fraud.

    The advertiser should see these clicks as ineffective clicks, not fraudulent, and Google should detect them and price them accordingly. They are not totally worthless. There would likely be some conversions, but at a much reduced rate from normal.

  17. Soufulow@Bluehost Hosting

    OMG~ Seth Godin’s my favorite author of all time and I’m so shock to learn that he’s saying this “If you like what you’re reading, click an ad to say thanks”! This is simply… foolish.

    By the way, Stephen – I agree with you. Pushing for fake clicks will definitely bring in negative effects on your Smart Pricing scores, which eventually, backfiring your Adsense earnings.

    Great post!

  18. Tony@PC enclosures

    Thanks for an easy to understand explanation, hopefully I can make some more moeny using this knowledge you’ve passed on.

    Tony.

  19. Frank@Mercedes Wheels

    Now I understand, why it is tough to earn money through google adsense.

    Thanks for the article.

    Moral of the story is try to bring consistent traffic to your site.
    Putting goggle ads on your site and waiting for others to click on your ads is simply not going to work.

  20. helmy@toyota camry review

    I have to learn how to sperate the visitor from search engine and regular visitor I guess. As you say, it makes the visitors who cllick an adsense become very targeted.

    Thanks for the article.

  21. Steve Lott@Ergonomic Chairs

    AdSense smart pricing is driving me nuts. I understand the whole philosophy behind it but what I can’t get a handle on is my click prices varying wildly on a day-to-day basis. Like if my account was smart priced and I was receiving very little CPC on my ads I could understand the reasoning, but what happens to me is one day I’ll get $0.05 for clicks on one of my sites and then the next day I get $0.90 for each click. So I freak out and think I’m smart priced and then the next day it gets better, and then gets worse again, it’s going in cycles. Anyone know what the deal is with this?

  22. ajak@How To Make Money Online

    Great post. Thank for being kind to give such information to me. Before this, I don’t have any idea what is smart pricing. Thank to you (Stephen) and Grizzly. Both of you are my Guru.

    Thanks again.

  23. Jayme@Decompression Therapy

    I thought that was the very definition of click fraud. I may be wrong, but I thought Google had strict policies against having anything which blatantly tells users to click or which tricks users into clicking on ads. Am I confused about this? I don’t use Adsense on my sites, so maybe I’m remiss here.

  24. pinoyseo@expense management software

    this article a must read for those who are starting to engage with adsense. This will help them avoid to be banned. Great help for us. Thanks.

  25. Ricky@bebo skins

    the guys an idiot, i mean yes we would all like to earn extra money however, people are paying good money to advertise their websites and if people are clicking on their adds without the intention of visitng the site then thats wrong

  26. Tom@Recording Studios

    I think what your saying makes sense (not to have have people click on Ad Sense ads if they are not motivated to explore, or buy. I only have one blog, just starting up, no ads yet. from what your saying , it seems pretty hip not to have your ads show unless the reader is there by search engine. and it also seems like Ad Sense isn’t the only way to fly.
    Tom

  27. Marc@The Seo Blog

    I have been looking for good info but there is not much usefull stuff that really explains this topic. I think this might be effecting me as my blogs and adsense are not doing to well.

  28. tony@Best cheap web hosting.

    I think he should have said people should support the blog by buying a product or service from the site not clicking ads. If they have a product and you need it any ways support the sites you like.

  29. James Wheelock@Houston homes for sale

    The concept of smart pricing is highly interesting to me. Now I realize why so many bloggers complain about not being able to make anything via adsense despite a certain number of the clicks being high dollar when it comes to the bidding.

  30. Brad@Make Money Online

    The conversions are still there, that is the frustrating thing. Click fraud is always going to exist, unfortunately.

    We need to adjust.

  31. Ergonomic Office Chairs

    Smart pricing, no matter how much we dont like it will always exist. We only have to live with it and post comments on it. Thats it. I wish there was some way we could circumvent the Smart Pricing.

    Same goes with Click Fraud, have to live with it.

    Thanks

    LINK REMOVED: because of failure to use KeywordLuv syntax (name@keywords)

  32. chintan@dog fence

    nice article on smart pricing. I would to thanx author to draw attention towards click fraud and well budgeted smart money budget.

  33. mesa dentist

    Smart pricing, no matter how much we dont like it will always exist. We only have to live with it and post comments on it. Thats it. I wish there was some way we could circumvent the Smart Pricing. I think he should have said people should support the blog by buying a product or service from the site not clicking ads. If they have a product and you need it any ways support the sites you like.

  34. Chris

    Great article. I tried using other PPC services and what not and I spent loads of money on clicks. When I started looking at the duration people were staying on my site and how many pages they were viewing and coming from, it was clear that they were not valid customers. I have since stopped using things such as AdSense and other programs of the like.

  35. CarHIDKits

    Great post. Thank for being kind to give such information to me. Before this, I don’t have any idea what is smart pricing. Thank to you (Stephen) and Grizzly. Both of you are my Guru.

    Thanks again.

  36. Ram Ramirez

    Griz really knows his stuff you’re definitely pointing people in the right direction.

    This post is dead on – if the majority of your visitors are not coming from search engines than adsense is not for you – you’ll get smart priced and wont make any money, the only thing you will do is ugly up your blog and maybe lose readers

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