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The surge in popularity of OTT apps such as WhatsApp and Viber, and the enhanced features of RCS means that business messaging could be set for a paradigm shift with SMS struggling to hold on to its seat at the top of the table.

In this blog post, the messaging experts from Openmind Networks explore this question, and look at the strengths and weaknesses of each of these channels and outline some of the market forces that might be relevant in what is coming over the next few years.

In a recent poll published on the Openmind Networks LinkedIn Company Page, we asked our community of telecom & messaging industry experts what they felt would be the most dominant business messaging channel by the year 2027.

The results reflect a clear understanding that OTT providers like WhatsApp, Viber, Telegram and Signal will continue to grab market share and become the most significant players in business messaging, with 47% of respondents believing that OTT players will dominate the business messaging market in years to come, compared to 26% for both RCS/RBM and the traditional SMS channel.

The Future of Business Messaging: OTT, RCS, or SMS?

For businesses that want to reach their customers effectively, text messaging is the obvious area in which to invest. However, choosing the right messaging channel is not straightforward and each channel has its pros and cons.

Companies are looking for ways to engage customers effectively, efficiently, and personally on their mobile devices. In the past decade the area of investment has been in social media channels with their high engagement rates and ability to present brands in attractive and engaging ways.

As messaging products have evolved, with WhatsApp and RCS driving innovation, the question becomes, what will be the dominant business messaging channel in the next ten years? Will it be OTT applications, RCS and rich business messaging (RBM), or the traditional SMS?

Let’s delve into each of these options, examining their strengths, weaknesses, and potential to become the dominant force in business messaging.

SMS Messaging

  • Ubiquity

    SMS is universally supported by all mobile phones, regardless of brand, model, or operating system.

  • Reliability

    SMS is a tried-and-trusted method with a high delivery rate, ensuring messages reach their intended recipients.

  • High Open Rates

    SMS boasts impressive open rates, often cited as high as 98%, making it an effective channel for urgent and time-sensitive communications.

  • Limited Functionality

    SMS lacks multimedia support and interactive capabilities, restricting the types of content that can be sent.

  • Termination Fees

    Depending on the region, SMS can be costly, particularly for businesses sending large volumes of messages.

Despite its limitations, SMS will likely remain a critical channel for certain types of communication due to its reliability and reach. However, its dominance may wane as more sophisticated technologies become mainstream. Even in a 10 year outlook it is highly unlikely that SMS will disappear but will endure as a legacy solution or a lightweight option in limited use cases like IoT or others.

RCS / RBM

  • Enhanced Features

    RCS offers advanced features of any OTT app such as multimedia messaging, read receipts, and call-to-action buttons as you might find online or in business emails. This functionality is what is required by the market for business messaging use cases.

  • Native Integration

    As an upgrade to SMS, RCS is integrated directly into the phone’s native messaging app, providing a seamless user experience without the need for additional downloads.

  • Verified Business Messaging

    RCS supports verified sender IDs, enhancing trust and reducing spam. This verification process is managed by third party players in the ecosystem like network operators which ensures only legitimate businesses are on the network.

  • Fragmented Adoption

    RCS rollout has been slow and inconsistent across carriers and regions, leading to fragmentation. Apple is slowing coming to the table with support for RCS and this should represent a tipping point where adoption of the protocol becomes easier for businesses and end consumers.

  • Dependency on Carrier Support

    Its success hinges on network operator adoption and support. There are many reasons why operators may be slow to come to the table as contracts need to be agreed with Google, resources allocated and the impact on operators existing SMS revenues calculated.

RCS has the potential to revolutionize business messaging with its rich features and seamless integration. If the issues of fragmented adoption and iOS support can be resolved, RCS could become a leading channel, particularly for businesses looking for a ubiquitous channel, unlike other OTT providers.

OTT Applications

  • Rich Media Capabilities

    OTT apps like WhatsApp, Telegram and Viber offer a range of features including video calls, images, GIFs, and more. Businesses and consumers expect these features as a minimum in order to have commercial conversations.

  • High User Engagement

    These apps are widely used and highly engaging, with many users spending significant time on them daily. They are also considered a safe place to interact due to encryption of messages.

  • Commercial Models

    WhatsApp for Business is innovating on message pricing models with a per-conversation price being applied instead of per-message. Also, there are different prices for different message types of use cases, in most cases charging more for the higher-value message types like sales messages or authentication messages. Interestingly, OTTs are benching their prices against existing SMS termination fees by geography so they can undercut network operators.

  • Platform Fragmentation

    Each OTT app is a separate ecosystem, requiring businesses to manage multiple platforms. WhatsApp, for example, has huge market reach but nothing like the ubiquity of SMS and is strong in certain countries but not in others.

  • Dependency on Internet Access

    OTT apps require a stable internet connection, which may not be consistently available in all regions.

OTT applications are poised to continue their growth, driven by their rich feature sets and high user engagement. As businesses seek to meet customers where they already are, the popularity of OTT apps suggests they could become the dominant business messaging channel, especially for multimedia-rich and interactive communications.

Market Forces that Impact the Future Adoption of Business Messaging Channels

The adoption of business messaging channels is influenced by a complex interplay of market forces. As businesses navigate the transition from traditional SMS to more advanced platforms like RCS and OTT applications, several factors come into play. Understanding these forces is crucial for companies aiming to implement effective messaging strategies.

It is worthwhile mentioning that business messaging adoption is at a very low rate currently in comparison to, for example, email marketing, social media and other communication tools. In fact, only about 5% of businesses actually use messaging in their communication mix. Yes, that 5% includes nearly all of the world’s largest brands out of necessity but it is clear that there is huge potential growth in this market if messaging products become more easily accessible to small and medium sized businesses.

Impact: This growth potential or ‘rising tide’ may be the most significant market force in the coming year and it may bring growth to all ecosystem players as well as the brands that adopt business messaging.

Network operators traditionally control SMS and RCS channels, but they have no influence over OTT messaging channels like WhatsApp, Viber, and WeChat. However, there is a growing conversation around the role of network operators in OTT messaging, particularly regarding regulatory compliance and data privacy. Telecoms regulators will be drawn quickly to this market when OTT business messages become the target of fraud actors with Smishing campaigns and malicious actions. Network operators may be the best placed to install regulatory oversight on messages delivered over ISPs in the same way that they do over SS7 networks currently.

Impact: Protecting end consumers is the remit of national regulators and they have existing relationships within their own jurisdictions’  telecommunications companies more so than OTT providers such as Meta, Google and WeChat. Installing operators in the delivery chain as a regulatory layer may be mandated by regulators in order to exert control and protect consumers.

Advances in artificial intelligence and automation are reshaping business messaging. Chatbots, large language models (LLM), natural language processing (NLP), and predictive analytics enable more personalized and efficient customer interactions. If these AI tools can be embedded into business messaging capabilities it could scale B2C conversational messaging at a scale unlike the chatbot capabilities we have seen with website chatbots. An army of robot customer service agents, marketers and more would automate business communications and drive brand adoption of the channels.

Impact: An enhanced customer experience where AI-driven messaging can provide instant, personalized responses, improving customer satisfaction. On the negative side,  it does seem that integrating AI into business messaging systems requires significant investment, which may be a barrier for smaller businesses.

Conclusion

Predicting the future of business messaging involves weighing the strengths and weaknesses of each channel. SMS, with its ubiquity and reliability, will likely maintain a role, especially for critical and time-sensitive messages. However, the limitations in its functionality mean it may not be the primary channel for engaging, interactive content.

RCS has the potential to become the go-to channel if adoption issues are addressed, offering the best of both worlds: the reliability of SMS with the rich features of OTT apps. However, its future dominance hinges on widespread carrier support, Apple Inc strategy and user adoption.

OTT applications, on the other hand, are already leading the charge in terms of user engagement and feature richness. Given their global reach and the increasing reliance on rich media in communication, OTT apps are strong contenders for becoming the dominant business messaging channel in the next decade. Their ability to provide a comprehensive and engaging user experience makes them a prime candidate for businesses aiming to connect with customers in meaningful ways.

Weighted conclusion: OTT seems to be in the strongest position currently to become the dominant player but if RCS does become normalized on Apple devices it could take over very quickly.

To learn more about the topics covered in this article, or to discuss how Openmind Networks can help you navigate the future of business messaging, please get in touch or contact our team of messaging experts online here.

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