How Brainlabs’ Daniel Gilbert wants to build the biggest media company in the world
The Media Leader Interview
Brainlabs’ global CEO Daniel Gilbert reveals how he looks to utilise the company’s recent private equity investment, and speaks to how executive chairman Stephen Allan has helped transform the company into a worthy holdco competitor.
Last month, digital-first media agency Brainlabs secured a private equity investment from Falfurrias Capital Partners, which succeeded private equity firm Livingbridge as a key investor in the growing agency challenger.
Speaking to The Media Leader over a video call from Florida, global CEO Daniel Gilbert explained how the new investment will help support Brainlabs’ ambitions of one day becoming the largest media agency in the world.
It’s a high aspiration for a company that is only on its eleventh year, but the company has expanded greatly through M&A since Livingbridge took a minority stake in the business in 2019.
In 2020, Brainlabs launched in the US market and acquired SEO company Distilled and pay-per-click agency Hanapin.
In 2022, it opened its first APAC and LATAM offices in Singapore and Brazil, respectively. That year, Brainlabs further acquired influencer marketing agency Fanbytes, Amazon agency Molzi, conversation rate optimisation company User Conversion, programmatic agency MediaNet, and mobile ad creative studio Consumer Acquisition. Its purchase of Bangalore-based digital data analytics company Nabler also gave Brainlabs its first foothold in India.
‘Working out our pipeline’
Atop continued organic growth efforts, that inorganic growth is something that Gilbert is keen to continue.
“We have a large international capability to deliver media,” he says, “but we don’t have client services on the ground in certain key markets where we need to be, not just to service, but to win and work with some of the world’s largest advertisers.”
Gilbert tells The Media Leader that the company doesn’t need to be in every individual country, but rather that it will look to expand its hub model, primarily through additional M&A.
Though Gilbert declined to reveal specific M&A targets, nor specific cities he’s looking to build out more hubs in, he pointed to APAC and Western Europe as the two key regions where Brainlabs is eyeing additional expansion. In particular, he named Germany as a core country to grow in in Europe, and the large markets of China, Japan, Korea and Australia as countries most worth considering in APAC, especially given Brainlabs’ establishments in Singapore and India. “We’re not going to buy something tomorrow,” he said, “but we’re working out our pipeline.”
Outside of regional expansion through M&A, Gilbert says he will look to invest more into the continued development of its technology stack, particularly Brianlabs’ proprietary platform Cortex, which powers its media stack and sits atop key digital platforms like Google, Facebook, and Amazon. In addition, ongoing investment in AI technology, as well as continued pursuit of top talent, will be ways in which Gilbert will utilise the cash influx.
Holdco’s clients ‘are not being serviced at the level they expect’
As Brainlabs has expanded its capacity from a digital performance player to a full service media agency, and as other performance-first challenger agencies have been founded in recent years by the likes of Sir Martin Sorrell (S4 Capital), Mark Penn (Stagwell), and Daniel Jones and Nick Emery (The Brandtech Group, which bought Jellyfish earlier this year), the challenger space has become crowded, especially as the major agency holding companies have also invested increasingly in digital performance agencies.
When pressed on whether Brainlabs’ capabilities have thus become more fungible, Gilbert says he remains confident his agency is well-positioned to take on the major media holding companies, primarily because their clients have often publicly expressed a lack of happiness with how they’re being serviced.
“Net Promotor Scores (NPS) for the incumbents—the global network media agencies, who own 90% of media fees and media income—are pretty low,” he says. “And I think it’s quite unique to our industry that you have clients like [Proctor & Gamble chief brand officer] Marc Pritchard publicly come out and say, I don’t want to pay you anymore for your inefficient operating model. That’s really unusual in the services industry, because in most industries if someone is unhappy with a service provider, they wouldn’t make that an industry thing, they would just change service providers.
“So embedded within that message, it says to me that clients are not being serviced at the level that they expect.”
Whereas Gilbert says it would be “massively problematic” for Brainlabs if they were a challenger to the likes of management consultancies McKinsey or Bain, he argues there is significant room for challengers in media because the major network media companies are not “well-run” and have a “broken corporate structure.”
“I’m not suggesting the holdcos don’t know this; they’re moving towards the right direction,” he adds. “But there is a legacy in each of those of hundreds of different companies that were made to compete with each other, not work together, that is now out of control to the point where they are now dysfunctional.
“So from our angle, there is an opportunity to create a genuine alternative. Brainlabs is not there yet; that’s what we’re chasing. And we will get there.”
‘Why I chose private equity, not public markets’
Gilbert isn’t just bullish about his own company, but other digital-first challenger agency groups as well, who he views as peers rather than competitors, insisting his focus is on going after the holdcos, which still own the vast majority of ad budgets.
“The reality in a market like this is there will be multiple winners from within the challengers, from within the existing holdcos, from within some companies we haven’t even thought of yet, and there will be space for all of those people. At the end of it, the people focused on the highest performance for their clients and creating the best places to work will be the ones that win; not necessarily the ones that have some competitive advantage today.”
Challengers haven’t necessarily had an easy go of it this year amid rising interest rates and a digital downturn. Sir Martin Sorrell’s S4 Capital last month issued a second profit warning, with the founder and CEO admitting the company “had a tough week” amid a decline in clients’ adspend.
Gilbert, on the other hand, told The Media Leader his company was “trading really well,” pointing to Brainlabs’ impressive 800% topline growth over the past four years as evidence of the agency’s success.
Unlike S4 Capital, Brainlabs has remained a private company with Falfurrias’ investment, and therefore does not publicly disclose its finances. Doing so has allowed the agency, and by extension its clients, to take a medium-to-long-term outlook as opposed to facing short-term profit pressure. “It’s how I wanted the business to run,” says Gilbert, “which is why I chose private equity, not public markets.”
‘Stephen’s on another planet’
Running the business hasn’t just been a one-made job, and Gilbert is keen to give credit to his whole team and, in particular, executive chairman Stephen Allan, who he described as having made a “transformational difference in the journey we’ve undergone from pure performance player to media agency.”
“There’s quite a few steps that you need to go on that journey to make it happen, and Steve, in conjunction with the whole team, has helped the whole business to move up a level of strategic value-add to clients and through rounding out our product mix.”
Allan joined Brainlabs in November 2021 after founding and leading MediaCom (now GroupM’s EssenceMediacom) to become the world’s biggest media agency.
Gilbert referred to the business transformation since Stephen came on as akin to moving up divisions in English sport, and doing so at a rapid pace. “Stephen’s on another planet, and I feel incredibly blessed and privileged to call him my partner,” he says. “He’s full time, and full time for Steve means seven days a week. We joke that between us, we’ve got 24/7 coverage because I’m up early and he goes to bed late.”
At the same time, growing the company so rapidly hasn’t come without turnover; Brainlabs’ global COO, UK CEO, US CEO, and UK chief growth officer have all left and been replaced within the past 12 months.
But the changes Brainlabs have instituted since Allan joined have nonetheless turned Brainlabs into what Gilbert says is “a genuine alternative to the likes of what [Allan] had built previously.”
“It took him 38 years to go from eight people in a room to the largest media agency in the world,” adds Gilbert. “I’ve told him, we’ve got three, so we better get on it.”