What does TAC stand for in search advertising?
TAC stands for traffic acquisition cost. For a search engine it is the money paid to partners who bring it searches, including syndication partners that show its ads. For an arbitrage company it means the opposite side: what it spends buying visitors. Revenue "ex-TAC" is revenue after those payments, the figure that shows what a middleman really keeps.
TAC appears in the accounts of Alphabet and Microsoft as payments to distribution and network partners. Search arbitrage lives inside that line: a feed provider's income is the search engine's TAC.
Further down the chain the same word is reused. Listed operators report gross revenue and then Revenue ex-TAC or net revenue, because most of the gross figure passes straight through to traffic sources or sub-publishers. When comparing companies, look at ex-TAC numbers. A firm with $400 million of gross revenue and a firm with $100 million can have similar real earnings if the first passes on far more.