A2P SMS – Revolutionizing Business Communication and Messaging

The short messaging service, popularly known as SMS, has evolved over the years. While consumers worldwide have gradually veered to instant messaging applications, including WhatsApp, WeChat, and Hike, network providers continue to find unique methods to ensure usage of SMS. At present, the overall engagement or user traffic for application-to-person (A2P) SMS type is scaling new heights – a trend that is expected to continue over the upcoming years. Leading top tier and medium-sized companies across the world are increasingly focusing on raising employee and customer engagement due to which, the A2P SMS market has experienced considerable growth.

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While A2P SMS continues to fuel and revolutionize business messaging, new A2P SMS technologies are being developed by vendors operating in the current market landscape. Nearly 90 percent of the overall A2P traffic is likely to be driven by SMS during the forecast period due to which, significant developments across the A2P SMS market, in terms of technology, can be anticipated. The exponential surge in the number of mobile users worldwide, growing affinity toward mobile marketing, rising adoption in the banking sector, and two-factor authentication, particularly for web platforms and services, are some of the major factors that are expected to drive the global A2P SMS market, which is expected to reach ~US$ 101 Bn by the end of 2030.

A2P SMS Emerges as Powerful Marketing Tool as Demand Grows

The adoption of A2P SMS is expected to garner significant traction during the forecast period, as more number of business entities across different domains, including tourism, healthcare, and banking are largely in favor of using A2P SMS as a default channel for marketing communications, employee engagement, and circulating notifications, alert, and reminders. However, as A2P SMS continues to garner impressive traffic, vendors operating in the current A2P SMS market are likely to offer solutions that are highly flexible and scale as per evolving business avenues during the forecast period. Businesses across the world are mainly focused on customizing their engagement strategy and mobile network operators are leaning toward A2P SMS to attain that objective. The adoption of A2P SMS across organizations of different sizes, profit or non-profit, etc., is on the rise, as companies continue to seek different ways to break through the cutthroat competition across different industrial sectors.

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However, vendors operating in the current A2P SMS market are expected to invest in research to assess the evolving landscape of the messaging sphere. Product customization, focus on improving quality, and development of various A2P channels are some of the key areas that vendors are likely to focus on during the forecast period. In addition, as consumers continue to slant toward digital platforms to process their transactions, A2P SMS is set to gain a considerable amount of demand, particularly in nations such as India, Indonesia, Malaysia, etc. The growth of the A2P SMS market is a win-win situation for both – the vendors due to an added revenue channel and for the users as a cost-effective communication and marketing channel. The adoption of A2P SMS is on the rise, as it has played an imperative role in streamlining reminders and appointments to patients. In addition, A2P has more impact than an email, offers a personalization touch, fast, and cost-effective.

Government Bodies and Agencies Lean Toward A2P SMS to Combat COVID-19

While the COVID-19 pandemic continues to cripple different industrial sectors worldwide, the A2P SMS market is anticipated to witness a sluggish period during 2020. As more number of governments across the world continue to fight the COVID-19 pandemic by enforcing lockdowns and announcing national quarantines, the average engagement and SMS traffic have experienced a considerable decline. The retail marketing sector is projected to remain the worst hit during the pandemic. However, traffic pertaining to online transactions, alerts, and notifications is moving in an upward trajectory, owing to a large-scale activity across the e-Commerce sector. An increase in one-time-password (OTP) and alerts traffic is expected to provide vendors a window of opportunity during the COVID-19 pandemic. Government bodies and other agencies are expected to utilize A2P SMS, as an effective tool during emergencies and create awareness regarding the COVID-19 disease.

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A2P SMS Market: Overview

  • The global A2P SMS market is expected to expand at a CAGR of ~4% during the forecast period, primarily driven by increase in mobile subscriber base and growth in mobile marketing activities by marketers and application developers
  • The A2P SMS market reached value of US$ 64.6 Bn in 2019 and expected to reach ~US$ 101 Bn by 2030
  • In terms of application, the customer relationship management services segment is anticipated to account for notable share as compared to the other components of the A2P SMS market
  • In terms of end-use industry, retail segment is set to dominate the market during the forecast period. Additionally, BFSI is likely to remain the fastest growing application during the forecast period.
  • Asia Pacific remains a prominent market for A2P SMSs globally, and the market in the region was valued at US$ 26.3 Bn by the end of 2019
  • The A2P SMS market report provides analysis of the market for the period 2018 – 2030, wherein 2019 is the base year, 2020 is the estimated year and 2021 to 2030 is the forecast period. Data for 2018 has been included as historical information.
  • Providers of A2P SMSs are focused on developing innovative solutions to serve specific requirements of end users, which is expected to drive the market demand in the coming years

Asia Pacific A2P SMS Market Snapshot

  • Majority of retailers see mobile as a necessary component of marketing strategy, thus contributing to a huge uptake of SMS technology in the Asia Pacific region. The huge volume of SMS messages sent has the potential to generate significant revenue for operators. The future of A2P SMS is in the partnership of messaging specialists with operators rather than working as separate entities. Therefore, partnership of messaging specialists directly with operators is a significant driver of the A2P SMS market, specifically in Asia Pacific.

Key Drivers of the A2P SMS Market

  • Growth in mobile marketing activities by marketers and application developers: Application developers, marketers, and brands together utilize SMS services to strengthen their customer base, by updating their users with breaking news, campaign perks, location-based opportunities, and other important information. Marketers and brands prefer text messaging over other marketing initiatives, as it allows them to re-connect with customers, who have deleted their apps or have not used their apps recently. Impact of mobile marketing activities on the A2P SMS market is currently high due to the growing trend of SMS marketing in banking, financing services, gambling/betting, hospitality, leisure, and advertising industries. Brands are likely to increase their promotional activities, owing to which the impact of mobile marketing activities by marketers is expected to be high in the short and medium term of the forecast period. However, with digitalization and growing Internet penetration, brand promoters are likely to shift from SMS marketing to Email marketing in the long run.
  • Proliferation of mobile banking, mobile payments, and mobile health services: SMS is used as a customer engagement tool, customer service tool, activation and authentication mechanism, and a service delivery function by enterprises and organizations. Every handset in the world can send and receive SMS, owing to its simplicity and ease of use without advanced requirements. The simplicity and convenience in using SMS makes it an attractive platform/mode for brands that intend to communicate with their customers regularly. Financial and banking institutions and ticketing services are widely adopting the practice of interacting with their clients through SMS. While other industry verticals have been using SMS for several years, banking and finance industries adopted the practice of using SMS for balance notification only in recent years. It is anticipated to fuel market growth in the near future. Organizations that keep track of the health industry and offer services to drug manufacturers to reach healthcare practitioners and doctors, are also contributing to the market growth. Growth in the e-Commerce industry, availability of low-cost smartphones, along with growing penetration of Internet, mobile payments, and mobile banking is expected to drive market growth during the forecast period.
  • Therefore, proliferation of mobile payments, mobile banking, and mobile health services is expected to continue fueling the growth of the A2P SMS market during the forecast period 2020 – 2030

Key Restraints of A2P SMS Market

  • Technical anomalies overshadowing bulk SMS: SMS is often associated with basic phone feature and therefore, is overlooked when brand promoters start dealing with smartphones. Bulk SMS service providers have not yet tapped the true potential of messaging technology as a marketing technique. This is primarily due to marketers and brand promoters are anxious about experiences and features that they can offer through apps and the mobile web, which often overshadows the features offered by A2P SMS. However, there are certain challenges such as leveraging SMS that can fit into a broad mobile strategy. Moreover, technical experts are required to set up an SMS program to ensure that permissions are structured properly from wireless carriers. Generating short codes used in SMS campaigns is another challenge for A2P SMS market growth. Since A2P SMS are dependent on the use of dedicated or shared short codes, brand promoters have to deal with ambiguity and complications associated with the set-up of short code, provisioning, and regulations.

A2P SMS Market: Competition Landscape

  • In October 2017, Syniverse Technologies, LLC partnered with Listrak, a digital marketing company to expand the suite of mobile marketing. The partnership enables Listrak to integrate messaging service as a part of its cross-channel offerings that include email, mobile engagement, and social media marketing.
  • In July 2017, Tyntec introduced a new plan to design a powerful structure in North America that fills the gap between application to person and person to person messaging over short codes. The new structure addresses the new uses and demand for 2-way mobile messaging.

A2P SMS Market: Company Profiles

Syniverse Technologies, LLC: Syniverse Technologies, LLC has been operating as a subsidiary of Buccaneer Holdings, Inc., since January 2011. The company provides mobile telecommunications solutions and transaction processing solutions that provide uninterrupted mobile communications to over-the-top providers (OTTs), mobile network operators (BnOs), and enterprises globally. The company offers A2P messaging gateway to streamline A2P message delivery through a reliable connection to aggregators and large corporations from a centralized point of integration. Syniverse Technologies, LLC offers enterprise mobility solutions, including mobile messaging services for financial, healthcare, hospitality and travel, logistics, and retail industries.

CLX Communications (Sinch): CLX Communications provides customer services and solutions to enterprises and mobile operators, to assist clients with better communication. CLX also provides an interactive service with virtual phone numbers in more than 40 countries, which allows enterprises to receive SMS text messages and in certain cases, voice calls, on the same number (Inbound SMS). CLX Communications offers solutions for delivering messaging, voice, and data services, and customer experience management.

Tanla Solutions Ltd.: Tanla Solutions Ltd. offers end-to-end mobile payment solutions, providing connectivity to more than 100 mobile networks in over 32 countries. The company is engaged in integration of communication technologies and IT systems, and provides integrated solutions to content publishers, mobile application developers, mobile carriers, and distribution channels. The company markets its solutions to customers in telecom services (customer development and product development), offshore software development, telecom infrastructure, and maintenance sectors. The company has over 300 employees worldwide and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

AMD Telecom S.A.: AMD Telecom S.A. is a privately owned mobile services company that provides advanced mobile applications and messaging services across the world. AMD Telecom S.A. covers more than 1,200 networks and has presence in 230 countries worldwide. The company’s client base includes over 25,000 customers. The company is certified by the Groupe Speciale Mobile Association (GSMA) as an Open Connectivity Solution Provider.

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