The venerable WSJ is reporting that Microsoft is buying a small 30-person firm in Santa Barbara called AdECN that runs a network linking buyers and sellers of internet ad space.

Can Microsoft build the next ad exchange platform?  Sure.  Will users want to use it.  Huge maybe.

Google itself has learned the hard way that even with tons of muscle and money, there are just some things you can’t do well (such as Google’s repeated failed attempts to broker print space).

Ask.com has a pretty slick algorithm going nowadays but how many times have you used it in the past week?  Me…nada.  And yet I like its interface very much.  Old habits die hard…which is why Ask.com earlier this month worked a deal with Microsoft under which customers of Microsoft’s paid search program will see their listings appear on sites operated by Ask.com and its partners.

What does AdECN bring to the table that its purchase of aQuantive didn’t get them?  Are they just building scale?

From the AdECN website explaining their exchange: “In the following illustration, the AdECN Exchange is the central marketplace. The member is the advertising network that holds a seat on the exchange and acts on behalf of the advertiser or publisher in executing transactions. There are many seats on the exchange, and each member has its own advertisers and publishers. ”

Think of it as NASDAQ for online where an AdECN member buys on the exchange (representing an advertiser/s) and sells on the exchange (representing a publisher/s).

The AdECN member’s advertisers specify in advance how much they are willing to pay based on the visitor’s profile, or the visitor’s past behavior, or the page content, or other factors. Advertisers can bid on a CPM, CPC, CPA, or CPL basis.

When a visitor lands on a website page, an auction is held among all the advertisers in less than 12 milliseconds, for every single ad impression. The highest bid wins, and that ad is shown.

Now this sounds all well and good but what if we, as internet readers, see this rampaging trend about web publishers and advertisers wanting to know every little detail about our web usage (not to mention our demographics using combinations of Behavioral Targeting, Geotargeting, and other tools of the trade) and we start training ourselves to purge cookies and set our privacy settings much higher?

Oops.  Who was that reader that just flipped through our pages again?

AdECN provides all of the hoo-hah that most ad networks provide when serving up ads using tags from what I can tell.

Members can place all, some, or even none of their traffic on the exchange. They can specify that the auction favor a match between their own publishers and advertisers, unless the profit of using traffic from the Exchange exceeds a certain threshold which is interesting.

The pitch here is as a member you will be in an electronic bazaar where supply and demand will dictate pricing.  But there are surely ways to game this system much like you occasionally hear about hedge fund managers gaming stock pricing from their ‘antics’ and massive buying (and selling) power.

Why would we want to see more of that activity in the online space?  I don’t.  Do you?