DeSilva + Phillips, an investment bank based in New York, released a whitepaper last week on the continuing evolution of the global exchange eco-system. It’s a solid overview on what the landscape currently looks like and how it’s likely to change in terms of technology adoption by the buy and sell side, mergers and acquisitions and the entrance of new players into the space. It's probably not as definitive as last year's report by ThinkEquity, but it provides excellent insight nontheless.

Here are some of the key points in the report, along with some of my ownj observations:

- The challenges for Right Media moving up the ad exchange food chain to become a premium exchange: publishers remain sceptical about putting remnant through the exchanges (although many are doing it anonymously, especially here in Europe) for fear of sales cannibalisation. D+P believe Yahoo will test different exchange models going forward, including a futures exchange or a reverse auction model where publishers bid on a buyer’s business. I still think publishers aren’t quite ready for a futures market; they’re still trying to come to terms with exchange trading.

- The growing influence of Google in the display market. Google want to own the non-premium exchange marketplace. With its huge reach in the marketplace through DFP and DFA, D+P believes Google could dominate the market. But it does stress that running a neutral ad exchange in this market might be impractical – and more importantly less profitable. The report feels Google might build out a DSP itself, as it looks to capitalise on the growing appetite on the demand side for more audience-focused buys. This is making holding agencies very nervous, as Google might be able to offer this service directly to advertisers directly and possibly disintermediate holding agencies from the media buying process. This is a very plausible scenario. Potential DSP acquisitions might include Appnexus, Invite and MediaMath (you could probably another five or six companies in there as well) – but it’s hard to know if it will go for a pure technology play. If it does decide to go down that and engage in some M&A action, my money would be on Appnexus.

- The report also focuses on the role being played by SSPs (the new acronym for Yield Optimization experts). The SSPs are effectively morphing into premium exchanges, as they help premium publishers sell their unsold inventory to the market. The SSPs are playing heavily on publishers’ fears about pricing and protection of proprietary audience data. The new SSP breed, such as Rubicon, Admeld and Improve Digital, will become an important buying point for ad networks and DSPs simply because these platforms will be managing some of the best inventory in the market.

- Advertisers love data. They need it to allow them to make “smarter, more targeted and timely online ad-buying decisions”. D+P talk about the rise of the data exchange as a means of accessing greater amounts of relevant data. From a publisher's perspective it could well become an important channel for data monetisation. There are some serious hurdles to jump though. First of these is that premium publishers are interested in managing their own data and might not want to put their data on to an open exchange; and secondly, here in Europe legislators would have an absolute fit if they thought that cookie was being traded openly. It could explain Exelate and BlueKai absence from the market.

- And finally the report tackled the “big issue of our time”, the DSP. The report goes through the usual DSP focused companies, highlighting the evolution that has happened since the arrival of the of the first buy-side platform. There is particular love for Appnexus in this report, which makes me think that they the writers didn’t take time to talk to the rest of the people in the space. My own view is that Google will buy Appnexus or DataXu and that some of the big holding companies will acquire the rest based on the technology and expertise. Invite and MediaMath look like the best candidates for a holding company buy. I think the most interesting point made in the analysis of the DSP market is on the area possible new entrants. The report looks at Accenture as possible new player in the space. It points to Accenture’s investments in audience data provider, Adchemy, and its digital marketing consultancy gigs with the likes of Proctor & Gamble as possible indicators of entry. It also has an interest in a search bid management platform, MakeMeTop. Audience insight and biddable platform: sounds like a typical DSP to me. I wonder how many other companies are looking at entering the space. We know that Ebay are working directly with Appnexus. Are big advertisers thinking about building their own buying tools? Probably not, given the complexity of building out a buying platform. Expect a lot of consolidation in this space over the coming twelve months though.