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A new investment from private equity firm Falfurrias Capital Partners has propped up independent full-service agency Brainlabs’ valuation to an estimated $320 million.
Brainlabs declined to confirm the investment amount. The estimated value is according to sources familiar with the matter who spoke with Adweek anonymously.
The agency’s been executing an aggressive expansion strategy, with plans to become the world’s largest independent agency. In March, it won Consumer Cellular’s $50 million retail media, paid search and paid shopping business. It’s also recently added clients Estée Lauder Companies, Adidas, WeTransfer, Formula 1 and Capital One to its roster. As its attracted these clients, it’s been speedily acquiring other shops that beef up its service capabilities. In 2022, it acquired influencer agency Fanbytes, conversion rate optimization agency User Conversion, Amazon agency Molzi, programmatic agency MediaNet, the mobile ad creative studio Consumer Acquisition and data firm Nabler.
It’s still pressing forward, committing to use its new investment capital to achieve international growth, particularly in markets across Europe, Asia Pacific and Latin America. Private equity firm Livingbridge, Brainlabs’ previous investor, has now exited. Since receiving its first investment from Livingbridge, Brainlabs grew by 800% and now employs approximately 900.
“We’ve come a long way since I started the agency in my parents’ attic, just over 10 years ago. From day one, this business has been built on the belief that high performance in media would require a data-driven, tech-enabled methodology, rooted in digital media,” Daniel Gilbert, Brainlabs global CEO, said in a statement.
Stephen Allan, now Brainlabs’ executive chairman, previously led WPP media agency MediaCom. At the time, it was the world’s largest.
Allan first met Gilbert years ago while in the global CEO role. “The reason I meet Dan some years ago is because I tried to buy the business,” Allan told Adweek. At the time, Gilbert declined to sell to WPP or another holding company, opting instead to raise money from investors. “Different agencies choose different paths,” Allan added.
There’s been significant change in terms of how large agencies are assembling. With consolidation rampant across the holding companies, individual agency brands are becoming scarcer amidst group-level brands like Dentsu Creative forming. All of this consolidation, counterintuitively, leads holding companies to hold fewer companies. This is prompting myriad questions about how, exactly, the industry should define a holding company: Must it be publicly traded, or is a holding company simply a company that acquires subsidiaries? “There’s been so much conversation around integrating marketing and media,” said Allan. “What you will have seen is holding companies cobbling together different agencies in their group, putting them under some kind of branding header. The reality is, those businesses are not integrated,” MediaCom’s former leader continued.
Today there are relatively few fully integrated agencies, limiting options for investors wary of investing in multiple companies with disparate offerings, Alexander Jutkowitz, executive in residence at Falfurrias, said in a statement. Investors must consider investing in performance-focused agencies, or investing in those that prioritize brand marketing. Brainlabs, with its implicit integration and its plans to become even more so, presented an attractive third option for investors tiring of the brand and performance dichotomy.
‘We’re not competing to be the big creative ideation agency’
Brainlabs leaders tell clients it is a high performance agency, employing a number of employees with backgrounds in science, mathematics and technology. The agency has a large in-house technology team, and, according to Allan, currently creates and builds both its proprietary marketing technology, as well as technology solutions for its clients.
It’s focused on dynamic creative (DCO) integrations, technology many media agencies are investing in, with varying results. As agencies attempt to master marketing across the now-broad social media platform ecosystem, many struggle to produce the sheer amount of creative they’d need to connect directly with each target buyer. Creating effective content en mass using DCO is one way Brainlabs wants to differentiate itself from competitors.
“We’re not competing to be the big creative ideation agency … There’s Wieden+Kennedy, or whatever those great agencies are,” Allan said.
This is relatively rare for an independent agency, given their limited scale compared to holding companies. Other independent agencies, including Texas-based PMG and Horizon Media, considered the U.S. market’s largest independent, also built advanced proprietary technology stacks. Technology investments are paying off, especially for PMG, which won Nike’s U.S. business last year in large part on the strength of its Alli technology platform.
Brainlabs expects it’ll soon compete with holding companies
Over Brainlabs’ investment cycle, it will build and develop more global hubs to increase its attractiveness to larger advertisers with global reach and push beyond the eight markets it now operates in. These enterprise-level clients are, in general, concentrated within holding companies. “I could see this amazing opportunity for us to scale up the business. By scale up, I mean to work for increasingly larger enterprise-level clients,” said Allan.
Aggressive acquisition strategies do benefit agencies who can afford them. Newer holding companies like Stagwell and Media.Monks acquired other shops at a rapid pace, helping the parent companies achieve relevance and nab larger clients quicker than other mid-to-large-sized shops. Now, it’s common to see Media.Monks pitching against legacy holding companies.
Allan expects this for Brainlabs, too. “I think who we used to pitch against, versus who we are pitching, versus who we will pitch against is definitely evolving,” he said.
Going up against larger shops is possible, also because shifting media trends continue disrupting media agencies’ buying models and rendering buying power obsolete. Before programmatic media and now, proliferating channels like retail media and CTV became relevant, holding companies could wield their clout (relationships with suppliers and bulk ad buys), to secure the best deals for their big clients.
“Scale today is not what it meant in the past in my former life [as MediaCom’s global CEO],” Allan said. “I go back over those four decades [and] scale was important in terms of, for example, the TV-buying market … In terms of having the biggest fist slamming the table, [scale] is just not relevant,” he said.
Now, Allan finds scale to be synonymous with organic growth, plus an aggressive acquisition strategy. More acquisitions, and especially those that would allow Brainlabs’ expansion to new global locations, are likely ahead.