The encyclopedia · Sales & Retail · Operational decision · 1996–2002
NBC's optimization systems added $200M in ad revenue between 1996 and 2000
GE built NBC a sales-optimization system that priced and placed commercials; revenue rose over $200M in five years and rework fell over 80%.
NBC
the move
NBC, then a subsidiary of General Electric, sells a fixed amount of advertising airtime, valuable inventory that disappears when the show airs. Its sales process relied on manually assembled plans, which created bottlenecks and made it slow to respond to client requests.
GE's Corporate Research and Development Center built optimization-based sales systems for NBC. The systems estimate demand for airtime by show and by week, schedule commercials against limited inventory, and generate sales plans that meet client requirements quickly, making the most profitable use of each slot.
Between 1996 and 2000 the systems increased revenues by over $200 million, improved sales-force productivity, cut rework by over 80 percent, and improved customer satisfaction. The tools became an integral and essential part of NBC's sales process.
why it works
- Demand estimation turned scarce airtime into a priced, optimized inventory.
- Automated plans removed the manual bottleneck between salespeople and clients.
- Rework fell over 80% because plans met requirements the first time.
what transfers
When the product is perishable inventory, sales planning is an optimization problem: demand estimation plus scheduling against capacity removed NBC's bottlenecks and lifted revenue.
what came after
NBC's sales systems stayed embedded in the network's selling process, and the Interfaces case became a widely cited example of applying operations research to media sales.
references
- NBC's Optimization Systems Increase Revenues and Productivity — Interfaces (via RePEc)
- NBC's optimization systems increase revenues and productivity — abstract
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