Money & metrics · also called gross, top-line revenue
Gross revenue
Gross revenue is total revenue before the costs of earning it are subtracted; where in the chain it is measured changes what the number means.
"Gross" means before deductions, but in a chain with several parties each one has its own gross. Start with what advertisers pay the search engine for clicks on a partner's pages. The engine keeps its share and pays the rest to the feed provider or direct publisher. A provider keeps its share and pays the arbitrageur. What the arbitrageur receives is the arbitrageur's gross revenue, though it is already net of two revenue shares.
From there the arbitrageur subtracts traffic costs to reach net revenue, and then operating costs to reach profit.
The distinction matters when reading company results and when comparing offers. Listed companies in this sector typically report revenue in total and then a figure after traffic acquisition costs, because a business with $100m of gross revenue and $80m of TAC is really a $20m business. Likewise, a feed that advertises a high share of "gross" is only attractive if you know which gross is meant. Ask what is deducted before the share is applied.
An example
Say advertisers pay $1,000 for clicks. The search engine passes $700 to a feed provider, which keeps 20% and pays the arbitrageur $560. That $560 is the arbitrageur's gross revenue. After $430 of ad spend, net revenue is $130.
Related terms
Net revenue (ex-TAC)
Net revenue is revenue left after subtracting the cost of buying the traffic that produced it, also called revenue ex-TAC.
Revenue share (rev share)
Revenue share is the percentage of advertiser spending that a search engine or feed provider passes on to the publisher whose page produced the click.
Take rate
Take rate is the percentage of money flowing through an intermediary that the intermediary keeps for itself.
TAC (traffic acquisition cost)
TAC is the money a company pays to others to obtain traffic, whether a search engine paying its partners or an arbitrageur paying for ads.
Revenue ex-TAC
Revenue ex-TAC is revenue after subtracting traffic acquisition cost: what the business keeps once the traffic that produced the revenue has been paid for.
Ad spend
Ad spend is the money paid to advertising platforms to buy traffic; in search arbitrage it is the main cost of the business.