What does the FCC's incentive auction and Turner's effort to provide better demographic ad targeting have in common. Both are competing for the same prestigious, if wonky-sounding, award.
The FCC's structure of the broadcast incentive auction, including the optimization software it used to figure out how to reclaim spectrum and repack broadcasters, has earned it a spot among six finalists for the Franz Edelman Award for Achievements in Operations Research and Management Science.
Also on the list was Turner Broadcasting for its TargetingNOW and AudienceNOW integrated forecasting and demographic optimization processes for boosting the reach and targeting of ads.
The award is given out by INFORMS, the trade association for operations and analytics professionals, which was impressed that the FCC was able to allow 78% of TV stations to remain on their current channels post-auction at a savings of $200 million in relocation costs.
The auction freed up spectrum for wireless broadband while ponying up more than $10 billion to broadcasters from the proceeds for giving up spectrum or moving to new channels or both. The two-sided auction was described as one of Rubik’s cube-like complexity.
INFORMS said the FCC had made a "revolutionary contribution" to broadcasting, describing that effort this way.
"The Federal Communications Commission recently completed the world’s first two-sided auction of valuable low-band electromagnetic spectrum, reclaiming channels from TV broadcasters to meet the exploding demand for wireless services.
"The Commission purchased spectrum from TV broadcasters, sold the acquired spectrum to wireless providers, and assigned the remaining broadcasters to new channels in a smaller TV band. Operations research tools, including optimization software and satisfiability solvers, were essential to the spectrum clearing target calculations, auction winner determinations, and final TV channel assignments. The auction repurposed 84 MHz of TV spectrum for wireless use, raised nearly $20 billion in revenue, paid over $10 billion to winning broadcasters, provided nearly $2 billion for relocation costs for non-winning broadcasters, and contributed over $7 billion to reduce the federal deficit. The final channel assignments, which included all 2,900 U.S. and Canadian TV stations, enabled 78 percent of the stations to remain on their existing channels, providing an estimated savings of more than $200 million in relocation costs."
FCC Chairman Ajit Pai was understandably pleased.
“The FCC is deeply honored to be one of the six finalists for this prestigious award, and I am pleased that INFORMS has recognized the groundbreaking accomplishment of our incentive auction team," he said. "This auction would not have been possible without the use of operations research tools to solve complicated design and implementation challenges. The success of these tools speaks for itself, and the team’s work is exemplary of the data-driven approach to policymaking that I believe should be this agency’s hallmark."
The framework was adopted under his predecessor, FCC Chairman Tom Wheeler.
Of the Turner ad effort, INFORMS said:
"TargetingNOW and AudienceNOW, released in 2014 and 2015, respectively, revolutionized media industry standards and processes by implementing integrated forecasting and optimization models to increase the demographics and reach of advertising opportunities. Currently, more than 130 advertisement deals have been executed under these new solutions representing significant ad revenue. Turner anticipates that by 2020, half its advertising inventory will be purchased through TargetingNOW and AudienceNOW, realizing ad revenue in the billions. Based on the current success of these systems, Turner is currently expanding its use of these methods to optimize other areas of media revenue management, including its programing schedules, as well as its Latin American markets."
The award, first handed out in 1972, honor Franz Edelman, who founded the operations research division at RCA.