Business SMS Growth Signaling Strong Outlook for Messaging Market

Transcription

1 Global use of SMS as a channel for business communications will continue to grow over the next 10 years as more organizations adopt A2P (Application to Person) services and integrate them into their digital communications. The business SMS or Application to Person (A2P) market which allows organizations to send out mass communication by text, can be said to consist of bulk SMS providers, SMS aggregators, marketers or resellers, SMS gateway providers and of course telco operators. A recent study includes examples of real-life use cases, including Virgin Trains application of A2P communications to manage peak hour commuter. Virgin Train s use of SMS for crowd management gives a great example of mobile engagement between an enterprise and its customers, and helps differentiate Virgin Train s service from other transport operators said Giovanni Benini of OpenMarket, who contributed to the report. We can expect to see continued use of these services across various industries to cut through the information clutter on our mobile devices and provide personalized information to customers right at the time they need it. 1 / 6

2 The study puts the success of business SMS down to the fact that it reaches the vast majority of consumers, proactively in their moment of need, and doesn t require the receiver to have downloaded and subscribed to a particular application. Furthermore recent studies show the potential for business across sectors such as banking, travel and transport, retail and healthcare to be enormous with growth of the A2P market expected to grow to 2.19 trillion messages and US$ 50 billion in revenue by 2018 as a broader range of organizations, including SMEs and government bodies, capitalize on its potential. It also touches on the use of SMS in security and fraud prevention as an authentication method which has risen in popularity from social media registration to financial services to factor authentication. The results of this first ever report on the mass messaging market by Telefónica finds the prospects for the wholesale SMS industry are encouragingly positive highlights and predictions include: - People worldwide will send 8.3 trillion text messages this year alone 80 pc of people are currently using texting for business with over one third of business professionals saying they can t go 10 minutes without responding to a text (eweek) pc of consumers said they would rather receive product details and other marketing material through text over any other channel (Direct Marketing Association) McKinsey experts says that SMS messaging generates 50,000 times more revenue per megabyte, on average, than data average revenue per user - 58 pc of the world s messaging population lives in Asia Pacific - WhatsApp heads the leader board closely followed by Facebook Messenger then WeChat, Instagram and Snapchat making up the top 5. Citigroup puts the combined value of these companies at $373.4bn text then could be said to be a core driver of the so-called digital economy. - Finally the following conclusions and recommendations have resulted: - The A2P SMS market was valued at $53.07bn in 2013 and is expected to grow at a CAGR of 4.2 pc. (Transparency Market Research,) This positive growth rate will be fueled by the growing use of A2P SMS in the web and mobile sector. - One thing is clear, the growth in popularity of messaging apps is projected to continue, and emarketer predicts that by 2018, the number of chat app users worldwide will reach 2 billion, representing 80pc of smartphone users. The financial services industry is leading the way in use of A2P in terms of overall usage and 2 / 6

3 our figures show that SMS is being used more often than app-based messaging for customer engagement said Joanne Lacey, COO of MEF, who also contributed to the report. Interestingly nearly one quarter of consumers have never received an SMS from a business, indicating an opportunity for continued growth in this channel. Our focus is on developing a framework for a clean and transparent ecosystem to ensure a sustainable future of messaging. To begin with text, messaging is native to all mobile devices today and consumers are already experienced in its use. It s an effective channel to meet them where they already are and that is its intrinsic value. Couple that with the fact that for many consumers, text is their priority inbox that they open and respond to quickly, there is little doubt of the channel s value to consumers, enterprises and organizations commercial or otherwise. Let s look at some figures. According to a feature in eweek, 80 pc of people are currently using texting for business with over one third of business professionals saying they can t go 10 minutes without responding to a text. 44 pc of consumers polled by Direct Marketing Association said they would rather receive product details and other marketing material through text over any other channel with another study by cloud communications platform OneReach saying 64 pc of respondents would rather text than call for tech support. Additionally sales prospects who are sent text messages convert at a rate of 40 percent higher than those who are not. The fact is that event notifications trigger a need for customer assistance and it can be a very effective to keep the customer in the same channel to try to resolve the issue. Linking the request for assistance to the originating outbound notification preserves context as well, increasing customer satisfaction and boosting efficiency. This is all good news for business and the text industry. Public sector also recognizes the value. A study by Warwick Business School in the UK said texting patients to say it will cost the NHS 160 if they miss an appointment could save the health services millions. As many as 400,000 missed hospital appointments a year could be prevented using this method a move that could potentially save the NHS 64 million a year. A poll by SMS services provider MessageMedia showed that when text is used as appointment reminders, attendance failure reduces by 30 pc. The exponential growth in popularity of digital and mobile services, especially in developing markets such as Latin America and Asia, has created a worldwide market where 8.3 trillion text messages are sent annually. As businesses embrace the opportunities of this market and integrate mobile into their digital services, SMS has emerged as a valuable tool for 1-to-many business messaging, providing a simple, effective and on the move way of updating customers. 3 / 6

4 James Lasbrey, Global Head of Messaging at Telefónica, said the report shows that despite the enormous popularity of the app economy for P2P (person-to-person) communications, the size and scale of opportunity in the SMS market has solidified its position as a valuable and attractive market for businesses, evidenced by 22 per cent global growth in the A2P or bulk SMS market in He continues, The value of 1-to-many business messaging has hit its stride in a big way. Text messaging has been part of our lives for more than 20 years, making it an intuitive, trusted and effective form of communication for most people. While the market has developed with the success of free apps such as WhatsApp, Snapchat and Facebook Messenger, the potential of SMS for business is unrivalled. I expect to see wide scale adoption of A2P by businesses worldwide looking to communicate effectively with customers to 2025 and beyond. The report includes examples of real-life use cases, including Virgin Trains application of A2P communications to manage peak hour commuter. Virgin Train s use of SMS for crowd management gives a great example of mobile engagement between an enterprise and its customers, and helps differentiate Virgin Train s service from other transport operators said Giovanni Benini of OpenMarket, who contributed to the report. We can expect to see continued use of these services across various industries to cut through the information clutter on our mobile devices and provide personalized information to customers right at the time they need it. Fraud and Grey Routes From an A2P business SMS perspective, one threat really comes from the misuse of P2P channels to send A2P bulk messages via International SS7 gateways which is more commonly known as grey routes. These routes are used legitimately by bona fide aggregators to take advantage of consumer routes which exist between many international operators to send large quantities of A2P SMS messages for a price point that is under the official A2P SMS rate. The grey part of the route is usually at the receiving end where the message terminates its journey on one operator s network. The text is often made to appear as if it originated locally through the manipulation of the SMS sender ID having passed from a foreign operator s P2P gateway. Another similar threat which comes from a very different route is the use of SIM farms by the more unscrupulous SMS vendors. SIM Farms are banks of mobile devices which contain SIM cards and connect to networks just like mobile phones. They typically use PAYG (Pay As You Go) with unlimited SIM deals offered by the networks and commonly associated with senders of junk text and SPAM messages. 4 / 6

5 The problems arise when underhanded suppliers exploit these routes using SIM Farms and a loophole that stems from the historic practice by Telco s of not traditionally charging for incoming traffic because they expected the costs to balance out when the recipient on one network sent a reply back. This allows less honest players to avoid paying any interconnect fees in order to offer unfeasibly cheap message services and it comes at a huge cost to Telco s in lost revenue. The unexpected consequence of trying to police this is that Telco s are forced to take action to block such channels and it can mean that innocent, completely legitimate SMS messages don t make it through. In this sense it s very important to get assurances from SMS vendors that they only use approved connections. Ultimately fraud is a measure of success. The effectiveness of business SMS means that it will always be a target. Telefonica expects fraud cases to increase - in this sense we need to focus on educating and protecting our customers and in our case we are regulated to ensure this happens. The study puts the success of business SMS down to the fact that it reaches the vast majority of consumers, proactively in their moment of need, and doesn t require the receiver to have downloaded and subscribed to a particular application. Furthermore recent studies drawn on show the potential for business across sectors such as banking, travel and transport, retail and healthcare to be enormous with growth of the A2P market expected to grow to 2.19 trillion messages and US$ 50 billion in revenue by 2018 as a broader range of organizations, including SMEs and government bodies, capitalize on its potential. It also touches on the use of SMS in security and fraud prevention as an authentication method which has risen in popularity from social media registration to financial services to factor authentication. The financial services industry is leading the way in use of A2P in terms of overall usage and our figures show that SMS is being used more often than app-based messaging for customer engagement said Joanne Lacey, COO of MEF, who also contributed to the report. Interestingly nearly one quarter of consumers have never received an SMS from a business, indicating an opportunity for continued growth in this channel. Our focus is on developing a framework for a clean and transparent ecosystem to ensure a sustainable future of messaging. The Future Despite the growth in other communication channels, SMS remains one of the primary channels of communication because it is proven to be the most effective way to reach users 5 / 6

6 with a 90 percent read rate in minutes. So when it comes to timeliness of delivery, SMS maintains the highest engagement rate in comparison to s and OTT apps. In effect, if you have any kind of mobile phone you can receive and send SMS. This makes its global reach soar as there are no pre-existing connections required, such as accepting friend requests or requiring two parties to download the same app. The lower barriers to communication let users receive messages quickly, making it ideal for sending short, time-sensitive content. The one-size-fits-all solution makes anybody with a mobile number reachable and the technology for sending and receiving SMS is not reliant on high speed internet, essentially making anyone in modern society accessible. OTT messaging apps function only while connected to the Web. Different apps also require different hardware and software compatibilities, excluding out users with feature phones or smartphones that the OTT app doesn t support. SMS does not discriminate in this way. But it is true nonetheless that SMS use continues to drop and is becoming less and less important as a revenue stream for mobile carriers however and by total contrast A2P volumes are predicted to continue to rise over the next few years, generating far more revenue for mobile carriers than data messaging traffic. According to GigaOm, the next few years will mark a golden age for A2P SMS, with the number of worldwide A2P messages increasing from 1.4 trillion in 2013 to 2.19 trillion by SMS then serves as an ideal platform for A2P messaging another reason why the SMS is here to stay for the foreseeable future. Additionally disruptions in the A2P sector make a global telecom network more accessible with a new breed of cloud communication platforms making the technology easily-deployable and available to more companies especially start ups the new growth engines of the digital economy. Today, SMS may be viewed as antiquated technology but the reality is it that SMS plays a key role in connecting most modern technologies. From its high user engagement rate to its disruption in the A2P sector, we won t see SMS disappear anytime soon. 6 / 6