Global A2P SMS Messaging Forecasts 2017-2025

Global A2P SMS Messaging Forecasts 2017-2025

Published July 2021

Key findings:
  • A2P SMS industry has been reset by the Pandemic
  • Spend on A2P SMS to grow 87% by 2025
  • Over 1 million businesses started using A2P SMS in 2020
  • Mobile operators: It’s time to rethink your SMS strategy

The Global A2P SMS Messaging Forecasts 2017-2025 Databook is the most trusted source of independent industry data to the business messaging community, and we have expanded the number of years it tracks, now starting from 2017. Scroll down for full contents and methodology.

This is the culmination of 10 months research (in addition to the 10 years we have been closely tracking the A2P SMS marketplace). This is the biggest and most comprehensive Databook we have ever published.

Each of the 200 countries we cover (view the full list of markets here) is based on actual A2P SMS market data, ranging from cost-per-message (domestic, international, wholesale, retail, grey), traffic volumes (white, grey, impact of SMS firewalls), to year-on-year growth.

Our forecasts contain actual market data from over 130 mobile operators – a figure growing rapidly since Mobilesquared joined the GSMA in October 2019.

This Databook provides the most comprehensive overview of the A2P SMS industry with 2+ million data points and is essential reading for any business looking to future-proof its A2P SMS strategy.

This Databook is available to buy as a global report covering 200 markets.

Business Messaging is the one area truly dominated by the mobile operators, with between 80-90% of all spend staying with them. What impact has Covid-19 had on the industry? Well, as it turns out, a massive impact.

In total, an extra 1.3 million businesses started using A2P SMS in 2020, taking the total number of business using the channel globally to just under 8 million. This represents an increase of 20% compared to the number of businesses using A2P SMS before the Pandemic. To put this in perspective, even with strong growth in the number of businesses starting to use A2P SMS for the first time in 2020, there are still less than 3% of total registered businesses using it. Mobilesquared believes this highlights that businesses are only now starting to buy into the concept of using A2P SMS to communicate with customers and potential customers.

The Pandemic, lockdowns, and the new normal (if we know what that actually is yet), have forced businesses to expedite their digital transformation, and adapt their communications strategy, including the adoption of messaging as a core channel. We saw traffic levels and spend on A2P SMS in 2020 reach new, unprecedented levels, and we are seeing similar spend and usage levels in 2021.

As an industry, A2P SMS has undergone a dramatic period of readjustment.

The consequence of the Pandemic and 2020 on the A2P SMS industry is positively catalytic. On the back of our research over the last 10 months, we have fundamentally revised our stance on the future of A2P SMS, and believe what we are experiencing now in terms of growth and usage is just the tip of the iceberg. Based on our new forecasts, we project the A2P SMS industry to grow by 87% between 2019 and 2025.

The data and assumptions contained in the Databook were compiled from exhaustive research, interviews and surveys conducted from September 2020 to June 2021.

A total of 111 companies and individuals have contributed to the research and comprised regulators, aggregators, cloud service providers, solutions providers, firewall providers, mobile operators, and mobile operating groups.

Our ongoing research into the global A2P SMS market has cemented our belief that SMS is by far the most powerful channel a business has to connect with its customers, and represents a golden opportunity for every company operating within the legitimate A2P messaging ecosphere.

The challenge for mobile operators and aggregators (including cloud service providers, hubs and service providers) is in anticipating market demand, and successfully planning for disruptive factors, in particular the impact of RCS and WhatsApp Business.

This Databook is accompanied by a PDF report, which includes analysis of the global data, highlights market trends and key drivers, and delivers an overview of the mobile operator and aggregator value chain.

The analysis also includes current and forecast figures on SMS and SS7 Firewalls deployed.

Includes:

  • A total of 2+ million data points supplied as an Excel document, including data for all 200 markets at a national level
    • Accompanying PDF market report including analysis of regional data, trends and opportunities
  • Data from 2017-2025

 

Contents:

  • Annual A2P messaging traffic for 200 markets split by region / country / mobile operator / route / domestic / international / sector / message use cases
    • Average A2P messages per subscription split by region / country / route
    • Annual A2P messaging revenues split by region / country / mobile operator / aggregators / route / premium (retail)/wholesale
    • Average A2P revenue per sub split by region / country / route
    • Potential annual A2P messaging revenues split by region / country / mobile operator / aggregators / route
    • Lost annual A2P messaging revenues split by region / country / mobile operator / aggregators / route

Please note our sector traffic is split into the following categories:

Automotive / Broadcasters / Education / Enterprise software / Finance / Gambling / Healthcare / Internet streaming / Leisure & sports / Public services / Retail & eCommerce / Social media & chat / Telecoms / Transport & logistics / Travel & hospitality / Utilities

Use cases split by: Alerts / Customer Services / Marketing & Promotions / Path to Purchase / Reminders / Security

Our traffic volumes are the result of multiple inputs across all 200 markets covered in this report, showing actual messages delivered for 2020, and the change from 2019 as a result of organic growth and changes in both consumer and business behaviour due to COVID-19.

As a result of the greater input, we have been able to model each of the 200 markets individually for market size, split of international and domestic traffic, and growth over 2019, into 2021, and throughout the forecast period.

Information from firewall vendors and solutions providers on the rollout and adoption of SMS firewalls has, together with insights on grey traffic from aggregators and mobile operating groups, enabled us to model grey traffic by source (international or domestic), per operator, and per market.

We have also applied varying rates of protection where SMS firewalls are in place due to differences in managed solutions, hosted solutions, on-premise solutions, or blended, based on the research data.

Pricing data for each mobile operator covered in this Databook was received from multiple sources – including both discount and premium messaging providers, as well as mobile operators and operating groups.

We have assumed there is now a process where players in the majority of markets charge the same price for both domestic and international traffic, with pricing separation only remaining in around 15-20% of markets where cheaper domestic rates can be accessed provisioned on specific requirements or regulations.

We have used three separate rate cards for our pricing:-

– A discount international rate for large-volume providers – with an approximate 10-20% mark-up on the cost of purchase from mobile operators in 2021 (we applied an average 15% mark-up).

– A premium international rate – with an approximate 30-40% mark-up on the cost of purchase from mobile operators in 2021 (we applied an average 35% mark-up)

– A domestic rate (where available) – typically 20-33% of the relevant international rate for discount or premium providers with the same mark-up applied.

We have assumed approximately 90% of non-direct traffic between mobile operators and brands is discounted, and the remaining 10% is premium.

We have also assumed that 5-15% of all traffic delivered to a mobile operator will be the result of a direct relationship with brands, priced without the above mark-up.

Input on the cost of grey route traffic varied from 15-70% of the discount rate. We have applied a rate of 46%.

The data and assumptions contained in this Databook were compiled from exhaustive research, interviews and surveys conducted from September 2020 to June 2021.

A total of 111 companies and individuals have contributed to the research and comprised regulators, aggregators, cloud service providers, solutions providers, firewall providers, mobile operators, and mobile operating groups.

Input on market size, growth, pricing, income and routes covered all 200 markets contained in this report and provides the most comprehensive research so far undertaken by Mobilesquared into the A2P SMS messaging ecosystem.

We would like to thank everyone who contributed their valuable and candid insights, and encourage you to tell us differently if you disagree with any of our working assumptions below.

All data has been anonymised and aggregated (where there was input from multiple sources), modelled and sense-checked and, we believe, now provides the most comprehensive and accurate view of the A2P SMS messaging marketplace.

 

Assumptions

Traffic

Our traffic volumes are the result of multiple inputs across all 200 markets covered in this report, showing actual messages delivered for 2020, and the change from 2019 as a result of organic growth and changes in both consumer and business behaviour due to COVID-19.

As a result of the greater input, we have been able to model each of the 200 markets individually for market size, split of international and domestic traffic, and growth over 2019, into 2021, and throughout the forecast period.

Information from firewall vendors and solutions providers on the rollout and adoption of SMS firewalls has, together with insights on grey traffic from aggregators and mobile operating groups, enabled us to model grey traffic by source (international or domestic), per operator, and per market.

We have assumed that where no SMS firewall is in place that at least 80% of traffic is grey.

We have also assumed there will be varying rates of protection where SMS firewalls are in place due to differences in managed solutions, hosted solutions, on-premise solutions, or blended.

 

Pricing

Pricing data for each mobile operator covered in this Databook was received from multiple sources – including both discount and premium messaging providers, as well as operators and operating groups.

We have assumed there is now a process where players in the majority of markets charge the same price for both domestic and international traffic, with pricing separation only remaining in around 15-20% of markets where cheaper domestic rates can be accessed provisioned on specific requirements or regulations.

We have used three separate rate cards for our pricing:-

  1. A discount international rate for large-volume providers – with an approximate 10-20% mark-up on the cost of purchase from mobile operators in 2021 (we applied an average 15% mark-up).
  2. A premium international rate – with an approximate 30-40% mark-up on the cost of purchase from mobile operators in 2021 (we applied an average 35% mark-up)
  3. A domestic rate (where available) – typically 20-33% of the relevant international rate for discount or premium providers with the same mark-up applied.

We have assumed approximately 90% of non-direct traffic between mobile operators and brands is discounted, and the remaining 10% is premium.

We have also assumed that 5-15% of all traffic delivered to a mobile operator will be the result of a direct relationship with brands, priced without the above mark-up.

Large mobile operating groups, and mobile operators in mature markets, are likely to see more direct traffic than smaller, independent mobile operators, in developing markets.

Input on the cost of grey route traffic varied from 15-70% of the discount rate. We have applied a rate of 46%.

All monetary values show the actual income for each part of the value chain – mobile operator or aggregator. Total spend is what a brand pays for messaging with the income from that then split (where appropriate) between mobile operator and aggregator.

 

Potential/ Lost income

Our calculations for potential income treat all traffic (both white and grey-route) as official white-route, with pricing as above.

The lost income is therefore the difference between the actual, and the potential, income.

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