Brands will divert billions of dollars from ineffective digital banner advertising to mobile operator-led RCS campaigns over the coming years, according to the findings of a report by business messaging intelligence experts, Mobilesquared.
Global brand RCS spend will be worth more than $52.2 billion by 2028, with mobile operators able to claim a significant portion of this revenue.
The report, RCS: The game changer the industry has been waiting for, published by Mobilesquared in association with Out There Media, highlights the extremely poor return on investment achieved by digital banner advertising today – for every $1 million invested, just 0.1%, or $1,000 derives value for brands resulting in $999,000 being wasted by brands. If brands fail to divert budget to more impactful digital platforms like RCS, they stand to waste a staggering $70.7 billion on digital banner advertising in 2020 and an eyewatering $917.2 billion by 2028.
For operators, this presents a significant opportunity to increase revenue from digital advertising. Mobile operator-owned RCS gives brands a new channel of engagement that delivers a highly engaging, extremely interactive digital platform right into the hands of consumers.
RCS combines the power of messaging, the richness of an app and the same levels of interaction offered by existing messaging apps such as WhatsApp. There will be 700 million RCS users by the end of 2020, a number that will grow to nearly five billion in the next eight years, reaching 61% of total smartphone users—this is twice the size of the addressable audience that Google and Facebook can reach today. This will make RCS the single biggest medium in the world.
“Brands are waking up to the chronic waste that surrounds the average digital advertising campaign,” says Kerstin Trikalitis, CEO and Co-Founder, Out There Media. “Consumers are growing increasingly tired of Facebook, Google and other digital platforms due to concerns over data privacy, and inaction regarding hate speech, ad fraud and disinformation. This is being reflected by the poor levels of brand engagement and ROI their platforms offer brands. The digital advertising world is desperate for a compelling alternative to the Facebook and Google duopoly. RCS is it; it is the alternative for brands that are no longer willing to spend millions on digital advertising and see poor returns.”
In the year 2022, RCS will generate $1.5 billion from the natural evolution of brand spend from SMS to RCS. This will continue to grow and by 2024, RCS revenue will increase to $11 billion as brands also adopt the channel for P2A customer care, starting to supplement, and eventually replace, call centre voice solutions with RCS chat bots. Overall, RCS revenue for mobile operators will reach $52.5 billion by 2028.
Trikalitis continues: “We start seeing brands diverting media spend to RCS this year and this will increase dramatically in 2021 and beyond. This is great news for mobile operators who are pivotal in the delivery of successful RCS campaigns for brands—they have the reach, the scale, and first-party deterministic data to really ensure maximum ROI from campaigns. As operators view to monetise their 5G investments and race to create new streams of revenue amidst a backdrop of flattening ARPU and increasingly squeezed bottom lines, ensuring they are able to benefit from this migration in digital spend could be key to their future success.”
Nick Lane, Chief Insight Analyst, Mobilesquared, adds: “RCS is a really exciting opportunity for consumers, brands, agencies and mobile operators. Brands can no longer waste vast swathes of their digital budget on ineffective channels. And mobile operators need to deliver a rich messaging experience to their subscribers and remain a central in the messaging landscape, otherwise they face the risk of losing this massive opportunity to the likes of WhatsApp and other challenger messaging apps.”