A2P SMS Messaging: The challenges operators face in the ever-changing digital world
The A2P messaging market is on an upward trend, with brands leveraging it to offer seamless and interactive customer experience. Telcos need to monetize this opportunity or risk losing it to OTT players.
Senior Content Writer
Aug 2, 2022
The telecom industry is in a state of disruption with the advancement in technology and growing competition from OTT players. Its traditional revenue avenues are no longer as profitable as they once were, forcing telcos to look elsewhere for opportunities and new revenue streams. While P2P messaging is not much of a cash cow, A2P messaging is not only relevant but also thriving in the age of digitization. Using A2P messaging, brands can send messages to their customers, making it the most prominent marketing avenue. The global A2P messaging market size is predicted to grow to USD 89.65 billion by 2027 at a CAGR of 5.76%.
Despite the competition from OTT platforms, SMS is still a popular A2P messaging tool for enterprises. SMS campaigns enjoy an open rate of 98%, while an average app campaign losses 77% of its users in the first 72 hours. So, it is no surprise that A2P SMS revenue is predicted to grow to USD 51.15 billion by 2025. However, despite its potential runaway success, there are challenges that SMS must overcome to ensure its relevance and profitability.
The A2P SMS messaging supply chain involves multiple stakeholders in the form of intermediary companies that process and transmit messages to customers, making it susceptible to malpractices. These intermediaries often look for the cheapest routes to transmit SMS traffic, causing telcos to lose out on termination fees. Bad actors indulge in fraudulent SMS origination activities via grey routing, SIM farms, and deliberately masking A2P traffic as P2P traffic, preventing telcos from benefiting from bulk messages.
Alternatively, A2P messaging can also be used to exploit subscribers to extract sensitive information via fraudulent activities like phishing and masquerading as verified senders such as banks. So, telcos need to invest in tools like firewalls and surveillance to protect themselves and subscribers. This will help maintain end users’ trust in SMS, ensuring no drop in relevance and usage.
WhatsApp, Facebook Messenger, and Telegram dominate the P2P messaging market with better user experience offering interactive features like location sharing, group chats, audio and video support, and no character limits. They go beyond the limitations of SMS, making OTT messaging apps more attractive to users. Similarly, telcos face the risk of losing pole position in the A2P messaging market, with OTT platforms offering enterprises the same interactive features.
With the added advantage of elevating their CX and reaching customers on their preferred platforms, brands are leveraging these business messaging offerings from OTT players. So, what must telcos do? They must offer a richer messaging experience by leveraging Rich Communication Services (RCS) or risk losing potential present and future A2P messaging revenues.
RCS is the future of SMS and the telco counter to the OTT competition in A2P messaging. RCS offers rich features similar to OTT platforms, toppling the limitations of SMS while still enjoying its popularity. This makes RCS a sure-fire success, offering brands and consumers a platform to communicate with each other without downloading a third-party app. Leveraging RCS business messaging (RBM), brands can build a network of satisfied and happy customers, elevating their CX experience. What’s more, telcos themselves can use RBM to improve their infamous customer services, increase CSAT scores, and decrease churn rate.
One may argue that SMS has been around forever and still withstands the competition from OTT players. It enjoys significant success and customer trustworthiness over other A2P messaging avenues. On the other hand, RCS has evolved glacially over the last decade, is yet to receive complete acceptance, and does not cater to non-RCS device users (iPhone users). And then, there is the monetization of the RCS messaging problem. So why should telcos invest in RCS?
While these are true, OTT messaging platforms, with their gamut of interactive features, are wooing away brands from SMS. Also, by adding various security and authentication measures, they protect end users from unsolicited spam messaging, solving a prominent and common customer pain point with SMS.
With digitization, the introduction of chatbots, and changing customer expectations, brands not only want to reach customers but also offer them an interactive, personalized, and engaging experience. For instance, WhatsApp has over 2 billion users worldwide across 180 countries and provides an array of interactive features. Brands want to leverage these advantages to reach an ever-growing user base and improve their customer experience.
With the limits of SMS, telcos have nothing of high value to offer enterprises that will bolster their customer service and marketing efforts. So, if telcos do not deploy RCS and leverage RBM now, OTT players will capture a significant part of the A2P messaging market, leaving telcos with a drying revenue stream.
RCS upgrades SMS in terms of its reliability, security, and versatility. While enjoying the convenience and reach of SMS, it also solves some significant drawbacks of SMS.
While trustworthy and convenient, SMS, with its limit of 160 characters, is not a lucrative marketing resource in today’s interactive marketing world. Customers prefer chatting and talking to brands over emails and calls, and SMS simply does not offer the bandwidth to do so, making it a somewhat obsolete marketing tool in the digitized world. However, RCS removes this limit, allowing consumers to send messages as per their needs.
Inability to support rich features like image, video, and location sharing, group chat, and suggested buttons make SMS an ineffective communication medium. But RBM, with its set of rich features and interactive marketing capabilities, allows brands to elevate their engagement with customers. It offers brands a host of features like the following:
Apart from these features, RBM offers brands deep-linking to run campaigns, deeper metrics, and read and delivery receipts, helping brands roll out intelligent and intuitive customization and personalization for customers.
With its power-packed features, RBM is how telcos’ can dominate the A2P messaging market and not risk losing a highly profitable revenue stream to their competitors. However, to ensure easy RCS deployment and quick RBM monetization, you must collaborate with the right partner. Dotgo, an industry leader in RCS business messaging, offers an array of solutions that will help you gain a higher return on investments in the fastest way possible.
For instance, with Dotgo’s Messaging-as-a-platform (MaaP) solution, a cloud-based platform, you can quickly deploy RCS within your network without making structural changes. Also, it comes bundled with Dotgo’s RBM Managed Services, which will help quickly monetize your RBM services. Furthermore, by leveraging Dotgo’s Universal RCS solution, you can send RCS messages even to non-RCS devices as an SMS with a browser link that offers an RCS-like experience even to non-RCS users. With so much to offer, Dotgo can help you not only set up RCS but also guide you in optimizing your RBM services every step of the way.
Contact us to let us know how we can help you in your RCS journey.