Targeting prospects is becoming more refined through the development of real-time bidding (RTB). This server-based system is bringing marketers together with prospects by creating a network that uses up-to-the-minute market data and fluid pricing.

Here’s how it works:

1. A user visits a web page
2. An ad request is sent from the publisher network to the RTB platform
3. The RTB platform packages information about the impression (e.g. site information) and personally-unidentifiable user information to the ad networks
4. The ad networks pass the information on to the demand-side platforms (DSP)
5. The DSPs determine interest in the space, holding a bidding auction with interested parties
6. The DSP sends the winning bid to the RTB platform
7. If the advertiser is eligible, the space is secured and the ad image is displayed

All this takes place in about 80 milliseconds, which is about 25% less time than it takes to blink an eye!

Real time bidding is a dynamic process that allows marketers to achieve greater cost efficiencies, higher performance and greater granularity of consumer profiles. The system also features a finer distribution of inventory; in fact, some analysts expect premium inventory pricing to rise because of the remnant inventory sold through the RTB system.

With RTB, marketers can direct campaigns using current, actionable data, which is expected to improve brand interest and/or purchase intent.

Some argue that the technology is expensive, complex and inefficient (although it’s hard to beat 80 milliseconds!) so RTB may have limited success without greater infrastructure development. Ad requests must pass through rules to determine if it is eligible for RTB. These rules are expected to become more varied among server networks in the future. Some techies refer the RTB as a “kluge” – an inefficient process that is slow to serve the creative element, problematic to web traffic, expensive, and difficult to report results.

There are concerns about ROI when it comes to making large commitments to RTB. A December 2010 study showed that many publishers believe RTB has hurt their client relationships. But data collected by DigiDay and Google earlier this year showed that approximately 90% of agencies and marketers expected to at least maintain their current budget allocations to RTB through 2011. We’ll see if this changes.

Scalability of RTB is an issue that bears the question “how will RTB handle a market broader by tenfold?” Often, engineers must code from scratch, and open system or off-the-shelf products can’t handle the load. That’s where the major players (Google, Microsoft and Yahoo) come in. Those companies and others are building out the infrastructure as we speak. Some industry analysts expect 30-50% of future inventories will be allocated through RTB channels. Although much of those inventories may be comprised of remnant space, efficiencies that can be achieved through a scalable RTB infrastructure can positively impact marketing budgets, drawing more marketers in.