OTT marketing traffic expected to surge

Over-the-top business messaging is set for exponential growth and could threaten operators' SMS revenues, according to Juniper Research.

Nick Wood

January 24, 2023

3 Min Read
OTT marketing traffic expected to surge

Over-the-top business messaging is set for exponential growth and could threaten operators’ SMS revenues, according to Juniper Research.

The firm predicts global OTT business messaging traffic will grow to 254 billion messages by 2027, up 172 percent from 93 billion in 2023. That growth will be driven by the proliferation of open OTT messaging APIs and competitive pricing models, which will attract greater interest from communications platform as a service (CPaaS) providers.

“The volatility in wholesale SMS business messaging pricing provides an opportunity for OTT messaging platforms to grow their revenue, by offering stability for CPaaS platforms when negotiating traffic subscriptions with enterprises,” said research author Elisha Sudlow-Poole, in a statement on Monday.

OTT messaging apps like WhatsApp, WeChat, Viber and so-on are also attractive to brands because of their rich media capabilities. Security features like brand authentication, Juniper Research said, can also assure consumers they are dealing with a legitimate company and not a scammer.

“Increased processing and strict channel verification systems of OTT messaging applications will be key to ensuring that OTT communications are not susceptible to the same fraudulent activity found on channels such as SMS,” said Juniper Research.

However, separate forecasts from MobileSquared suggest that operators probably shouldn’t panic about their business SMS revenues just yet.

According to the messaging market research firm, SMS will remain the biggest single engagement channel for brands investing in CPaaS, accounting for 75 percent of total CPaaS spend in 2020, and 50.1 percent by the end of 2026. That leaves other comms channels – such as voice, email, and various OTT messaging apps – to fight over what’s left.

The overall size of the pie is expected to grow too, from $16.9 billion in 2020 to $52.8 billion by the end of 2026. It means that even though business SMS’s proportion of the spend will fall, the overall value of that proportion will increase to $26.5 billion from $12.7 billion.

According to MobileSquared’s chief insight analyst Nick Lane, the majority of companies are still reluctant to do anything too radical when it comes to contacting consumers, with 80.1 percent of total CPaaS spend in 2022 going towards one-way channels like SMS, MMS, email, in-app push notifications, and video. Interactive, two-way channels like voice, social media, rich messaging and WebRTC, accounted for the remaining 19.9 percent.

“Right now, $1 in every $5 spent on CPaaS by a brand in 2022 had the potential of generating engagement activity with the consumer, with $4 in every $5 spent on non-interactive, one-way channels,” he said in a blog post last week. “This will increase to $1.5 in every $5 invested by brands in CPaaS by 2026, but this shows that brands are playing safe and spending the mainstay of their CPaaS budget on reliable and robust one-way, channels, like email, SMS and in-app notifications, that will not generate a truly interactive experience with the consumer.”


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About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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