A2P messaging will more than double in value over the next five years. What’s behind this projected growth? And how can the industry make sure it grasps the opportunity? Nick Lane, chief insight analyst at Mobilesquared shares his thoughts…
In 2017, enterprises sent 1.7 trillion A2P messages to their customers. By 2022, they will send 2.7 trillion.
It’s easy to toss around numbers like these. But think for a minute what 2.7 trillion actually looks like.
This is astonishing. Especially when you consider that the A2P messaging market scarcely existing a decade ago.
But there’s a simple reason for this spectacular growth: A2P messaging works. Recipients are far more likely to read and respond to texts than most other types of communication.
Brands know this. Now, they are escalating their commitment to the channel.
So says Nick Lane, chief insight analyst and founder of Mobilesquared, which reported the 2.7 trillion stat. Lane was speaking to MEF about the A2P messaging market as part of an Executive Insights series supported by RealNetworks.
“There’s huge growth in the number of enterprises seeing the value of communicating with their customer bases in this way,” he says.
“They know that around 98 per cent of people read messages inside a couple of minutes. That’s a compelling statistic, and they see that it is a big advantage over email, which has such frustrating open and read rates.
We think GDPR could drive growth… Enterprises now know they need to get their databases in shape and ensure that customers want to hear from them”
“But also, customers are willing to reciprocate. They want to be kept informed by brands, to get help managing their day or get access to information or discounts. They’re buying into this concept of a value exchange with brands.”
Lane adds that, in value terms, this mainstream acceptance of enterprise messaging equates to a market worth $11.7bn last year. He says this will rise to $26.3bn by 2022*.
So what will drive the market to these new levels?
One possibility is RCS. The next generation of SMS, with its ability to add rich branded content, read receipts, group chat and more, could transform the market. Of course, there are many provisos, but Lane sees some positive signals coming from an unexpected source.
“RCS is an unknown entity,” he says. “It could be massive. We don’t know. But we have seen a rise in MMS. It’s not massive. It’s used by around 15 per cent of the hundreds of enterprises we have spoken to. But it does reflect the fact that brands want to d eliver richer messages. And maybe it’s paving way for when RCS is widely commercially launched.”
Meanwhile, in the shorter term Lane believes there are other measures enterprises can take to grow the market. He is positive about the impact of GDPR, the European legislation that will demand higher standards of security and permission around customer data.
“We think GDPR could drive growth,” he says. “Enterprises now know they need to get their databases in shape and ensure that customers want to hear from them”
He also believes the market needs to keep working on making its networks more reliable. Primarily this means tougher action on unreliable grey routes.
But technology can also help. Lane believes tools that track and analyse message traffic will enable operators to see where the leaks are. Even better, it might also help them prioritise messages – and thereby bring in tiered pricing.
“What needs to be deployed are tools that can analyse the traffic and say: we will allocate 3c to this message or 6c to this message,” says Lane.
“Operators will understand what messages are traversing their networks and be able to allocate different costs to different messages. So they will be monetising their networks through white routes, and those white routes will become transparent.
“The operators will then be able to see the find types of messages that are being delivered and allocate different costs to that.”
* Mobilesquared is currently updating its market projections, so these numbers may be amended shortly.
This Executive Insights Video Series, in association with Kontxt from RealNetworks, takes an in depth look at the next generation of messaging.