NBC's Optimization Systems Increase Revenues and Productivity

Abstract

The NBC television network, a subsidiary of the General Electric Company (GE), uses optimization-based sales systems to improve its revenues and productivity. GE's corporate research and development center (CRD) developed these systems using operations research and management science techniques to improve NBC's sales processes. These systems remove bottlenecks caused by manual development of sales plans, helping NBC to respond quickly to client requests with sales plans that meet their requirements. These systems also enable NBC to make the most profitable use of its limited inventory of valuable advertising slots by estimating demands for airtime by show and by week and to schedule commercials. Between 1996 and 2000, the systems increased revenues by over $200 million, improved sales-force productivity, reduced rework by over 80 percent, and improved customer satisfaction. They have become an integral and essential part of NBC's sales process.

Scheduling Commercials on Broadcast Television

“…Bollapragada et al (2002) have developed a math-programming-based algorithm to rapidly generate near-optimal sales plans that meet advertiser requirements. A sales plan consists of a complete schedule of commercials to be aired for an advertiser during a broadcast year by show and by air date to meet its requirements.…”

Scheduling commercial advertisements for television

“…In particular, the regularity on the advertisement airings has been largely ignored in the literature, with the exception of Bollapragada et al (2002Bollapragada et al ( , 2004 and Brusco (2008). Bollapragada et al (2002) introduce an advertising scheduling problem faced by the National Broadcasting Company.…”

“…Bollapragada et al (2002) introduce an advertising scheduling problem faced by the National Broadcasting Company. It is solved in Bollapragada et al (2004) and later in Brusco (2008) and Gaur et al (2009).…”

Milestones in the application of analytical pricing and revenue management

“…It forecasted demand and optimized hurdle points to open and close discount buckets (Cross, 1997). In the late 1990s Revenue Management was adopted by US network ad sales at American Broadcasting Company (ABC) (Mandese, 1998) and National Broadcasting Company (NBC) (Bollapragada et al, 2002). The very different nature of the US market required a different approach.…”