What are Google's Traffic Acquisition Costs?

[marcamillion]

Their latest earnings release - http://investor.google.com/earnings/2010/Q3_google_earnings.html - shows their Traffic Acquisition Costs (TAC) @ $1.81B for the quarter.

What type of traffic is that? Is that the cut they give Adsense partners? Or is that the various deals they cut with a variety of third parties (e.g. Firefox search bar, and desktop manufacturers, etc.)?

Or is there something else I am missing?

I know that startups usually have TACs, which many times consists largely of dollars flowing to Adsense. So just trying to wrap my head around what type of TAC Google could have.

Thoughts?

[answerly]

From the linked earnings summary:

"The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.52 billion in the third quarter of 2010. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website..."

So, primarily adsense but also likely includes the other methods of distribution you referenced.

[marcamillion → answerly]

answerly, you really lived up to your name :)

Silly me. I posted this too quickly without reading the full release.

Also of interest, further down:

"TAC - Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $1.81 billion in the third quarter of 2010, compared to TAC of $1.56 billion in the third quarter of 2009. TAC as a percentage of advertising revenues was 26% in the third quarter of 2010, compared to 27% in the third quarter of 2009.

The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.52 billion in the third quarter of 2010. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $285 million in the third quarter of 2010."

[marcamillion → marcamillion]

This is actually an interesting reveal. Is this something Google has disclosed before?

As far as I knew, they typically didn't disclose how much % of every dollar they give their Adsense partners.

But they essentially just revealed that $0.21 of every dollar from an Adsense lead/click goes to partners. This is VERY interesting...especially considering that Apple gives $0.70 to app developers.

[answerly → marcamillion]

I think they have been reporting aggregate numbers like this for a while. IIRC TAC as a % of revenue has been consistently decreasing over the last several years.

[tradrmick]

I haven't seen where they gave the % paid to adsense affiliates before either. Believe me I've looked as a major portion of my revenue is from adsense.