CPaaS has become a by-word for… well, no one really knows what CPaaS really is. All we do know is that its big business. Paul Skeldon goes looking for some definitions and finds an interesting road ahead for the technology
Communications Platform as a Service. CPaaS. In the past two years the concept of CPaaS has become synonymous with brands looking to use SMS and OTT messaging to communicate with consumers – using the channels that consumers want, not the tried and tested and largely ignored email and banner ads of yore.
But what really is CPaaS, what opportunity does it present to the telemedia and messaging industries – and where is it going?
According to self-confessed ‘messagenaut’, Nick Lane, founder and chief data analysts at Mobilesquared, CPaaS is “the capability to provide real-time, cloud-based, omni-channel communications via an API to connect brands and consumers at scale”.
Let’s unpack that. Real-time comms means those instant and semi-instant messaging channels such as SMS, OTT messaging, WhatsApp et al; the kind of channels that get a near instant reaction from consumers when they land on their mobile.
This is an interesting one as this real-time nature is a two way street. Brands like it because consumers read it instantly and react. Consumers, however, expect brands to also reply instantly to them when they use it back at the enterprise. This is a challenge.
Which brings us to why it is cloud-based and at scale. The secret to what CPaaS offers is that it is a means to allow vast, near-instant comms between brands and consumers, offering a personal interaction that makes them feel special. This is a massive challenge to enterprises to deliver – and, with CPaaS offering an API that can be plugged in, allow brands to start to think about how they can actually deliver this in reality. This is the true power of CPaaS.
That and the fact that it is omni-channel. Enterprises need to be able to offer this experience across more than just one channel. Right now it may be mainly SMS, but WhatsApp, iMessage, RCS and even Telegram are starting to also gain user in numbers significant enough to need attention.
“The key thing [about CPaaS]is that it makes all messaging platforms work together,” says Michael Power, founder and CEO of Engage Mobile. “So, it’s not just SMS in isolation, voice in isolation, WhatsApp in isolation. The idea is that an enterprise can work with a CPaaS provider to utilise all those channels as they become relevant to their consumers.”
While CPaaS is in search of a definition, it is interesting to note just how it is made up. Research from Mobilesquared finds that there are already a number of key telemedia sectors muscling in on selling CPaaS (see Figure 1).
Perhaps the most interesting thing is that MNOs, who could make a pretty penny out of not only selling the messages, but also owning and operating the CPaaS platforms account for just 18% of the sector currently. The lion’s share – 43.6% is in the hands of messaging specialists.
Even those players that are seen as voice specialists eclipse MNOs, taking a quarter of this nascent market. In fact, of the top 38 CPaaS providers out there, three quarters are messaging specialists. MNOs don’t figure at all.
Interestingly, CRM specialist and software companies hardly figure at all – accounting for just 13% of the market. This could well be a mistake on the part of these companies, as messaging through CPaaS has the potential to be even bigger than the internal enterprise messaging market that these two already service.
Within this, CPaaS platforms available offer a wide range of messaging types – 14 in all, according to Mobilesquared. Currently, the vast majority uses SMS (87%) as the primary messaging channel, but WhatsApp, RCS, voice and even email aren’t that far behind (see Figure 2). These, make up what Mobilesquared denotes as the primary CPaaS channels at the moment, currently accounting for two thirds of messaging in 2022.
The others – MMS, Facebook Messenger, video, in-app notifications, web, Viber, iMessage for Business, other OTT’s such as Telegram and Social media – account for about a quarter of CPaaS use currently, although these too are set to grow in the coming three years as consumer become more diverse with their messaging use and enterprises stive to be where they are (see Figure 3).
Engage’s Power agrees: “The reality is that SMS is still what drives our industry, but we are seeing a huge move to more interesting channels. Channels such as RCS and WhatsApp. We are seeing consumers start to move to those channels and the result is that brands that are using them are doing much better.:
It is early days for CPaaS, but brands are starting to use it in earnest. Currently only a third of brands are using just one channel – typically SMS – while 29% use two and just 12% use three. But the market is shifting. According to Mobilesquared, CPaaS was worth ¢16.9bn globally in 2020, but will hit $52.8bn as soon as 2026.
The trick is how to sell the idea of CPaaS to brands and enterprises. Let’s face it, its not a very sexy name is it?
“To start with, we have to teach the market and find some early adopters to stop that noise and get the excitement flowing,” says Engage’s Power. “We’re in very early stage of that. When you look at the bell curve, we’re still in that very early adopter stage. So, it’s largely the big players going out, showing enterprises where they can make use of this technology.”
Mobilesquared’s Lane has wittily dubbed it “The Messageverse”, leveraging some of the hype around the metaverse to try and encourage more interest in the world of messaging.
“The metaverse can be all sorts of things, and so can the messageverse,” he says. “We need to sell the idea of what messaging can do, not that you need CPaaS to do it.”
Engage’s Power agrees, but thinks that as well as giving it a more attractive name, it also needs to be sold on results.
“The key thing I’ve found as an industry is when we go out to enterprises and try and sell CPaaS, they don’t know what it is; it’s a phrase relevant only to our industry,” he says. “Better is to go out and sell use cases. So, if we go to a call centre, we show them that we can allow the call centre operatives to answer or deal with three or four calls at a time by chat rather than one at a time by voice. We can do call deflection so that you can streamline the flow of information into a call centre, or improve marketing by adding in your CRM data to personalise messages and the content sent out. That’s what matters to enterprises; all those things when you’re trying to take a new technology into a marketplace.”