Targeted Traffic.

I said at the beginning of this post that you only had to do two things to make good money with adsense; perfectly optimize your blog for a single keyword and then drive targeted traffic to it.

If we go back to the widget example let's look at what happens when the two blogs don't get the right type of traffic. As they currently stand I said both were ranking well in the serp's and neither would be smart priced. Blog A will do OK with adsense but not great. Blog B will do much better as the blog is better optimized for the traffic from the serp's.

Now imagine that neither blog gets serp traffic for their respective keywords or very little compared to other types of traffic.

If you are a proponent of using social media to get traffic to your blog then pay attention. Let's say most of your traffic comes from stumblers and entrecard and RSS subscribers and Digg etc. If you have Adsense on your blog you run the risk of being smart priced. Most of these social visitors will never click an ad - and that's a good thing. Unfortunately a few will click an ad from time to time. When they do Google knows where they came from and knows that they aren't targeted traffic looking for widgets. They are just casual browsers and if you get too many of these casual browsers clicking your ads then Google will discount the hell out of the CPC in order to compensate the advertiser who is getting really crappy traffic from your site. Google will smart price you until you provide quality traffic.

Social traffic is not quality traffic and if you get a lot of it then you had best not have Adsense on your site. Period.

Because you have a lot of social traffic that rarely clicks ads you will have a very low CTR - hence the misconception that low CTR means you are smart priced. You aren't smart priced because you have a low CTR, you are smart priced because your traffic is crappy and not targeted for the ads. You get a low CTR just because most of your traffic doesn't click ads.

My sidebar ads are all low CTR - under 1% and yet they bring in up to $5 a click. They aren't smart priced - they just don't get a lot of clicks. The top ad block gets the bulk of the clicks.