The report revealed that brand spend on SMS business messaging (A2P SMS) will peak in 2024 unless mobile operators overhaul their existing pricing strategy. Following the Pandemic, the number of global businesses using SMS was close to 10%, but this could now be businesses using SMS peaking in 2024 instead.
According to findings, since mid-2021 the average cost to send an A2P SMS internationally has almost doubled from $0.033 to $0.0646. During this period, 90% of mobile operators have increased their international SMS fee, with over one-third of mobile operators (36.4%) increasing their rates by over 100%; and 3.9% of mobile operators increasing their rate in excess of 500%.
As a result, brands are forced to pay over $0.25 to send a single SMS into particular markets, resulting in these same brands seeking alternative channels to distribute their communications.
The rise in exclusivity deals between mobile operators and aggregator partners is driving the increase in pricing and has also resulted in an increase in fraud levels and fraud types on SMS.
“These international SMS price increases have created a short-term boost in revenues for the industry, but they are doing so at a heavy cost,” said Nick Lane, chief insight analyst at Mobilesquared, and author of the report.
“Exclusivity deals are enforcing higher SMS rates, and higher rates are generating an even better ROF (Return on Fraudment, and yes that’s a play on ROI) compared to previous fraud types prevalent on the channel. But most damning of all, is the hugely negative impact all of these developments are having on brands and their required investment in SMS.”
Included in the report is Mobilesquared’s ‘Alternative View’ of the A2P SMS landscape, with market projections.
Mobilesquared’s ‘Alternative View’ projects that total spend on A2P SMS between 2022 and 2027 would have been $224.47 billion, compared to actual cumulative market spend projections of $210.11 billion - showing that market developments over the last 24 months will cost the A2P SMS industry $14.36 billion in revenues by 2027.
“This is a ‘sliding doors’ moment for the SMS business messaging industry with two paths open,” Lane added.
“Mobile operators need to understand the actual value of an SMS to a brand, and certainly in relation to other channels like email, push notifications, and the Voldemort of messaging… WhatsApp. Otherwise, they risk curtailing what should have been a massive opportunity for them.”
