Traffic acquisition costs are payments made to third parties to direct web traffic to Google web services.
Traffic acquisition costs, known as TAC, were $6.45 billion, up from $4.85 billion a year ago. The growing fees Google pays to third party search partners such as phone makers and Web browsers is an increasing concern for Google’s advertising business. Searches on mobile and YouTube require Google to pay out higher fees.
This is not the same as what Newsweek Media Group is accused of doing – buying fake clicks to boost ad revenue – but it has similarities. Google pays third parties to make Google services, including search, as the default settings on web browsers, smart phones, tablets and on other devices and services. In a broad sense, its sort of like Google is buying advertising to market its services, which ultimately, are used for advertising.