While wishing the humble text message Happy 20th Birthday, many newspapers are also announcing its death. The culprits have been under suspicion for a while, for instance, WhatsApp now accounts for billions of messages and other Over the Top messaging media are not far behind. While ‘consumer’ SMS may be suffering in some countries and regions, according to Informa Telecoms and Media, there is still growth in the old dog yet – who predict that SMS traffic will increase 13.9 percent in 2012, to 6.7 trillion messages.
The truth is that SMS is still healthy and is here to stay. This is not just because people do not change their habits easily (remember, SMS did not take off in the States for a long time because every red blooded executive had a trusty pager strapped to his belt), or that the threats to ‘normal’ SMS traffic are not significant and scary. It is simply that SMS has become a valuable, reliable, tested and true communications channel. The question is who will pay for it, now that consumers are, indeed, moving to free OTT messaging services.
First up, operators themselves will fund SMS. It is a critical part of their communications with their customers. It is used as a secure channel to deliver one time passwords, confirmation of service or payment, conduct quick surveys and is a vital component of in-app billing. In-app, direct operator billing is a key way for operators to get back into the value chain, and remember that the margins for consumer SMS are pretty large – and therefore the cost that the operator will need to bear to keep the channel alive are not huge.
In close second place, payments providers of all shades (shades of pay?) love SMS. According to recent research and predictions from Gartner, the mobile payments universe will reach $617 billion and be used by 448 million around the world by 2016. Oh, and most of that will be enabled by SMS.
In third place – first, in terms of folk actually paying for SMS – are the Big Brands. As the advertising noise levels increase and every offline and online channel is clogged by ever cooler campaigns, many of the Fortune 500 companies are seeing the true value of a text. Texts are by nature personal. They are reliable. They are global. They are interactive and a brand can have a conversation with a customer via text. A brand will also know that a text has been received, opened, a coupon redeemed, a link clicked. Using location based tools such as geofencing will allow brands to target people in a certain place, or event, with special offers, coupons, vouchers, deals and then use the medium to drive those same people to cool interactive social media channels where the content is tailored to the event. The biggest of companies know the potential of the humble text – Coca Cola has a precision marketing team that is developing its strategy around such technologies up to 2020. For them, it is huge, and they will happily pay for the privilege of using it.