The use of SMS is in decline, in favor of instant messaging services. And this also applies to the communication of companies with their consumers. More and more organizations are using OTT or over-the-top services (which do not involve operators) for their communications, instead of SMS. And this will generate huge losses for telephone operators, whose revenues generated thanks to SMS will naturally decline.
According to a prediction from Juniper Research, because of the quality of SMS, companies will use alternative communication channels, including mobile messaging apps. And it predicts a loss of revenue for operators of $3 billion over the next five years, because of this transition.
According to Juniper, the decline in SMS quality is mainly due to the prevalence frauds. However, he also predicts that operators will increase SMS prices in order to compensate for the drop in demand.“To take advantage of this stagnant SMS market, the report urges OTT app providers to deploy pricing strategies that attract high-spending businesses away from established SMS channels. These strategies must separate traffic by uses; charge companies extra for critical traffic, such as MFA (Multi-factor Authentication),” reads the Juniper press release.
An explosion in OTT revenue< /h2>
While SMS revenues will plummet, the revenues of companies that offer these OTT messaging services will explode. Juniper predicts that globally, these revenues will increase from $790 million in 2023 to $2.6 billion in 2028.
The advantage of messaging apps is that they can integrate new features useful for businesses. Therefore, Juniper recommends that providers of these apps offer integrations between their other products and the messaging activity. This helps provide more comprehensive e-commerce solutions to businesses. For example, for Juniper, it is imperative that messaging services integrate payment functionalities into their app offerings.
Among the messaging apps that already rely heavily on this communication between businesses and their consumers, there is WhatsApp. It generates its revenue through communication tools for businesses, and WhatsApp already integrates a payment system in certain countries. Otherwise, WhatsApp no longer excludes the integration of online advertising into its economic model, even if it is out of the question to display ads in users' inboxes.
- SMS is being used less and less and even businesses are turning to alternatives, like messaging apps, to communicate with their customers
- Juniper predicts that over five years, operators will lose $3 billion in revenue
- As for OTT messaging services, they will see their revenues explode