DIMOCO trend update: What are the main drivers for the A2P messaging growth?

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A2P SMS drivers

The A2P SMS market value worldwide is expected to grow from USD 55 billion in 2015 to USD 60 billion in 2020 says Juniper Research. DIMOCOs’ new A2P messaging trend overview shows the main drivers of the A2P SMS market growth. To download a free copy of the “mobile messaging worldwide” poster please go to the: publications area on the DIMOCO website

Mobile Messaging Market Special

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1,762 bn. text messages will be sent on the A2P and the P2A-market in 2018
According to Portio Research, the Application-to-Person- and the Person-to-Application-market will rise from 1,436 billion SMS in 2013 to 1,762 billion text messages in 2018. Asian Pacific (565 billion A2P- and P2A-SMS, in 2013) and North America (548 billion A2P- and P2A-SMS, in 2013) are the top regions where SMS is used for application to person communication and vice versa. In 2013, Europe showed an A2P and P2A-SMS traffic of 185 billion, followed by Latin America with 88 billion A2P and P2A-SMS and the Middle East & Africa with 50 billion A2P- and P2A-SMS.

 

The key drivers for companies using SMS
Besides the excellent return-on-investment (ROI), speed, security and reliability are still the number one criteria for companies using SMS communication. “Our mobile TAN service for the banking industry and our 2-factor-authentication service for online biz have become state-of-the-art messaging services,” says Tauchner. From customer acquisition to after-sales services, text messages are used in the entire customer lifecycle process as well as in the entire employee lifecycle.

“From Asia to North America, SMS is and will continue to be an important channel for companies. Unlike the decreasing Person-to-Person SMS market (as a consequence of the increasing over-the-top messaging apps) the Application-to-Person- and Person-to-Application SMS area is a strong-growth market
”, says Gerald Tauchner, DIMOCO CEO, adding: “We are supporting various industries with our carrier-grade infrastructure and our 1-way as well as 2-way messaging products”.

 

141212 Messaging poster

 

Download the poster here

A2P SMS growth in 2013, 2014 and beyond

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At the end of 2012, 83 percent of worldwide SMS traffic was P2P messaging, and A2P/P2A traffic made up the remaining 17 percent. Although P2P still dominates global SMS markets, it is a diminishing segment of the total market, whereas A2P SMS represents a strong growth market, in all regions worldwide, with a strong future. With the increasing focus on mobile banking, mobile payments and mobile health etc., we believe that the contribution of the A2P/P2A category will increase over the next five years. According to our forecasts, close to a quarter of total text messages will either originate from or terminate at an application server by the end of 2017.

Currently, around the world, we seem to be witnessing an uptake in enterprise use of SMS, as a customer service tool, a customer engagement tool, a service delivery function and as an activation and authentication mechanism.

 

The more Enterprise SMS services I hear about, the more I am prompted to look into the growing world of A2P SMS use cases. For MNOs, carriers, aggregators, service providers and service enablers in all sectors, it stands to reason that if a company has a relationship with an enterprise customer to provide even just one service using SMS, then there will likely be further use cases within that same enterprise.

Carriers, service providers, messaging vendors and aggregators can deepen relationships with existing customers, building on trust and selling in further SMS-based services to that enterprise.

Here at Portio Research we have been looking at an ever-increasing number of enterprise uses for SMS. Most people in this industry can list a few, but increasingly there are more and more use cases for A2P SMS in the enterprise sector. Now let’s take a look at what’s been going on in 2013 and 2014.

 

Increasingly, SMS is being utilised as a communications tool at all stages of the enterprise communications cycle.

We are seeing A2P SMS now rolling out within all areas of the enterprise:

–       Internal communications and logistics

–       Supply chain and supplier communications

–       IT and security

–       Orders and passwords

–       Customer confirmations

–       Operations and delivery logistics

–       Customer service

–       Service appointments and reminders

–       Relationship management

–       Upsell and marketing

 

SMS is now used in way more enterprises that we might have imagined just a few years ago. Even small companies now use SMS as a tool to communicate with their customers. We’ve seen taxi companies sending ‘Your taxi is arriving in 1 minute’ alerts to customers, and we’ve seen theme park operators offering ‘find the shortest queue for a ride’ SMS alerts. SMS use is widespread in travel and tourism, for reservations, ticketing, bookings, airport boarding cards, itinerary changes and security notices.

SMS is common place for TV voting on game shows, SMS is now being used for political campaigning, for delivery of booking confirmations, theatre tickets, dinner reservations and online order confirmations. Friends and family can follow their loved ones running a marathon with text alerts telling them as runners pass certain check points and city landmarks, and SMS is broadly used by OTT messaging apps (and many other apps) as a channel for order confirmation, to invite friends to join and to authenticate and activate a download.

 

The ubiquity of SMS

In many markets worldwide, including most of Europe, the US and Canada, Australia, New Zealand, Japan and many other countries in Asia, in Mexico, South Africa and markets in all regions, A2P SMS seems to be rapidly gaining acceptance as a key enterprise communications tool. The sheer ubiquity of SMS, now in the hands of around 6 billion human beings, means enterprises have a cheap, quick, simple communications option that is broadly acceptable to all consumers in all markets.

Consumers are very comfortable with using SMS, it’s been around for over 21 years now and it’s widely accepted as one of the cornerstones of mobile device use. We expect A2P SMS to continue growing over the next few years, as more and more enterprises switch on to the many possible uses of SMS within the organization.

 

Karl Whitfield is the Founder and Managing Director of Portio Research Ltd, a UK-based boutique research agency and the market leader in mobile messaging research. He focuses on SMS, MMS, OTT messaging apps and the ‘battle of our time’ between SMS texting and OTT messaging apps, such as WhatsApp, Pinger, Viber, iMessage, LINE, WeChat, KakaoTalk, Skype, Facebook and Kik messenger. 

Karl has been leading Editor and Contributing Writer on the Mobile Messaging Futures annual research report for the last 8 years, and as such he is widely regarded as a world-class authority on SMS, OTT messaging apps, MMS and the competing markets between SMS and OTT messaging services. 

Additionally, Karl has knowledge of handset markets, smartphone adoption, mobile apps usage, mobile payments markets and regional subscriber growth around the world. Karl has been actively tracking these markets for 16 years, and Portio Research has been publishing research on mobile messaging markets since 2003.