How Icelandair Boosted Bookings Using Programmatic Advertising

Icelandair faced significant challenges in the wake of the pandemic. The airline had to adjust its flight routes due to changing border regulations, which led to difficulty filling flight seats. As one of the largest companies in Iceland, Icelandair also needed to maximize bookings while operating with a smaller budget than its competitors. The solution they chose was unconventional: programmatic advertising.

The Challenges of Programmatic Advertising

Traditionally, programmatic advertising is used to build brand awareness rather than drive direct conversions. Icelandair’s digital marketing partner, Brainlabs North America, recognized that while programmatic advertising typically yields lower click-through and conversion rates, it also presented an opportunity to reach a new audience at the right moment in their decision-making process.

The goal was to go beyond organic searchers’ usual audience and target higher-income travelers, including business travelers and those intending to travel internationally. However, Icelandair needed a more sophisticated approach than simply broadcasting its brand to a broad audience to achieve this.

Leveraging AI for Custom Bidding

To address this challenge, Brainlabs turned to Scibids. This AI-driven tech partner enables custom bidding models through demand-side platforms (DSPs). Scibids’ AI technology allowed Icelandair to create tailored bidding strategies focused on the key performance indicator (KPI) that mattered most: flight bookings.

Nadia Gonzalez, CMO of Scibids, explained that the AI-driven custom bidding models were explicitly designed for Icelandair, enabling the airline to achieve outcomes that standard DSP optimizations couldn’t deliver. The objective was to maximize online flight bookings at the lowest possible cost, which required gathering and analyzing vast amounts of data throughout the marketing funnel.

The Strategy Behind the Campaign

Executing this campaign successfully required two key elements:

1. Detailed Audience Framework: Before implementing AI or machine learning, Icelandair and Brainlabs developed a detailed audience framework to ensure they were targeting the right people. This foundation allowed them to fully leverage AI and machine learning’s capabilities.
2. Close Collaboration: A close partnership between the strategy and planning teams was essential for capturing the intent signals to help identify Icelandair’s next best audience. The combination of these signals with AI-powered bidding was what ultimately made the campaign successful.

Anjlee Majmudar, VP of programmatic at Brainlabs, highlighted that aligning the audience with the bidding strategy was the real challenge. By leveraging automation and AI, they were able to find the right combination of factors that would lead to conversions more quickly and effectively.

Results: A Significant Increase in Bookings

Icelandair initially tested this programmatic strategy in 11 markets. The results were so impressive that the airline quickly expanded the program to all its markets. The campaign substantially reduced the cost per flight booking by 70% over the past year. This efficiency translated into a 10x return on investment (ROI) compared to the benchmark price of applying artificial intelligence without Scibids’ custom bidding models.

As a result, Icelandair now sees more direct effects from its programmatic media spend on flight bookings. This success has also given the airline greater flexibility in allocating its budgets, ensuring that every dollar is used as efficiently as possible.