A2P (Application-to-Person) messaging sends messages from a business application to end-users. They are usually sent by an automated process for marketing or service purposes. A2P enables enterprises to automate large volumes of business-critical messages. Some of its examples are OTP messages, package delivery notifications, suspected fraud alerts, and promotional messages.
A2P SMS provides MNOs with a whopping 98% open rate compared to 20% for emails. Apart from its effectiveness, operators can capitalize on other benefits like cost efficiency, scalability, and speed. Below is a primer on the importance of A2P monetization and how it can help operators keep abreast of other players in the telecom industry.
SMS revenue is currently witnessing negative trends because of the declining P2P SMS traffic. Whereas, A2P SMS traffic is expected to rise from 5.52 billion messages per day in 2020 to 7.18 billion messages per day in 2025. Although it offers great potential, only 2% of the enterprises worldwide are currently using A2P SMS in their communications stack. This suggests that MNOs need to discover ways to monetize A2P traffic to unlock its potential.
The industry has forecasted an annual revenue leakage of $7.69 billion till 2024 because of the high number of grey routes. SIM farms create illegitimate traffic by sending bulk spam messages, accounting for 20-40% of the network traffic. Operators end up paying termination fees for messages that shouldn’t be delivered. Bad actors also use SMS channels to exploit end-users through phishing and spoofing. This necessitates A2P monetization, which allows the maintenance of reliable SMS channels.
With a decline in P2P messaging, operators turned to A2P messaging for outreach strategies. However, OTT (Over-The-Top) players captured even the A2P market with their free voice and messaging applications, like WhatsApp, Telegram, and Facebook Messenger. The customers’ shift to OTT has put MNOs at risk of A2P going down the same road as P2P. However, operators can stop this value chain takeover by cashing in on the growing demand for enterprise SMS. It helps deliver Rich Communications Services (RCS) using new technologies, allowing personalized interactions with customers in the safest possible environment.
Following are different ways to monetize A2P messaging to realize its maximum benefits:
MNOs are being challenged by declining P2P traffic, fraudulent SMS deliveries, and OTT players. The increasing A2P SMS traffic, with its many benefits, makes it an ideal choice for an alternative revenue stream. A2P monetization becomes essential to respond to these threats by strengthening the SMS channel.
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