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    Managing On-air Ad Inventory in Broadcast Television

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    Mallik-OnAirAd-2008.pdf (355.7Kb)
    Issue Date
    2008
    Author
    Bollapragada, Srinivas
    Mallik, Suman
    Publisher
    Taylor and Francis
    Type
    Article
    Article Version
    Scholarly/refereed, author accepted manuscript
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    Abstract
    Motivated by the experiences of the National Broadcasting Company (NBC), we present an analytical model for managing on-air ad inventory in broadcast television. The ad inventory in this industry is priced based on rating points or the number of viewers that watch a commercial. The rating points during a broadcast year are sold through two distinct processes: the Upfront, which occurs before the broadcast season, and the Scatter, which occurs during the broadcast season. A firm needs to allocate its total rating points inventory to these two markets before knowing either the performance rating of its shows or the Scatter market price, both of which are random. The networks offer ratings (performance) guarantees on the inventory that is sold in the Upfront market while such guarantees are seldom offered in the Scatter market. We propose an optimization model for the networks to manage their rating points inventory. Our model explicitly incorporates the performance uncertainty of the television shows as well as the revenue uncertainty of the Scatter market. We derive conditions for feasibility of the problem and characterize the optimal amount of rating points to sell in the Upfront market. Our model explains the current practice of selling around 60-80% of the total rating points for the season during the Upfront market and analyzes other common strategies used by the firms. In addition to providing key managerial insights, our work introduces quantitative methodologies to television networks in planning their Upfront markets.
    Description
    This is the author's accepted manuscript. The original publication is available at http://dx.doi.org/10.1080/07408170802323026.
    URI
    http://hdl.handle.net/1808/11251
    DOI
    https://doi.org/10.1080/07408170802323026
    Collections
    • School of Business Scholarly Works [213]
    Citation
    Bollapragada, Srinivas, and Suman Mallik. "Managing On-air Ad Inventory in Broadcast Television." IIE Transactions 40.12 (2008): 1107-123. http://dx.doi.org/10.1080/07408170802323026

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    785-864-8983
    KU Libraries
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    Lawrence, KS 66045
    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
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    Contact KU ScholarWorks
    785-864-8983
    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    785-864-8983

    KU Libraries
    1425 Jayhawk Blvd
    Lawrence, KS 66045
    Image Credits
     

     

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