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Paul Graham of Y Combinator addresses the crowd

A few lucky people got a peek at the future of online advertising recently, thanks to a Y Combinator event.

Close to 200 entrepreneurs, marketers, publishers, and venture capitalists packed Y Combinator headquarters in Mountain View on Sept. 14 for the startup incubator’s first ever Ad Innovation Conference. The two-hour event was open to the public and designed to showcase companies developing ad-related technologies.

What with Demo, TechCrunch, Intel Developer Forum and Microsoft Build last week, we didn’t get a chance to publish this post until today. Plus, we had some difficulty embedding the videos (see below). So here’s the news from the event.

YC co-founder Paul Graham kicked off the program by sharing his list of online advertising trends. Here’s a summary of what Graham said:

  • Tablets are important. Apple is the dominant player here: Watch what it does.
  • All data will be stored in the cloud. All the info that you’d want to know about someone will be sitting on a server somewhere.
  • There’s lots of opportunity based on peer-to-peer technologies (i.e: Airbnb). As people can connect with each other more efficiently, restrictions will be eliminated.
  • Expect many more startups, some doing ad innovation. Starting a company will be a more common endeavor, post-graduation. Big companies will be more interested in talking to small ones, where creativity and intelligence is abundant.
  • Facebook is a big deal, much bigger than you realize. It’s growth-focused and has hardly started monetizing yet.
  • More companies now must be software-driven to succeed. A successful ad company should be a software company that does ads, not an ad company that has programmers. Graham referenced Marc Andreessen on this point.
  • Ad targeting will become increasingly precise. Learn what the user is thinking. Then, work backwards to what you can do.
  • Data-driven decision making will get more sophisticated and more widely adopted. Quantifying the impact of performance is key, as more will be done by numbers.
  • Ad creative will be fused with user-generated content. Before you just had one ad. Now, you can have thousands of variants. Ad creative will become transformative (like games, not totally unconstrained, but changing, based on the user).

Following Graham’s introduction, 18 YC startups, some public and some still incubating, gave presentations about how their products will try to change the industry.

Companies presenting at the event included DoubleRecall, Crowdbooster, Polleverywhere, GinazMetrics,, Tagstand, Vidyard, Optimizely, Loopt, Mixpanel, Paperlinks, PageLever, GazeHawk and MixRank.

Sequoia Capital’s Ron Hornbaker attended the event and said the startups are headed in the right direction.

“The message is clear to me that ads are still broken and there is room for tons of innovation. Ads don’t have to be a bad thing,” Hornbaker said. “They can be a good thing. That was one of the key takeaways from me today.”

Hornbaker, now an entrepreneur-in-residence at Sequoia, founded online gaming company FooMojo, which produced virtual pets and online ads. He estimates the total size of the online ad market discussed is about $50-60 billion. McKinsey consultant Luis Arellano was in the crowd filling the Y Combinator gathering room madly taking notes. Arellano’s favorites were MixRank, PageLever, and Paperlinks.

Wells Fargo and Red Bull were among the companies in attendance. And advertising agencies were well represented, with people from AKQA, Goodby,  Weiden+Kennedy, Sapient,  WPP, Omnicom, Cadreon, VivaKi, Beeby Clark + Meyler, BN Interactive  and Jess3 all at the event.

For a closer look at the event, check out the videos below hosted by Vidyard, one of the presenting companies. Vidyard is an online video platform that aims to be the “YouTube for business.”

We’ve produced two videos from the event. If the embedded videos below don’t work, please click on the links below to watch each one.

Ron Hornbaker of Sequoia Capital appears in the first video.

And here’s Luis Arellano of McKinsey & Company.

Videos and photo by Alexa Lee. Disclosure: Lee was attending the event as a PR consultant for Crowdbooster.

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