Improve Digital released its updated eco-system map last week, and it is messy. Very messy. More new categories, and even more companies. You need to ask yourself if the display market (4.5 billion euro at the last count) in Europe is big enough to support all these companies. In an interesting caveat at last week's Automated Ad Summit (encroaching on trademark there, perhaps) in Amsterdam, AppNexus CTO, Mike Nolet, presented his own version of the eco-system - the Nolet-scape if you will.

Many of the categories on the Nolet "no nonesense" map were replaced with just two: namely, tech enablers and buyers/sellers. He pointed out to the audience that Google was slowly assembling the complete stack, and that many feature companies would get crushed by this formidable end-to-end stack. In fairness to Nolet he did intimate that AppNexus was taking a similar approach albeit with a more open strategy.

The Buyers/Sellers Layer Is Still A Great Business

Tech is a tough business in online advertising. The margins are horrible, and there is a constant need for investment to scale the business. The buyer/seller layer is a good place to be in. Despite the rise of the DSPs and the SSPs the ad network business seems to be holding up well. A shift away from re-targeting, cookie-chasing and into the world of prospecting is giving the web's greatest business model (FACT!) a new lease of life.

These are the new ad trading specialists of our eco-system, delivering performance for agencies and advertisers. The rebooted ad net model is now complimenting the agency trading desks. The slash-and-burn strategies towards the ad nets seems to have abated somewhat as the smart ad net players have figured a way to work with the big agency groups - building their own tech and data layer on the top of the infrastructure plays (Google, AppNexus, IPONWEB, etc)

Let's not forget the agency trading desks. The ATD might still be hampered by internal politics and client concerns over hidden margins and - gasp - the media arb. These are issues that most agencies seem to be dealing with competently now. But certain sections of the media seem hostile of an in-house buying capability. Why is there so much negativity around agency trading desks anyway? Agencies are well within their rights to offer this solution to clients - and if they are doing a better job than third-party buyers then they are worthy of their place on the plan.

And we should also mention the independent trading desks - or what ExchangeWire likes to call, the Next Generation Agency (NGA) - who are blazing an optimisation trail across Europe (more on that next week).

The Complete Stack, It Cometh

There has been some serious debate around this in the more intelligent quarters of the industry. Kawaja called it the rise of the advertising operating system. Effectively what we are looking at is maybe 4-5 players (you can chose from about ten candidates at the minute) that will have the ability to offer an infrastructure layer for the rest of the industry to build/trade on top of. It takes a serious amount of cash to develop this - probably between £100 and £150 million. It is simply beyond any one tech vendor in, let's admit it, a horribly fragmented Europe to raise that kind of money to build a sustainable/competitive solution to the likes of Google.

VCs would pass - suggesting instead a death-spiral pivot into some rubbish mobile social sharing app solution. If you look at most of the feature-focused companies Google has acquired over the past three years, you begin to wonder how the humble European FNAC solution providers will compete with the simplified easy-to-use targeting and optimisation capabilities built into both DFA and DFP.

Let's Roll-Up The Industry: Europe Needs Its Own Stack

There is no doubt the Improve Digital map is being poured over by VCs and P/E firms looking to see if they can join the dots. And join the dots they should. It might be time to roll it all up. There are going to be 4-5 infrastructure companies in two-to-three years, and as it stands they will be all US-based. Many of the advertising technology companies on the eco-system map are Europeans so we are only applying this strategy to them - and of course they are cheaper in comparison to the heaviily VC-backed US vendors.

If a private equity firm was prepared to give ExchangeWire four hundred million pounds, how would it go about assembling the technology and companies required for the Euro stack? The trick here is to overlay the messy eco-system with geographical and market penetration - as well as tech and development resource. Where would you start? Fill in the blanks as you go along...

Spending £400 Million... The Shopping List For The CES

We need an ad server with Northern Europe, Southern Europe, German and French market penetration. Next we need a native DSP - or a provider who builds customised algos or buying platforms. We need a dynamic creative solution - for re-targeting purposes. Then move on to ad verification, semantic targeting. Move onto the exchange - with SSP/ yield optimisation capability. There's a data management gap to be filled on both the buy and the sell side so let's chuck a DMP into the mix. Then we need supply. Pick up some big ad networks in Germany, France and Eastern Europe. Let's not forget about social, mobile and video so let's bolt those vendors on to the CES (Complete Euro Stack).

Integration Would Be Painful, But The IPO Would Be Spectacular

You've got to be upfront with the P/E firm that has just given you £400 million to roll up the entire Euro ad tech eco-system by telling them straight out that the integration of all this tech will be horrible. It will not be seamless. Far from it. Look at the problems Google has had integrating Teracent into DFA/invite - and that was just a dynamic creative solution. The pay off would be huge though. The company would go public. The IPO would be over-subscribed as you took the new CES public and then onto global domination.