The Search Engine Strategies panel in San Jose addressed how "ad exchanges are changing everything," and speakers from industry heavy hitters like DoubleClick and Right Media explained what this means to a still burgeoning market.

Microsoft’s regulatory objection to Google’s buyout of DoubleClick may have been more strategy than concern, especially as the Beast and fellow-rival Yahoo made similar purchases a short time later.

These companies represent an ad sales market that deals in impressions on the destination side rather than the entry side, and, according to DoubleClick, as much as 80 percent of publisher inventory goes unused.

At the same time, advertisers are stumbling over each other as the short tail gets fatter (cluttered and well-trod), leaving less inventory available for potentially converting contexts and destinations that are less traveled, but collectively are powerful.

So diffusion must take place, and ad exchange companies are betting on the overflow into the long tail, even if panelist Jay Sears, of ContextWeb, admits the "long tail is perceived as a scary place" where there is little control of where ads appear and where impressions are wasted when paired with irrelevant content.

But that also means there exist necessity and invention, and out of that new models and networks are born to address these issues.

While much of publisher-advertiser matching is automated, ad exchanges allow for a certain level of advertiser and publisher control. The publisher sets an asking price for ad space, and the advertiser sets a bid price for specific inventory. (And one would imagine advertisers can block or reject as well.)

A system like this allows for tighter targeting, more control, and an escort for treacherous wanderings into the long tail. Sears and ContextWeb boast about their aptly named ADSDAQ product, which has four key offerings: premium inventory; pricing control; contextual technology; and an open platform.

"ADSDAQ is turning the long tail into a clean, well-lit place for advertisers," said Sears, always ready with the pitch.  

Also, Microsoft brokered its relationship with Electronic Arts into a three-year arrangement to place advertising on a network of EA Sports titles. Again, Google along with a host of smaller companies lost out to the Microsoft team.

Steve Ballmer, Microsoft’s CEO, dropped a quote-worthy line on attendees of the company’s Financial Analysts Day. CNet cited this gem, classic Ballmer style:

“We are hell-bent and determined to allocate the talent, the resources, the money, the innovation to absolutely become a powerhouse in the ad business,” Ballmer said.

And then, Microsoft announced its AdECN Exchange acquisition. AdECN describes itself as a stock exchange for ads, where a member of the exchange buys on it for advertisers and sells on it for publishers.

“Rather than an ad network, a true ad exchange is the neutral, transparent, automated connection between multiple ad networks,” Microsoft said in its statement about the buy. Advertisers get access to more inventory, while publishers can earn more money per page view.

As AdECN was a privately held company, Microsoft did not disclose financial terms of the deal.