"How did those assorted tank tops work out for you?" (Screen grab.)

It takes less than 30 milliseconds to determine a web-user's value to advertisers, apparently, which is either a marvel of engineering or a foreboding of a Kafkaesque future in which our lives are guided by all-knowing machines whose processes are beyond comprehension. Or both.

Or anyway, that's the way The New York Times spins its dive into real-time bidding for digital advertising, an emerging industry in which practitioners dump a given web-user's data into an algorithm, and the algorithm pumps out an approximation of what said user is worth to a given advertiser—all in the time it takes a web page to load.

Viewed through the prism of the Rubicon Project, an ad-sales platform that says 97 percent of U.S. internet users interact with its system each month, the process works something like this:

Most sites ... compile data about their own visitors through member registration or by placing bits of computer code called cookies on people’s browsers to collect information about their online activities. To those first-party profiles, Rubicon typically adds details from third-party data aggregators, like BlueKai or eXelate, such as users’ sex and age, interests, estimated income range and past purchases. Finally, Rubicon applies its own analytics to estimate the fair market value of site visitors and the ad spaces they are available to see.

The whole process typically takes less than 30 milliseconds.

That's great for advertisers sick of the inefficient "spray and pray" strategies they depended on for years. For consumer advocate-types, though, the real-time methods raise an old set of tensions: It's great to get things for free, less great when we realize we're paying by participating in an invisible market for information about ourselves.

Put it another way, it's pretty innocuous when the systems are asserting different pricing on the respective page views from a high-net worth individual and a Chinese teenager, but maybe less so when a payday lender is putting its ads in front of the highly indebted?

Looks kinda eco-friendly?

When big name publishers like The New York Times and Wall Street Journal are looking to create the rich media ads for their new tablet apps, they turn to Medialets. Now the startup, which raised $8.4 million back in November, is hoping to parlay its relationships with top publishers and blue chip brands into a private marketplace that will connect the two. 

"This is really something we've been building towards since we launched the company," CEO Eric Litman told Betabeat. "Premium publishers want 100 percent control of who appears next to their content and big brands want to make absolutely sure they don't put their name next to something that doesn't fit their image."

Offline, in the world of glossy magazines and TV spots, the money being spent is enough to cover the chain of human beings who handle these relationships. But online, where fewer advertising dollars are being spent, and especially across multiple channels like the web, mobile, in-app, iOS and android, the margins get very thin.

"We're creating a private marketplace that takes the friction out of buying online, but ensures that publishers and brands only work with the kind of premium partners they feel comfortable with," explains Mr. Litman. The marketplace will offer inventory from 40 publishers. Medialets won't say exactly who, only that they come from the roster of more than 200 big names like Conde Nast and Hearst they already work with. Brands can see how much is being offered at what price and easily spread their buys over multiple platforms.

"It creates value for both advertisers and publishers by not only addressing challenges that exist in the mobile advertising ecosystem, but also resolving operational issues that still exist online," Paul Gelb, a VP of mobile at Razorfish explained.

For Medialets, this is a power play. Real time bidding is a big complicated business with massive players like Google branching out in every direction.  But if they can establish an exclusive marketplace for tier 1 advertising, away from the long tail and remnants that dominate other purchasing platforms, they can add a big revenue stream to their current business. And while they are playing matchmaker, Medialet's won't get in between existing relationships. "This is a compliment to the direct sales that is going on," Mr. Litman said, "A way to optimize across the complexity of digital media."

The luxurious accommodations at Google's Carrier Hotel

When Google plunked down a $400 million offer for New York's AdMeld, a lot of local venture folks were surprised at the price.

"They've got some good growth, but nothing that would justify this kind of premium," was how an ad-tech investor put it Betabeat. To date AdMeld had raised just $30 million.

But a chat yesterday shed some light on the situation. "We are getting a ton of pitches from former Wall Street quants looking to start companies that apply the principles of high frequency trading to the emerging market for real-time bidding across online ads," said Bryan Birsic, a senior associate at Village Ventures. 

Birsic says that while a few companies have claimed to have real time bidding, AdMeld, Rubicon and a few others are actually just beginning to create a efficient, liquid market for this publishers online advertising inventory. "Folks who have reached their limit on Wall Street, or who are looking to make the jump to tech, see a big opportunity here for high level algorithmic arbitrage."

Google is the perfect company to jump into that market. They are an engineering heavy culture with a ton of resources to throw behind what boils down to a computational arms race. The $2 billion they plunked down for New York's premier Carrier Hotel at 111 Eighth Avenue means that Google is sitting on some of the fastest fiber in the media capital of the world.

The challenge for Google right now is to convince the anti-trust folks down in D.C. that the acquisition of AdMeld doesn't give them to much power in the online advertising market. It's unlikely that the Feds have even thought about the implications of the high frequency trading model making its way into the ad market. But if the deal is approved, look for Google to bring serious firepower to this fast developing business.

According to Forrester Research, the real-time bidding market will hit over $820 million this year, up from over $350 million in 2010 and more or less non-existent in 2009. And while that report was actually commissioned by AdMeld, its clear a lot of firms are looking to bring the lessons of high frequency trading to bear on the booming RBT market.

As Jay Sears, General Manager of the CONTEXTWEB Ad Exchange, put it on his blog, "Pundits will say Google bought publisher relationships and Admeld’s yield optimization service for large publishers. Now Michael and Ben and their team at Admeld have done an excellent job of pulling in top, large publishers such as CBS, IDG Tech Network, NBC, Quadrant One and Weather.com, but this misses the point entirely. Google bought QPS volume, period. [QPS is queries per second, a measure of liquidity or volume of display ads being offered via real time bidding.]"