Rich messaging is on its way to becoming a trillion dollar industry – but only if MNOs and the industry focus on how it can help brands make money, not what it costs.
The messaging and engagement market is set to be generating hundreds of millions of dollars a year in revenues from brands, but how it is priced and structured is not focussing on its value, experts warn.
While there has been a small boom in A2P messaging, such as OTP messages, the real money is in rich messaging, both A2P and P2P, as the world continues to build on the engagement habits fostered in the pandemic.
So how will it hit the trillion dollar mark? “it’s very much not there yet, but it could get there,” says Nick Lane, head of Mobilesquared. “A2P currently makes up about 1.7% of MNO revenues, but only some 5% of businesses globally use it with an average annual spend of $1500. Expand this to 30% of businesses and you start to see a potentially huge market.”
However, as Lane concedes, even if 100% of businesses use SMS it will “only” create a $500bn sector. How will that then be doubled?
The answer lies in rich messaging and using it for customer care. “The customer care business using voice is already a trillion dollar industry,” points out Lane and there is great potential to expand that to use messaging in all its forms to service customers in new ways.
The pandemic changed how both consumers and businesses saw messaging and has propelled it to be something quite different to what it was two years ago. This is where the untapped potential lies.
In fact, according to Nick Millward from Kaleyra, rich messaging is now something more akin to social media than SMS. It is, now something that is two-way and engaging and, with the addition of shoppable content – powered by DCB – it is also much more useful.
This is why there is now so much interest in RCS, WhatsApp, iMessage and whatever else is out there in different regions. It is also why there is so much focus too on CPaaS.
What came through loud and clear at Telemedia 8.1 LIVE back in February was that MNOs need to rethink how they sell messaging – and how its priced. Speaker after speaker at the ‘Making messaging a trillion dollar industry’ conference track put together by Mobilesquared iterated how messaging now needs to be sold not as a commodity, but priced on its value.
According to Ira Cohen from MMDSmart, the industry has to stop thinking about messaging in terms of the pricing and business model given by the MNOs and look at how to charge based on its value and the return it can bring to organisations based on how they use it.
“Everyone has to stop thinking about MNO business model for messaging and create our own business models based on value,” he says. “MNO models see no value in the way messaging is currently sold – so we have to change that and control it ourselves. It should be about how much brands are going to make, not how much it costs.”
“For many MNOs, A2P messaging is a sleeping giant,” agrees Jonna Kuligowska, Head of Global Market Intelligence at Haud, stressing that MNOs need to rethink how they work with messaging. “For MNOs messaging is difficult and time consuming compared to the tiny proportion of revenues it generates, so most MNOs have done nothing to promote it – but the potential, even for just A2P messaging, is huge. SMS alone is trusted and delivers unrivalled engagement. This needs to be built upon.”
With messaging becoming ever-more rich, it is going to find itself being used in a raft of new ways and charging fractions of pence per message isn’t really going to cut it. Instead, Cohen and others aver, the model needs to very much more align with what the enterprise or brand wants to do with the messages and what they are looking to generate in return. This will make it chargeable as a value proposition not just as a commodity.
With messaging becoming something more akin to a social media interaction for brands and consumers this makes sense. It also chimes with the shift towards buying in ‘messaging and interaction’ through third-party, publicly-hosted CPaaS platforms.
CPaaS is going to drive how messaging is used and it too could be the lever needed to see message pricing shift to one based on value. Time will tell.
The way messaging is used is shifting and that needs to be reflected in how it is charged for. For example, kids today are sending voice messages to one another across OTT messaging platforms such as iMessage and WhatsApp. This is going to become part of the whole CPaaS messaging offer and will, in time, become a mainstay of messaging: how is that going to be priced?
Addressing these issues is going to be key for the industry. Part of the reason why messaging was dropped from MWC is because it only makes up 2 to 4% of MNO revenues. To them it is very small beer. But it won’t be. Like mobile marketing and advertising 10-15 years ago, it is nascent but poised to explode.
That explosion will see it become a multi-billion dollar industry before the decade is done.