MoNage - Spring 2017: History and Future of SMS Marketing

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History & Future of SMS MarketingWilliam DudleySAP Mobile Services

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 2Public

THE BEGINNING 2000 - 2010 2011 - 2016 2017 2018 & BEYOND

In the beginning…In 1992, Sema Group employee Neil Papworth sent a message to his Vodafone colleague, Richard Jarvis. It said “Merry Christmas” to test a new messaging capability called Short Message Service (or SMS) built into the GSM standard.

And thus it began…• By 2000, GSM based SMS was interoperable among GSM operators around the

world

• In 2002, SMS interoperability among mobile operators in the USA and Canada began launching… spurred by CMG, InphoMatch, Illuminet and others..

• In 2002, first inter-carrier short code deployed to promote a record album

• In 2006, 72% of a mobile operator’s data revenue was SMS & MMS.

• By 2007, Americans sent & received more text messages than phone calls

• During the early 2000’s A2P SMS was mostly limited to purchasing ringtones and a few notifications; it was not a major part of overall mobile engagement for brands and businesses




Over the last few years, SMS has grown to have many facets…

Time-dependent special offers

New product alertsSurveys and polls

Notifications and alertsSchedulingWorkforce managementInternal alerting on IT systems

Two-factor authentication

Log-in details reminders and resets

Fraud alerts

Notifications and alertsAppointment remindersPayment remindersInformation updates e.g. flight details

Customer communications

and supportSecurity and

authentication

Promotions and Marketing

Internal communications and processes



Messaging Is Core Enabler for Consumer Engagement

Source: KPCB.com/Internet Trends 2015

Personal yet

mainstream

Simple yet

24 x 7

Real-time yet

replayable

Instant yet

secure

Accessible yet

global

Current yet

evergreen

Mobile yet

distributed

Asynchronous yet

instant

Expressive yet fast

Engaging yet

user-controlled

Casual yet

professional

Easy yet

productive



Application-to-person (A2P) SMS Continues to Grow

• In the short-term, enterprise use of A2P SMS will continue to grow – driven by reach, low cost, high reliability, and accessibility

• A2P SMS still exhibits overall positive CAGR during the forecast period at 2.7%.

• Key industry verticals include: banking and finance, retail, social networking and media, travel and transportation, and healthcare

• Key use cases include: notifications and alerts, authentication and verification, competitions and promotions, payments and funds transfers, information and content delivery, and emergency broadcasts

• In the longer term, enterprise use of A2P SMS will decline slightly, in line with changing consumer communications behaviour

Source: Informa, PLC .



Cloud Communications market to grow to $7.5B by 2018

IDC notes that cloud communications provider forecast is based on analyzing call minutes, SMS and API transactions, due to current pay-per-use models based on voice minutes, SMS messages and API transactions. The emerging model growing in prominence are API transactions with acceleration in the later part of the forecast period and will become a growth driver in 2018 (growing from zero in 2013 to 337 billion calls by 2018.

2013 2018

3,500

268,000

2,500

242,500

Cloud Communications Provider Volumes through APIs

SMS messages and voice minutes initi-ated

through APIs

SMS MsgsVoice Min

Based on IDC Worldwide Cloud Communications Platforms 2014-2018 Forecast

Messaging vol: CAGR: 138.4%Voice Min vol: CAGR: 149.3%

The line between the pure API and pure SaaS product is blurring: Earlier: APIs were designed & marketed for developers (dev

conferences, hackathons) Now APIs are starting to fill the toolboxes of marketing, sales, and

support teams.

The way users interact & consume APIs is changing: Earlier: mainly through a terminal or IDE (e.g. code editor, where

developers write code) Now it is through platform plugins, widgets, drag & drop interfaces –

democratizing the way businesses use APIsMillions of messages & minutes



A2P/Enterprise Messaging Extends to Chat Apps

Strong push from chat app community to engage with enterprises

WeChat, Kakao, Line leading the way in Asia Facebook Messenger, Viber and now WhatsApp also

opening up their platforms to enterprises BUT chat apps will be part of enterprises’ omni-

channel customer engagement strategy – joining, NOT REPLACING SMS, voice, e-mail and others

The first stage of the chat app revolution was focused on growth and user acquisition

In the next phase, companies will focus on building out services and monetizing chat apps’ massive user base. These simple apps which were initially used for exchanging messages, pictures, videos, and GIFs will evolved into expansive ecosystems with their own developers, apps, and APIs



SMS must not be a silo – an Omni-Channel approach is key

The omni-channel approach allows enterprises to use different communications technologies as and when appropriate during an interaction with a customer.

SMS should be integrated into an enterprise’s omni-channel communications strategy – its reach and reliability on mobile are valuable attributes.

Source: Informa, PLC



SMS itself may evolve…will RCS be the solution?In November 2016, the GSMA & Google announced the launch of a mobile industry initiative to accelerate the availability of Advanced Messaging – called Universal Profile – a “next generation SMS…”

This is developed on the RCS (or Rich Communications Service) standards.

47 global operators now support Universal Profile

RCS is built into Android Messages today, already covering over 1 billion subscribers.If Google can convince mobile operators to support integration to RCS / Universal Profile, then its market share can effectively make RCS “universal.”Android Messages is now the Google Play Store, so it can be updated separately from Android.



Messaging as a Platform (MaaP)A blueprint for future engagement strategies?

MaaP combines advanced messaging (e.g. RCS) with chatbots and plugins to deliver a rich experience that customers now expect…

“Using Advanced Communications built on the GSMA’s Rich Communication Service (RCS), messaging enablers and suppliers can use MaaP to interact using traditional voice and SMS plus enhanced instant messaging, chat functionality, photo sharing, live video, video calling

and file sharing across devices on any network.” - GSMA

A2P SMS provides operators with an opportunity to migrate their SMS traffic to enriched RCS based messaging and then further into chatbots. A2P can be considered the precursor of chatbots and the first step in creating a full fledged chatbot platform. This is a huge market - Mobilesquared estimate the chatbot market to be worth $58.75 billion by 2020..



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William Dudley

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@wdudley2009

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