How Icelandair used programmatic to increase bookings

Icelandair had two problems.

First, “After the pandemic, they had to change a lot of flight routes because of border rules,” said Anjlee Majmudar, VP of programmatic, for the airline’s digital marketing partner Brainlabs North America. As a result “they had difficulty making sure that all of the seats were filled. Not only booking flights but making sure that all the seats within the flights were filled and fully optimized.”

And second, “In Iceland, we’re one of the biggest companies in the country,” said Jóhann Benediktsson, digital marketing manager, Icelandair. “In the markets where most of our marketing takes place, we are a quite small player with a budget that’s a fraction of what our competitors have. So every dollar counts.”

In short, they needed to maximize bookings without spending a lot of money. They chose an unusual channel for this: programmatic advertising. Up until then, the company had put most of its efforts into search and social media.

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Programmatic drawbacks

“Programmatic is kind of the shotgun method, where you’re trying to reach a large enough audience to build brand awareness,” said Benediktsson. “It has a much lower level of clicks and also a low level of conversions per click.” 

But Brainlabs saw an opportunity there — a chance to connect with a new audience and do it when they were deciding to travel. The first thing they wanted to do was move beyond people who were going to book a flight anyway. What they wanted were people in a higher income bracket, showing intent to travel and also travel internationally. That meant including business travelers and looking beyond people who were searching for Icelandair organically.

However, using programmatic in the usual way — getting a brand’s name and value proposition in front of a lot of people — wasn’t going to cut it. Brainlabs wanted to do this in a way that delivered on the only KPI that mattered: bookings.

That required getting dynamic creative in front of the desired audience at the right moment. And that is no easy thing to do. So Brainlabs turned to its tech partner, Scibids. Using AI, Scibids makes it possible to use DSPs’ custom bidding function. 

Custom bidding models

“When you put an AI provider like Scibids over the bid function, we are able to create custom bidding models that are buying on behalf of that advertiser and the advertiser only,” said Nadia Gonzalez, CMO of Scibids, a DoubleVerify company. “So it’s not your sort of off-the-shelf optimization that a DSP would provide for you, which is great for most advertisers. But if you want to take things to the next level, like Icelandair, you need the ability to say I want an outcome or a KPI that’s not found in the DSP.

“They wanted to maximize online flight bookings at the lowest cost,” she added. “This is not easy to do because when you’re looking at the funnel of where to buy from, the top of the funnel down to the conversion, you have to get a lot of data and a lot of information from what you’re seeing online.”

Anjlee Majmudar said two things were essential in executing this campaign:

• Have a very detailed audience framework before implementing AI or machine learning. That way you know who the audience is, and that allows you to take full advantage of those capabilities.
• Close partnership with the strategy and planning teams in order to capture the intent signals that identify who Icelandair’s next best audience is going to be.

“The challenge was really around making sure that the audience and the bidding match together,” said Majmudar. “That’s what we saw as the secret sauce. Leveraging automation and AI we were able to find that combination and the permutation much quicker because it was consistently ingesting that knowledge and those signals in terms of when, when that user was, was about to take action.”

Bookings take flight

Icelandair OK’d a test run in 11 markets and a few weeks later, when it saw the results come in, expanded the program to all its programmatic.

“We’re seeing more direct effects of our media spend in programmatic on flight bookings,” said Benediktsson. “One result is lower cost per transaction so we get more out of it. Now we can be more flexible in terms of how we distribute our budgets.”

In more concrete terms that’s meant a 70% decrease in cost per flight booking over the past year. “This level of efficiency represents a 10x ROI for the brand compared to the benchmark price of applying artificial intelligence ourselves,” said Benediktsson.