Tesco Poland: Quick facts

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1 Tesco s digital signage network in Poland proves its worth and looks to the future Case study executive overview DDS Poland, a Scala Certified Partner, provides network owner/operator Atvertin with operational and content management solutions to enable the development and management of extensive, scalable digital signage networks to class-leading retail brands, including Tesco Poland. This case study provides an overview of the role DDS and Scala played in the provision of services to Atvertin and Tesco Poland from the proof-of-concept stage, which launched in September 2008, to a phased rollout in early Background Atvertin is a specialist out-of-home advertising business providing digital signage networks to retailers across Poland and is currently a leading provider of digital signage network services to the Polish marketplace. In 2008, Atvertin and Tesco Poland agreed to create, implement and manage a Tesco-branded, customerfacing digital signage network in 52 of its largest stores. In this particular case, Atvertin owns and runs the Tesco Poland: Quick facts 52 superstores will have digital signage in 2009 Largest FMCG network in Poland About 1,500 screen network (on average 30 screens per store) Two channels Store-wide audio visual presence Third-party advertising model

2 network which is Tesco branded, pays a rental charge, and shares revenues from advertising partners back with Tesco. Recognizing the need to provide an efficient process for the creation and management of content, Atvertin turned to DDS Poland which specializes in the implementation of content management systems for digital signage deployment. This was partly due to DDS Poland s ability to offer Atvertin a highly qualified team of Scala engineers and designers to help Atvertin plan, create and deliver high-quality content strategies and content items for broadcast on the Tesco Poland network. The Atvertin/Tesco digital signage project is the largest deployment of its type in Poland, and I m very pleased that DDS Poland has played a key role in the creation and management of Tesco and third-party content, which constitutes the core broadcast product. That the project is due to expand in 2009 gives me great confidence that the Tesco Poland network will go from strength to strength over the coming year. Leszek Golonka, Managing Director, DDS Poland The Objective how effective a screen network would be in reaching shoppers, how many times they would be reached in each visit, and to what extent reach and frequency would influence buying habits. All this data and more would be used to determine a media selling price. Proving the Technical Solution The pilot network was based on the use of on average thirty 42 Philips plasma display screens and Scala content management systems in-store and at the network operations center with store infrastructure linked by Minicom CAT5-based audio/video distribution and extension systems. The system and the program broadcast were administered centrally by DDS Poland on behalf of Atvertin. While creating incremental uplifts on advertised products and services stocked in Tesco is a considerable advantage, the primary success criterion remains airtime sales, as a percentage of the revenue that Atvertin creates on behalf of Tesco is passed back as part of the commercial relationship. Tesco Poland is therefore measuring success in terms of the net incremental advertiser revenue that can be generated from airtime sales alone. In order for a screen network to effectively attract advertisers, Tesco and Atvertin needed to ensure the design of the physical installation, screen locations, numbers and content strategy would engage shoppers effectively, and therefore could be proven to be an effective advertising medium for third-party advertisers. The network therefore required extensive research to help evaluate the overall media sales strategy. It assessed Content was distributed from the network operations center to each store via terrestrial IP. A data return path ensured that network audits and health checks were carried out as part of the research and development program managed by DDS Poland.

3 Proving the Concept Tesco recognized opportunities to utilize a digital signage network to enhance the customer shopping experience and to leverage the screen networks to provide revenues from suppliers and non-competing advertisers. While other business units and territories within Tesco Stores Group PLC had undertaken tests and rollouts in the past, it was considered appropriate that Atvertin, a Polish company, work on a program dedicated to Polish customers and the Polish marketplace. In this particular instance, the network was conceived as a marketing solution for advertisers representing fast moving consumer goods (FMCG), Telecom and consumer electronics markets, and that the signage network would facilitate a marketing channel for them to reach Tesco customers across Poland in an impactful, informative and creative manner. the store to plan optimal screen placement and to assess an appropriate duration for content to ensure it was short enough and easily understood by shoppers as they passed by each screen. At the end of the process (April 2009), more than 10,000 Tesco shoppers had been interviewed. Extensive data was compiled, including shopper flow (speed, congestion, etc.), which relates to time spent in each zone, or the potential viewing or dwell time. This provided key metrics on what percentage of shoppers were in proximity to the digital signage network for a time equal to the program loop length and the extent to which this influenced shopper behavior. The data was used to refine the network model. In the summer of 2008, Tesco decided that a proof-ofconcept pilot was required to help plan, refine and package up a rollout solution which could then be exported to other stores across Poland. The first phase of the development of Tesco Poland s network was to explore the impact and effectiveness of digital signage at the point of purchase. An initial system was installed in four Tesco hypermarkets in Warsaw and Poznan in September 2008 with the specific aim of using these stores as research and development facilities for refining the model prior to rolling out to a larger estate of stores. In order to provide assistance to Atvertin in the creation of the physical network s screen locations and content strategy, Pentor Research International conducted a wide-ranging study in the four R&D stores. It assessed how certain types of shoppers navigated and used each store to decide where screens might be best placed to enable shoppers to see screens and screen content easily and clearly. Pentor s research used intercept interviews and observational methods to assess how customers interacted with Specialized software was then used to calculate the optimal number and location of screens to ensure that the maximum number of shoppers had the opportunity to see relevant content on any screen in any particular part of the store relative to the time they spent there.

4 Key learning from the proof-of-concept pilot concluded that: One audiovisual channel would work effectively across the store with two variants of the core program to cater to different merchandising strategies On average, 30 screens placed at strategically important points across the shop floor provided both total store and zone-specific coverage The optimum overall content loop length was 275 seconds with individual items ranging in length depending on the type, style and purpose of the message Once the fundamentals of shopper movement and screen engagement were calculated, Pentor was able to assist Atvertin in analyzing the effectiveness of content and advertisements. Specifically, they measured how the digital signage network developed shopper awareness of advertised products and services. Where advertisements related to stocked products, Pentor and Atvertin were able to evaluate the effectiveness of content executions and treatments against purchase trends and sales uplifts. DDS Poland fully understands the design and management capabilities that Scala offers a network owner/operator such as Atvertin, and I m especially pleased that through a combination of their experience and Atvertin s open-mindedness, we are seeing continual development of content strategies and items to enhance the customer experience and deliver commercial returns for Tesco. Alain Bodenstedt, Director, Partner Sales, EMEA, Scala Designing for the Shopper Research indicated that Tesco shoppers don t stop at the screens and watch them for a considerable time or in traditional TV style. It was therefore clear that building the Tesco digital signage network to operate like a broadcast TV system made no sense given that shoppers were making contact with screens on a very short basis. Content had to deliver its message in a matter of seconds rather than minutes. As a single-contact medium, the Tesco Poland network is designed to reflect some of the principles of outdoor advertising, where messages need to be seen and interpreted by viewers quickly if they are to be effective at delivering a message to a moving audience. Within the context of the single-contact philosophy, there are three major types of content produced by Atvertin for the Tesco network. These are: 1. Advertising spots for third-party brands 2. Tesco Poland editorial and product/service messaging 3. Infotainment, specifically the promotion of music and video game content Research indicated that each content item should not be longer than 15 seconds to ensure that each shopper has the opportunity to see the entire piece from start to finish. As a result, DDS Poland used Scala to assist in the creation of high-impact content that enables certain elements within each piece of content to change without changing the entire piece. For example, the title, statement or call to action message on any piece of content may change to highlight the name or logo of a brand, a picture or image, the price and/or product availability (e.g., for a limited time only). Much of the content is created by Atvertin, which uses Scala to combine other types of content (movies, music, film) and different content formats (avi, mpeg, swf, etc.) to create two channels with subtle variations from the master channel. These two sub-channels are: 1. The main advertising loop known as System Główny which is present on approximately 28 of the 30 screens installed across a typical Tesco superstore. 2. A supportive loop known as System 18+, which is based on the two remaining displays, and provides custom content relating to alcohol and tobacco in

5 appropriate areas of the store where local laws and regulations allow. To provide flexibility and variety to shoppers and staff in stores that operate the Tesco Poland digital signage network, content loops are carefully compiled and managed to ensure that the order of programming works seamlessly from one piece to the next while at the same time ensuring that repetition is kept to a minimum. This is in part done by composing and scheduling the two loops of content slightly differently from each other. While the core content is broadly the same between loops one and two, the variation in composition means that if you were to place these loops back to back, the broadcast would not be deemed more repetitious than if just one loop had been produced and repeated. These mechanisms ensure that shoppers and staff are able to receive a wide variety of relevant and helpful information in such a way that is not deemed irritating or too repetitious. Consequently, shopper feedback shows that the appropriateness and relevancy of the programming is a complement to their visit to Tesco. Scala was chosen by DDS Poland to provide the software solution for the creation and management of content and the content loop because the project needed a reliable, effective and cost-efficient software option. This option reflected Atvertin s and Tesco s requirements to provide a wide range of easily updatable content that worked dynamically to engage shoppers with constantly updated content. Crucially, Scala was also perfectly suited to manage more than one separate channel from one player, providing ease and cost-effectiveness of future scalability for Atvertin and Tesco. As the pilot progressed it was refined to reflect key learning, and the sophistication in the programming and use of content increased. In particular, Scala s functionality enabled Atvertin and DDS Poland to change content to reflect more precisely different trading patterns, different store zones and when content should be played at particular times of the day to maximize its effectiveness at driving shopper understanding, recall and purchase. This control also allowed the network to tailor its presentation of content to work seamlessly within Polish Advertising Law Regulations and enabled third parties or suppliers to choose whether they wanted to purchase airspace and show content on one or both channels, depending on their needs. This is a great example of specialist players combining experience, resources and know-how to create the right incubator for what we hope will be a very significant and successful FMCG retail digital network deployment. Clearly, the feedback from the proof-of-concept phase indicates very positive shopper response. I am very pleased that Scala was chosen to power this network and that it rose to the challenge of helping DDS Poland create the right design and content management environment to contribute to the success the program is enjoying. We look forward to working with DDS Poland as this exciting initiative develops. Oscar Elizaga, VP EMEA, Scala

6 release further information relating to the progress and success of the digital network in Tesco Poland over the coming months. About DDS Poland DDS Poland Sp. z o.o. specializes in the implementation of digital signage systems using a highly qualified team of Scala engineers who deliver best-in-class service to a range of clients on some of the most advanced projects of their kind. They offer a complete turnkey solution from design and implementation to management and servicing. In order to further enhance their proposition, DDS has recently enhanced its design studio to increase its capacity and capability to produce custom content for digital signage networks. This full-service offering provides their clients with an optimal model for working in partnership and to realize mutual success. For more information, visit About Scala Delivering Results Qualitative and quantitative studies conducted by Pentor Research has so far indicated that shoppers are highly favorable to the network and that it has proved effective in generating awareness and recall. These are important metrics given that the likelihood that shoppers will buy advertised products or services is greatly enhanced if in the first instance they recall who sells what product. By creating, programming and scheduling content that enhances the shopping experience and maximizes shopper relevancy and value, Tesco s approach is paying dividends in terms of customers willingness to engage with the digital signage network. Networks of this nature are capable of generating considerable advantage for the shopper and for the retailer and network owner. The Future Driving more than 200,000 screens worldwide, Scala is a leading global provider of digital signage and advertising management solutions. Scala is the world s first connected signage company, offering the leading platform for content creation, management and distribution in digital signage networks and the first unified platform for advertising management of both traditional and digital signage networks. The company s digital signage customers include Rabobank, IKEA, Burger King, T-Mobile, Virgin MegaStore, Warner Brothers, The Life Channel, Rikstoto, Repsol, NorgesGruppen and thousands more. Advertising management customers include CBS Outdoor, Clear Channel Outdoor and Magic Media, among others. Scala is headquartered near Philadelphia, USA, and has subsidiaries in Canada, the Netherlands, France, Norway and Japan, as well as more than 450 partners in more than 60 countries. More information is available at. Atvertin plans to expand the Tesco Poland network to encompass all original 52 stores and will be able to