September 9, 2019
SMS is a 160 character powerful and robust marketing tool. The Short Messaging Service (SMS) is a functionality that is available on any mobile handset the world over. Since the first message was sent in 1992, there has been no stopping the protocol. And with the rise of application-to-person (A2P) services, SMS will continue to grow. How can A2P SMS work for your business?
There has a been a range of other products over the years that have tried to rival the SMS. From the now-defunct Mxit, to the Facebook-owned Whatsapp and the microblogging platform Twitter. Each has tried to be the be-all, end-all, and go-to messaging platform, but none have fully succeeded in overtaking SMS providers.
A crucial problem with apps and the messaging ecosystem are their adoption rate and compatibility with the latest hardware. Mxit, for example, could take weeks to months to work on a newly released device, even if it used the same operating system as a previous model. Using Whatsapp requires that the user has a smartphone in order to install the app and the same can be said for Facebook Messenger. These are not feasible options for large-scale growth, especially in the African markets where feature phones are still the dominant mobile system.
Even though these platforms have large adoption rates, they still cannot hold the same penetration rate as a standard SMS. Adding to that, SMSes have an open rate between 98 and 99 percent. App platforms require different approaches, such as community driven engagement or AI chatbots.
Multimedia Messaging Service (MMS) is similar to the SMS as it’s a built-in functionality on phones. It uses the same core systems as SMS and enables the transfer of more than 160 characters per message, and the sending of video and audio. Though it is robust, it is limited to the use of an active data service. This means that if a consumer is not in a data coverage area, or doesn’t have any data on their device, they cannot receive an MMS.
According to a report published by Zion Market Research, the global A2P SMS market was valued at US$55-billion in 2014. It is expected to grow to US$70-billion by 2020. Adding to this, between 2015 and 2020, the market is expected to have a 4.0% compound annual growth rate (CAGR).
This growth is attributed to the way in which A2P is utilized. It is implemented across a wide-range of industries, though not all of these need to be tech-based companies. For example, medical establishments use two-way communication via SMS in order to notify and allow for the booking of appointments. Commercial banks use the service for clients to check their balance and to notify them about transactions. The aviation industry sends out plane tickets and details to passengers for flight details and changes. These methods are facilitated through SMS aggregators and marketers.
Countries and area of operation play an important factor in the growth of the A2P SMS market. Though these are utilized in both Europe and the US, they play an important role in emerging markets. For example, both India and China are important factors behind the A2P SMS push.
The A2P SMS market is also an important driving force behind the growth of the Internet of Things (IoT). For a visual breakdown, look at our infographic on the subject, which details a range of uses and statistics.