Customer Preference Modelling in Radio Advertising Spot Optimization Seminar

Global Radio (owner of the Heart, Capital, Classic, Smooth, LBC, Gold and XFM brands) reaches over 21 million people each week with annual advertising revenue of £250 million. In radio advertising, customer's often wish to hear their adverts on specific days of the week, at certain times of the day and on selected radio stations. In addition, customers often attempt to negotiate the price of the advertising package to achieve a discount. Faced with these preferences (and taking into account remaining inventory), not all preferences can be met. To address this, a two-step methodology is presented. The first step isolates the minimum price we are willing to accept for a given 'spot' and the second step is a mixed-integer linear optimization (penalty-relaxation method) used to model where the adverts will be aired and what customer preferences are met that ensures the most demanded inventory is kept for higher paying customers. In addition to the methodology, a short demonstration of the system will show how this is being used in the 'field'. The seminar will culminate in a discussion regarding new insights and moreover, the impact the approach will have on our pricing policies going forward as well as opportunities for academic research.