Internal Optimization means on-page optimizations that you should take into consideration while writing your internal web pages. This is one thing on which you have direct control. Also this has major effect on the ads relevancy and CTR.
Meta Tags:
Meta Keywords: They have low impact, BUT - they DO have impact over the ads relevancy. Its advised not to leave this part of your page as blank. Always try to make it as easy as possible for the crawlers to understand your website. And your webpage with Meta keywords. If there is NO CONTENT on your webpage, the Adsense Media bot will pickup Meta Tags and show ads according to that. Search on Google for pages that top the SERPs for the keyword you have in mind. These websites will give you good idea what to include in Meta Tags.
Meta Description: Whatever you put in the description meta tag, it will appear as description right after Title Text that links to your page in the SERPs (Search Engine Result Pages). This property of this tag makes it quite important as it has direct impact over the CTR of your link in the SERPs that leads to your website. It eventually decides how much traffic you will get from a Search Engine. Write description that attracts right kindof traffic from Search Engine pages - the one which is most interested in your content.
Title text:
Search Engines give importance to the keywords that appear in the title tag of HTML Source code. Title has a good impact over relevancy of ads too. For higher payouts, choose highest paying keyword of that category for title text.
However this depends upon your optimization strategy entirely. If you are more concerned about competition and getting more traffic than payouts, choose a keyword with low competition keyword (competition you can handle) with relatively higher traffic. Though, I will advise to get more traffic first, and become authority page of that keyword. Payouts will increase as traffic does.
Tip: Title text generally appears in the SERPs as TITLE link to your page. In other words, You can say, this very line controls the CTR of your website link listed in SERPs. How you design your title is entirely your own decision.
If you are optimizing it for more traffic, You will not want your title to read as it was written for Search Engine crawlers. The title has to be concise so much so that even 10 words are considered as too many. If you are optimizing it for more payouts - Go ahead!
However you can try to mix the high paying keywords with traffic attractor keywords too.
Give Headings:
Its quite important to mark the main headline of your webpage with H1 tags and subheadings with H2 and H3 tags and so on. This is so because headings highlight and indicate the most important element of your webpage - the actual content. It is important to use relevant keywords in headings and sub headings as these have good impact on rankings - especially when sorted by relevancy. This has an equally good impact on the ads appearing on your webpage. Headings give prominence to the content on your web pages.
Again, you can use these headings either to optimize for traffic, fighting competition or getting more payouts or both too.
Embedding keywords in content:
Besides hosting useful and genuine content on your webpages, its important to include keywords at the beginning and end of the article of web content. This helps Search Engines and Ad bots to determine the theme of the webpage. Its important to include the keywords in the first paragraph of the webpage content atleast.
Some people follow a strategy of hosting less content on a webpage. This helps focus ads on specific keywords and avoids dilution of ads by other keywords that you may have mentioned even once in the web content. This works when you are optimizing for Adsense, but has some traffic drawbacks too. Furthermore, Google may consider it as SPAM. So, its never advised to host like 2 or 3 lines and expect good earnings. Chances are that you will be hit by smart pricing.
On the other hand, Dont make lengthy webpages as it may misguide Adbots to get some wrong ads resulting in dilution of relevant ads. Ad bots can sometimes end up giving undue importance to certain keywords which might have just a mere mention or usage in the entire page. It is advised that if you are getting irrelevant ads, change Meta Tags and Title text and then move on to making changes in the content.
Internal Linking:
Internal linking of webpages has Traffic as well as Adsense importance. As all your link partners may not link all the pages of your website, its the responsibility of your webpages to hyperlink your other pages and define the crawlers what your pages are about. Speaking in context of Adsense, suggesting related links (related articles) to the visitor will also increase your page views of your website, and your chances that your visitor will click on high paying ads.
It is must for websites to interlink their pages. This can be done by displaying related articles or linking to pages with proper anchor text. This helps increase the importance of most web pages. Even a simple navigation bar can achieve that purpose.
Increasing Penetration
Write articles with more heading and subheadings. This not only makes your content more readable and user friendly but also will help the Ad Bots (and Crawlers too) to properly recognize theme of your webpage and serve you most relevant ads. This trick also gives you an another chance to mention more of those keywords in your webpage. Try to include as many instances where you can specify keywords to the bots. This will have impact over your CTR and EPC too and also help you get targeted traffic. Targeted traffic will mean more CTR of your webpage and better performance. Get targeted traffic and follow these guidelines and Smart Pricing cant even touch your webpages.
