The Trends Shaping the Mobile Messaging Market

June 2021

Telecoms & Connectivity

Scarlett Woodford

Principal Analyst

Due to the COVID-19 pandemic, there has been a widespread acceleration of digitalisation across a number of different verticals. With government lockdowns in certain regions requiring the cessation of non-essential appointments, hospitality, personal care, retail and travel, enterprises and organisations have been forced to develop their digital presence at unprecedented rates. 

As part of this digital transformation, there has been an increase in the number of organisations adopting an omnichannel approach to customer services, marketing, and sales aiming to reach customers on their preferred platform(s). This has led to a shift towards conversational messaging, in which enterprises are favouring interactive two-way conversations with customers over the one-way issuing of notifications. Whilst the latter will still be used to issue mission-critical traffic, conversations with consumers can work to foster brand loyalty and, ultimately, drive sales through the improvement of customer service offerings and the delivery of tailored solutions.

This transition to two-way conversations has been triggered by a growing number of enterprises adopting an omnichannel or multichannel approach to customer service, marketing, and sales operations. By using OTT messaging applications and social media messaging, alongside operator-run formats, such as SMS and MMS, businesses aim to reach customers on their most frequently used platforms.

We forecast that all regions will experience a decrease in average monthly SMS handset traffic; owing to the growing popularity of OTT messaging apps such as Facebook Messenger, WeChat, and WhatsApp. As P2P traffic has continued to migrate to these channels, operators have essentially lost this traffic to these providers and must seek to expand existing messaging portfolios in order to compete. Whilst P2P communication will continue to migrate to OTT messaging applications, we believe that the ubiquity of SMS will preserve its relevance in A2P use cases. With high open rates and the ability to reach large numbers of users, SMS is the ideal tool for communicating mission-critical traffic to large numbers of consumers. Even when RCS adoption accelerates, SMS will remain a crucial avenue for businesses to reach customers on both Android and iOS devices.

For what concerns MMS, North America will remain the biggest market for this technology over the next 5 years. Subscribers in the region have a pre-existing familiarity with rich media messaging formats, which we believe to have inevitably contributed to the region’s widespread adoption of RCS services.

Despite the recent increase in operator launches, movement on RCS to date has been relatively slow. This is due to the need for support from a variety of industry stakeholders, including handset manufacturers, network operators and messaging aggregators. Whilst the A2P messaging space is currently dominated by operator-led solutions, the question remains as to whether operators will be able to retain this dominance, once consumer confidence in OTT messaging applications increases. We believe that RCS represents the best chance for operators to maintain their control over A2P traffic; urging carriers to continue investment into RCS support. However, it is also important to maintain SMS channels in order to support mission critical traffic and preserve a trusted messaging format.

OTT messaging apps and instant messaging have also found increasing popularity to date. As a result of the COVID-19 pandemic, use of video conferencing software has increased significantly. There is a wide range of different options available for business use, including Google Meet (formerly Google Hangouts or Google Hangouts Meet), Microsoft Teams, Skype, Slack, Telegram, Zoho Meeting and Zoom. This growth has also been bolstered by the continued popularity of OTT messaging applications, including Facebook Messenger, Kakao Talk, LINE, Viber, WeChat, WhatsApp and Zalo. However, for A2P OTT messaging to be fully realised, the issue of security must be addressed. Whilst the majority of consumers would be happy to discuss sensitive information over the phone or receive updates about their bank account via SMS or in a native application, fewer would be happy to have the same discussions over OTT messaging applications. This is due to concerns surrounding the collection, processing, storage, and usage of personal data, as a number of these applications are owned by third-party marketing organisations, such as Facebook and Google.