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The Primer on A2P Monetization

May 31, 2022 / Blog / posted by Neha Mashruwala

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.

What Makes It Necessary to Cash In On A2P SMS?

Decline in Traditional Revenue Streams and Growth in A2P SMS Traffic

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.

Revenue Loss Due to Fraudulent Activities

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.

An Increasing Threat from OTT Players

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.

How Can Operators Monetize A2P Messaging to Revive SMS Revenue?

Following are different ways to monetize A2P messaging to realize its maximum benefits:

SMS Firewall: It continuously identifies, filters, and blocks unsolicited or unpaid SMS traffic on the network. A good SMS Firewall can distinguish between A2P traffic and P2P traffic disguised as A2P messages. This eliminates any network infiltration attempts, causing inconvenience to original subscribers.
Deploying a Tracking and Reporting System: This system allows operators to monitor and administer SMS traffic on their network. The real-time reports give valuable insights into the traffic received, traffic volumes, source, delivery routes, etc.
Ring-fencing the Network: It helps MNOs block grey routes by enabling them to control and filter its usual sources, like SS7 and international routes.
Introducing an All-in-one Technology Platform: A platform powered by cutting-edge AI and cloud technologies boosts A2P fraud detection/prevention and monetization. Access to APIs allows ERP, CRM, and CMS integration to increase customer loyalty and better compliance.
Legal and Operational Considerations: Operators must make sure that their filters adapt to local regulations. Regulatory authorities of some countries may have restrictions in place for location of filters and SMS data storage. For efficient implementation of A2P monetization, operators need to rewrite business plans considering legal aspects, technical aspects, and new pricing policies. Operators can outsource these aspects to achieve maximum results.

Key Benefits of Monetizing A2P Messaging

Increased SMS Profitability: By eliminating fraud, operators can collect termination fees for each SMS delivered to their network’s subscribers. Monetization creates wholesale opportunities with roaming partners and OTT providers.
Complete Control over Network Traffic: A2P monetization with an all-encompassing platform offers operators complete control over the network. It secures the A2P traffic through constant penetration testing and real-time reporting to ensure optimal network performance, resulting in a smoother customer experience.
Elimination of Frauds from the SMS Channel: By utilizing the SMS Firewall, ring-fencing, and real-time monitoring tools, operators can block grey routes and other illegitimate traffic.

Capitalize on the A2P SMS Traffic to Secure Revenue Growth

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.

Neha Mashruwala

Neha is a digital marketing evangelist with over a decade of marketing experience and currently overlooks the entire inbound marketing activities and manages the team. She's adept in marketing planning and execution as well as content management for strategic utilization and deployment of available resources to achieve organizational objectives. Neha is a nomadic traveler who loves to meet new people while travelling and enjoy reading travel articles. Connect with her on Linkedin.