The phone-paid services market has outperformed expectations this year, growing by 2.4% to £646.1 million (exc. VAT).
The PSA’s latest Annual Market Review (AMR) shows this growth was driven by increased consumer spend on premium SMS messages, which generated an additional £35.7 million on the previous year.
This increase was most significant on TV and radio competitions, with the introduction of higher price points for participation by certain radio broadcasters and some smaller radio stations embracing phone-paid services.
The review forecasts that in this financial year (2020/21) consumer spend on phone-paid services is set to increase again by 1.7% to £657.4 million.
However, the AMR notes increased spend at the beginning of the year during lockdown may be counteracted by a decrease in the longer term because of the economic hardship and recession caused by the pandemic.
Charity text donations are expected to experience a similar trend – while there has been a short-term spike in donations as charities have turned to other ways of fundraising in response to Covid-19, economic hardship may impact households’ incomes and their willingness to donate to charity towards the end of 2020/21.
The review also suggests that consumers are becoming more satisfied with phone-paid services. Global consulting firm Analysys Mason, which conducted the AMR, used the industry-standard Net Promoter Score (NPS) to measure consumers’ willingness to recommend phone-paid services to others. The phone-paid services industry has an overall NPS of -17, a significant improvement on the -26 figure from last year. Some services have positive NPSs, such as charity donations (3) and entertainment services (3).
Joanne Prowse, CEO of the PSA, comments: “We’re pleased to see that the market is growing and consumer satisfaction in the phone-paid services market is moving in the right direction, but there’s clearly still room for improvement. We’re currently reviewing our regulatory framework – the biggest review of its kind in a decade. Our aim is to develop a Code of Practice that builds public trust and confidence in an evolving and innovative market and delivers for consumers.”
Other key findings from the review are that more than half (52%) of UK adults used at least one phone-paid service last year. Half of people report that convenience is the main reason for using phone-paid services, followed by price (46%) and impulse purchasing (45%). The biggest category by consumer spend is TV and radio engagement (£146.1 million), closely followed by games (£146 million).