In the video below, Hal Varian, explains the purpose of “smart pricing,” how it plays a role in the ad auction, and how it benefits entire advertising ecosystem of publishers, advertisers, and users. “Smart pricing is designed to help advertisers bid efficiently and effectively on many publishers” ad auctions at once. This then allows advertisers to increase their maximum bids, which ultimately helps publishers earn more in the long run.”
Finally, “Smart pricing can impact which ad wins an auction for a particular content page. However, since the revenue share is fixed for all publishers, smart pricing doesn’t impact the percentage you actually earn for a valid click. Any changes to advertiser bids as a result of smart pricing will proportionately affect the amount both Google and the publisher earn,” explained Google.