Daniel Gilbert was 26 and working at Google when he quit and launched Brainlabs in 2012 because he could see how auction-based buying and automation were transforming online advertising.
"Brain power" was becoming more important than buying power, as Gilbert, an Oxford graduate with a degree in linguistics, likes to say.
Six years later, he runs one of the UK’s hottest performance marketing agencies with more than 200 staff, and the M&A chatter is that he is open to a sale. "We’ve never made a secret of it," Gilbert says.
Winning a global brief to help Vodafone run its digital media buying in-house this summer put Brainlabs on the map. It was a double jolt to the established agency players, which discovered a FTSE-100 advertiser was willing to go in-house and trust Gilbert’s young shop to advise on £140m-worth of business.
Brainlabs also won Formula One’s digital account this year to add to a client list that includes Domino’s, Expedia and TUI.
However, Gilbert, who is enthusiastic, cheerful and looks younger than his 33 years, plays down talk that 2018 has been pivotal. "The attitude we’ve got in the business is not to look back for too long," he insists. "If you think that it’s pivotal, then that implies it’s tailing off. We’re just getting started. This is the beginning of the growth story."
Gilbert, the son of two entrepreneurs, was a tech whizz in his youth, building computers out of spare parts and selling some on eBay.
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He joined Google after graduating. "It was the perfect blend of my fascination with data, language models and advertising," he says, recalling his 18 months at the search giant. "I got to speak to advertisers and agencies about their marketing activities and my feeling was there was a lot of discussion about the power of data and automation and what you could do with that but not enough skills to capitalise on the fact."
Too many people treated digital marketing as "an appendage" to the rest of their media activities. "I witnessed, over and over again, agencies failing to capitalise on the data that was available to them and repeating manual tasks that I thought could be automated," Gilbert says.
He could see the days of placing insertion orders and doing deals over lunch were over. "Fundamentally, the game had shifted overnight," Gilbert says, as we talk in his offices by London’s Old Street roundabout. "I saw there was a market to set up something different," he adds.
Gilbert moved back into his parents’ home. "I started hiring programmers, mathematicians, marketing people and data scientists and bringing their respective skills together," he says.
He came up with a simple business model: "We have clients, we charge them more than it costs to run the operation and then reinvest all the profits in the growth of the company."
Since Brainlabs is a service business, there is no need for other methods to boost margins. "We set out to deliver 100% transparency – no kickbacks, rebates, pass-backs," he says, recalling it was "heavily costly" as the agency missed out on work. But the market began to turn and Brainlabs "won bundles of business from uncontested pitches" because brands "just want a transparent offering". Landing the account for Which?, the consumer-rights champion, in 2014 was "a real confidence-booster".
As the landscape continues to shift, Gilbert has found some clients want only consulting or tech services because they are buying ads themselves; others need a "fully managed" service.
In any case, he argues clients should have direct contracts with media owners because it gives the advertiser more control over its media pricing, its data and brand safety. As for the agency, he says: "When you’re in a transparent business, there’s zero benefit to taking on the liability of the media spend and then reinvesting it [on the client’s behalf]."
Gilbert’s clear-sighted view extends to the creative process. He believes "you cannot separate the creative and media", arguing a Brainlabs employee should be able to buy and create ads. "When you’re buying search, social and programmatic, it’s unheard of for someone not to have the combined [media and creative] skills – they’re the same person," he says.
"If you think about Google search or a Facebook ad, you can’t have an agency that does the execution and then farms out the ads to a copy-writing agency," he explains. "We are executing in real time, which means we have to adjust ad copy constantly, across trillions of different data points in a live auction."
That’s vital because brands want to create millions of tailored ads. "If we fail to do so because we are waiting for new copy to be signed off, we can’t run campaigns properly," he says.
Gilbert dismisses critics who say performance marketing encourages short-termism, instead of long-term brand-building: "There’s a spectrum between brand and performance. The notion that brand ‘does not perform’ is nonsensical. The distinction is not in the type of media, rather it’s the metrics and the attribution model to measure the activity."
Running Brainlabs hasn’t been entirely smooth. "In the early days, when I was pushing it really hard to grow, I forgot it was supposed to be fun while you were doing it," he says. Now he will often the leave the office by 5pm to see his family.
Gilbert and his wife own 93% of Brainlabs, but that does not include the management team’s share options. Small accounts show it had amassed profits of £1.8m by March 2017, and Gilbert says revenue is now north of £10m a year.
Jim Brigden, founder of Searchworks, who has sold three businesses, joined as chairman last year. "Dan is very determined to build a great business and Brainlabs is changing the agency landscape before our eyes," Brigden says. "In terms of his ambition, the sky is the limit."
Another person who knows him says: "He wants to make a fortune."
Dan is very determined to build a great business and Brainlabs is changing the agency landscape before our eyes
– Jim Brigden, chairman, Brainlabs
Matt Bush, Google UK’s agency director, calls Gilbert "one of London’s most progressive agency leaders" and Tom Denford, chief strategy officer at ID Comms, likens him to Amazon’s Jeff Bezos, "rethinking the process, being relentlessly customer-focused, automating everything and investing profits back into new innovation".
Matt Adams, UK chief executive of Havas Group Media, says Brainlabs faces two challenges: "How do they grow internationally? And how do they move to a more diversified commercial model so they are less reliant on paid media?"
Gilbert opened a US office last year and sees lots of prospects for growth as all media, particularly TV and out of home, becomes biddable. In 10 years’ time, ITV won’t need a sales team as it will be automated, he predicts.
"We want to change the future of digital advertising," Gilbert says. "We should probably drop the digital at this stage and just say: change the future of advertising. We want to make it a more scientific pursuit, make it a transparent pursuit and generally be good people while we’re doing it."
Five ways Brainlabs is building an agency of the future
1 Charge a service fee. No rebates or kickbacks to drive transparency
2 Encourage advertisers to contract directly with media suppliers and vendors
3 Automate tasks that are being repeated manually
4 Bring creative and media together
5 Hire scientists, mathematicians and software engineers along with marketers