TAC, or Traffic Acquisition Cost, is a measure of the amount of money required to buy in traffic. It is usually calculated on a percentage basis, using either revenue or visitor numbers to yield a figure that can be measured over time.
For example, if you pay out $5 to Google in AdWords fees, and receive 1,000 visitors, then the cost per visitor is 0.5 cents (actually, it's more common just to say that the cost is $5 per 1,000 visitors, otherwise known as CPM).
Others may choose to measure it in terms of revenue - if you sell an eBook for $15, and pay $100 in advertising fees to sell 500 copies, then you have generated $7,500 for $100 of advertising. That's quite a margin!
Actually, these numbers might be a bit optimistic, and so helping reduce TAC costs is usually high up on the list of priorities for online entrepreneurs.
One method might be to hunt after JV's (Joint Ventures) where partners each get something out of the relationship. An eBook can be exchanged for the traffic that this might bring, for example - one partner offers the eBook to their list, and the eBook contains links to the other's online store.
Or, a software manufacturer or online service provider might pay a third party to pre-install software on a piece of hardware, or even supply software with certain settings that provide an opportunity for third party promotion.
This last example is use by advertisers to buy advertising in applications (so-called adware), which is a method that works, but can be costly and obtrusive to the end user.
When formulating your TAC cost reduction strategy, remember one thing - it's much better to offer something of value if all you're after is traffic; otherwise it may end up costing more than it brings in.
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