What is the A2P messaging market worth?

What is the A2P messaging market worth?

What is the A2P messaging market worth?

In December mobilesquared attended the Messaging and SMS World Conference in London where industry speakers claimed the A2P messaging market was expected to generate revenues of $60 billion in 2015, rising to around $70 billion by 2018.

For an industry that was really only conceived around 2010, this is astonishing growth.

For the sake of argument, let’s assume that the A2P messaging market was worth $500 million in 2010, after which businesses and enterprise grasped the A2P messaging opportunity and invested heavily in communicating with the customers, so much so, that revenues of $60 billion by 2015 represent a CAGR (Compound Annual Growth Rate) of 160%. However, between 2015 and 2018, this truly staggering growth slows to 5%.

To us, this does not make much sense. Especially at a time when our research reveals that consumers have never been more receptive to business or brand communications. Equally, only now are businesses and brands feeling bold enough to use messaging as a direct communication medium with their customers and are actively developing a mobile database.

So what is the A2P messaging market really worth?

This question is not something that we have raised out of the blue. We have spent the last 10 years researching the messaging space for clients, from both a marketing and enterprise standpoint. And before we go on, companies and media around the world continue to quote our research from 2010 which revealed 90% of all messages are read within 3 minutes. So we know a thing or two about messaging and the sector.

Admittedly, there is a commercial driver behind this blog. In a few weeks we will launch our new Databoook – Global A2P Messaging Forecasts (2015-18), and the following analysis has formed part of the methodology in our forecasting.

Some key points to take into consideration:

• Our research into the A2P space reveals that approximately two-thirds of traffic is via grey routes, leaving one-third over white routes;
• We applied a global average of $0.01 per A2P message over a white route and $0.001 per A2P message over a grey route;
• The industry is united in its belief that approximately 2.25 trillion messages were sent in 2015, at a rate of 6.16 billion per day.

To generate a market worth $60 billion based on the above pricing model, 13.5 trillion messages would need to have been sent in 2015, distributing just under 37 billion per day.

Alternatively, to generate approximately $60 billion in revenues from 2.25 trillion messages would require an average price point of around $0.067 for white route traffic, and $0.0067 for grey route traffic.

However, by applying the $0.01/$0.001 price points to 2.25 trillion messages it only generates revenues of $9 billion – still a hefty CAGR of 78% from our original 2010 starting point.

The revenues shared in this blog are just “back of a fag packet” calculations to highlight where our research into the A2P messaging market has taken us, and provide a glimpse of what data is shaping our own market forecasts into the sector.

To find out more about Global A2P Messaging Forecasts (2015-18), available May 2016, please click here or email info@mobilesquared.co.uk.

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