Traffic Acquisition Costs

 Traffic Acquisition is A Big Deal

   On the other hand, Google spent more than twelve and a half billion dollars which represented a TAC Rate of 71.9% to acquire traffic from sites part of its AdSense network, or as a revenue share with those partners to monetize the ads shown on those sites.

Goldman Sachs estimates Google paid Apple nearly $9.5 billion in traffic acquisition costs (TAC) during calendar year 2018, representing a third of Apple's profit in the segment.

Google's total traffic-acquisition costs — the fees it pays to partner websites that run Google ads or services — were $3.8 billion, or 21% of total advertising revenue, which was up 13% year-over-year.

Net revenues, excluding total traffic acquisition cost or TAC (TAC is the portion of revenues shared with Google’s partners, and amounts paid to distribution partners and others who direct traffic to the Google website), came in at $33.01 billion.

The Network Members traffic acquisition based on Google Network Members (part of the AdSense program) to monetize those pages by displaying ads on their properties, generating revenues when site visitors view or click on the ads.

In Q3, Google faced concerns over Amazon reporting 123 percent growth in advertising revenue that quarter, and reports began emerging that advertisers had, in some cases, moved more than half of the budgets they normally spent with Google Search to Amazon ads instead.

To continue to capitalize on ad revenue, the Motley Fool and other sources report that Google is wise to continue to pay large amounts of cash for the TAC, seeing as how it expands Google's reach and fights back against competing search engines, especially Microsoft's Bing engine.

Paid clicks on Google properties were up 1% sequentially and 18% from the year-ago quarter.

Cost-per-impression on Google Network Members' properties remained flat on a sequential basis but decreased 3% year over year.

Two years ago, court filings in a legal dispute between Google and Oracle over the Android mobile operating system indicated that Google in 2014 paid Apple $1 billion to be the default search engine for Safari.

Alphabet CFO Ruth Porat directly addressed the trend of increasing TAC at the beginning of the call, saying that Google's strongest growth areas — mobile and programmatic advertising — have higher acquisition costs, but Wall Street kept trying to tease out more details.

Beyond that, even large corporations, like Apple, benefit from the Google TAC; Google pays Apple millions of dollars to make Google the default search engine on Apple's Safari mobile platform.

Google, developer of the award-winning Google search engine, today announced a new self-service option for Google AdSense, a program that enables website publishers to serve ads precisely targeted to the specific content of their individual web pages.

It’s easy to give for granted Google success in terms of traffic; Yet Google is a website, which needs a continuous flow of qualified traffic that makes it able for the company to generate enough revenues to create a sustainable and profitable business.

The increase in TAC to distribution partners was a result of an increase in Google properties revenues and the associated TAC rate.

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Yandex’s expenses were driven by higher TAC (traffic acquisition costs) and increasing spending on product development and marketing.

Facebook did not break down advertising revenue by ad product type, but did report that 93 percent of ad revenue during the fourth quarter came from mobile advertising. That’s up from 89 percent for the same period last year.

Apple touts how services are a steady source of subscription revenue from millions of iPhone users who sign up for iCloud storage and Apple Music streaming, but a dependence on a single company like Google makes the business more vulnerable to the highly cyclical advertising business.

Investors anxious about Google traffic acquisition costs, which regulation could further increase Mobile fees and new regulatory moves could bump Google's revenue costs.