As a turbulent 2020 draws to a close, it is worth noting the resilience shown by mobile messaging. Many MNOs have already woken up to the potential of their SMS messaging service, and several trends — both long- and short-term — will only make that service more relevant (and profitable) going forward.
As we discussed before, the effects of the pandemic and ensuing lockdowns cannot be ignored. They have had some effect on almost all the events we discuss below. But the pandemic is not the only factor affecting MNOs and their business — market developments and the changing face of customer engagement are contributing to changes in traffic trends.
The net result of these trends is a steady increase in SMS traffic. Juniper Research is predicting that total A2P traffic will reach 4.35 trillion messages by 2025 (even as P2P traffic continues to decline). In fact, at GMS, we have observed a 4-6% increase in volumes during 2020 in most of the markets we cover. This means that messaging is an increasingly important aspect of an MNOs core business.
OTT messaging apps continue to be a threat to MNOs’ business. Even as market leaders increase their global footprint, new contenders arise — and they are all chipping away at operators’ messaging traffic and revenues. Theses apps get much of their appeal from the enhanced features they offer, including rich content capabilities and encryption, which SMS simply cannot offer.
This continuing pressure from OTTs is likely to drive RCS adoption, which is operators’ best hope for offering a competitive product (one which actually offers more features than many OTTs). This is all the more important because OTTs are increasing their efforts to move into the A2P space with Business Messaging offerings.
Having siphoned off a lot of MNO P2P traffic, the pattern looks set to repeat itself with A2P SMS. It’s not all doom-and-gloom, however, since in addition to the possible remedy of RCS, SMS will remain the only truly universal choice — the fragmentation of OTT apps and their highly specific geographical distribution will prevent any one becoming the dominant channel.
Whichever way you cut it, however, messaging use in general is increasing, in part due to Covid. The Economist Intelligence Unit have recently predicted that many economies may take up to 5 years to return to 2019 levels. To compensate, more and more companies are digitising their services. This can mean using digital channels to streamline the customer experience, or to rationalise and secure their internal processes.
In terms of SMS messaging, that translates into more notifications of various types, as companies turn to mobile as a reliable and quick way to deliver important information to their customers or employees. (Plus, as MEF has pointed out, 44% of customers prefer receiving business-related messages exclusively via SMS.)
Covid-19 did not cause this, but it did accelerate it — with more restrictions on people’s movement more people have been ordering online. To stay in business in such an environment, many retailers are following their customers and expanding their online capabilities. The gradual exploration of the digital marketplace has become a concerted move towards online ordering, and this has kickstarted an increase in notification and authentication traffic at both the local and international level.
Promotional messaging has seen pronounced variation, due largely to Covid. As businesses and outlets suspended (or completely ceased) trading during lockdown they naturally sent fewer promotional messages. As lockdowns ended in some countries, they saw a spike in promotions as newly reopened businesses sought to encourage customers to return with deals and announcements of their new opening regimes.
As some markets experience second and even third waves, this is set to continue, with the whiplash of lockdown easing and intensification leading to continuing fluctuations in promotional SMS traffic. However there is still likely to be a general seasonal trend as the winter holidays approach.
As Black Friday in the US (and increasingly elsewhere), Christmas, Hanukkah and various New Year’s celebrations across the world approach, various brands and businesses will be sending messages to their customers — whether to promote sales or simply to wish them a happy holiday. Multiple markets will therefore be seeing a spike in A2P traffic in the coming months. According to ROCCO Research’s latest survey of A2P vendors, most (37%) of respondents think this will result in an increase of 20-20% in marketing SMS traffic in 2021, as enterprises seek to win back business.
MNOs should take care to monetise all this traffic as it has great potential — Mobilesquared’s live business messaging tracker estimates the number of business messaging users at 5.1bn as of October 2020. But operators also need to ensure their traffic is handled properly. A poor experience for enterprise clients will undermine their willingness to use the service, while subscribers who receive spam will lose confidence in their network’s trustworthiness. And of course, there are worse things than spam….
Safeguarding your subscribers from fraud and identity theft is always a concern, one that is becoming increasingly pressing. Even something as simple as SIM swap fraud remains a problem. While the solutions to some involve educating enterprises and users, MNOs must also be vigilant of their traffic (particularly when it comes to message profiles). Particularly just now.
Fraudsters are always more active during the holiday season, when it is easier to hide scam messages among large amounts of other traffic. Now MNOs, enterprises, and consumers must also contend with the well documented rise in fraud and SMiShing attempts taking advantage of the flurry of official information released in the wake of the pandemic.
It has been a tumultuous time for many this past year. Existing threats are evolving. Some types of traffic are seeing unusual fluctuations that correlate with local market and social conditions. Nevertheless, we’re seeing good growth in overall traffic, mainly in OTP delivery and activation messages. The future is uncertain, but what is clear is that there are still opportunities to be seized — and MNOs may have to seize them to remain competitive.