Business & finance · also called Net revenue, Gross profit after traffic costs, Contribution ex-TAC
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.
TAC stands for traffic acquisition cost: the money paid to get visitors or, for a network, the share paid out to the publishers who supplied them. Revenue ex-TAC is what is left after that payment.
It is the honest measure of size in search arbitrage, because gross revenue flatters. A media buyer who spends $9m on ads to earn $10m from a feed has a $1m business, not a $10m one. A feed provider that receives $50m from a search engine and passes $40m to its partners under a revenue share has $10m of its own.
Public companies in ad tech and search monetisation commonly report an ex-TAC figure for this reason, and analysts calculate margins such as EBITDA against it. The same number appears in this glossary from the operator's viewpoint as net revenue.
Two warnings. Definitions vary between companies, so check what each one counts as TAC. And ex-TAC is still before staff, tools, financing and deductions, so it is a measure of gross margin, not of profit.
Think of it like this
A currency exchange booth that handles $1m a day has not earned $1m. Its real income is the thin slice it keeps on each exchange.
An example
Illustrative: feed revenue $120,000 in a month, ad spend $96,000. Revenue ex-TAC = $24,000, a 20% margin on gross revenue and a 25% return on spend.
Related terms
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.
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.
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.
EBITDA
EBITDA is a company's earnings before interest, tax, depreciation and amortisation, used as a rough measure of operating profit.
Take rate
Take rate is the percentage of money flowing through an intermediary that the intermediary keeps for itself.
Profit margin
Profit margin is profit as a percentage of revenue: the share of each dollar earned that is left after costs.