Revenue Management (also known as yield management) emerged as a science when the airline industry was deregulated in the US in the late 1970's and soon came to be recognized as a key component of airline profitability. Since then the use of revenue management has spread far beyond the airline industry. Industries, which today use revenue management, include hotels, car rentals, trucking, energy, entertainment, cruises, railways and healthcare. While the general principles of yield management are widely applicable, each particular application needs to carefully address the specific industry situation.

Revenue Management (RM) is being used increasingly in the broadcasting industry in recent years. Companies which have implemented sophisticated revenue management systems in the English speaking world include ABC (USA), NBC (USA), CBC (Canada), Channel 7 (Australia) and TV New Zealand.

NBC (USA) implemented a RM system in the 1990's. Implementation costs were slightly less than US $ 1 million. Between 1996 and 2000 the system was used to handle about US $ 9 billion dollars worth of inventory of advertising slots. The company estimates that the use of RM resulted in a net revenue gain of over US $ 200 million during this 4 year period. This represents a revenue gain of over 2% and a return on investment of over 200%. It should be noted that this is quite consistent with reports from other industries where the use of RM is frequently reported to result in revenue gains of 2-8% and profit increases of 50-100%.

The use of RM techniques provides several benefits.

1. Statistical techniques are used to forecast demand by show and week. Management can take advantage of accurate forecasts and revise rate cards for commercials quickly.

2. The use of a computerized system significantly reduces planning time and effort.

3. Broadcasters price premium inventory higher and offer discounts on advertising slots during less popular shows. The use of RM techniques allows management to price inventory accurately to take maximum advantage of demand elasticity.

4. Optimization techniques are used to schedule commercials so that all contractual obligations can be met while maximizing revenue.

5. A large part of broadcasting revenues come from bulk contracts for airtime during a season. The use of RM techniques allows such contracts to be evaluated quickly and accurately. The RM system recommends the floor price to be charged and the amount of inventory (airtime) to be allocated to the customer.

6. More accurate forecasts of cancellations allow management to act proactively to reduce wastage of inventory.