Traffic acquisition costs

Google announced their Q2 results yesterday. I haven’t dug in too deep into them yet, but one figure that aroused my interest (and should probably interest everyone else in the online marketing and sales business) is Google’s traffic acquisition costs.

Q2 revenue for Google was $17,727M (that’s 17 billion dollars). Their traffic acquisition costs were $3,377M. More than three billion dollars to acquire traffic for one of the world’s most successful online companies. A quick search tells me that this is the money Google pays for partner websites in revenue share.

Google’s TAC is about 19% of its revenue for that quarter. One could also argue that this is Google’s cost of sales, but I guess some form of accounting laws require them to announce it like this.

Regardless – it’s a good reminder for everyone on the share of money to spend on marketing and driving your business. 20% may not seem like a lot, but not a lot of non-VC invested companies are pushing even that much into marketing.