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UK-based digital marketing agency Brainlabs has boosted its valuation more than eightfold to $320mn in its latest fundraising, reflecting the continued resilience of data-driven advertising despite a wider slowdown in the market.
Large advertising agencies have warned in recent months of slowing advertising spend as many clients — especially those in the technology sector — have sought to cut costs.
However, more focused digital marketing rivals have fared better, with more than two-thirds of the market now shifted to digital advertising across online platforms and connected TVs.
Brainlabs has secured investment from US private equity firm Falfurrias Capital Partners, which was founded in 2006 by former Bank of America chair and chief executive Hugh McColl Jr, and will use it to expand its operations geographically.
It is opening offices in markets across Europe, Asia Pacific and Latin America, as it steps up a challenge to the large advertising groups that have dominated the market.
The deal values the business, which generates more than $1bn in client billings, at eight times more than its last fundraising four years ago.
Founder Daniel Gilbert said that the company could have sold itself to one of the large agencies, but had instead chosen to try to use its strength in some of the fastest growing parts of the market to go head to head with them.
Rather than a public listing, Gilbert said the group decided that capital from private equity would be the better way to finance the business as it sought to expand rapidly.
Stephen Allan, former chair and chief executive of WPP-owned MediaCom, is chair of Brainlabs. Allan said there was a “very real opportunity for us to scale the business and to act for an increasing number of multinational and global clients”.
Brainlabs produces and buys advertising for clients such as Estée Lauder, Adidas and WeTransfer through the complicated real time online auctions that now dominate the media market.
Technology advances in AI allow brands to narrowly target advertising to consumers — in effect, more personalised advertising at scale. The impact of such digital media is also much easier to measure.
WPP-owned GroupM estimates that digital advertising will account for more than two-thirds of the $598.5bn predicted in global revenues this year. Although growth is slowing — a reflection of the maturity of the market — revenues are still expected to increase by more than 8 per cent this year.
Gilbert also said that Brainlabs would seek to acquire companies and technologies that would help it expand. The company has already made eight acquisitions since it was founded in 2012. Brainlabs employs more than 850 people.