The global A2P messaging market was valued at USD 68.3 billion in 2022. The market size is expected to grow at a CAGR of 2.8% over the forecast period to reach USD 78.2 billion by the end of 2028.
A2P (application to personal) messaging, also known as commercial or business text messaging, is a type of text messaging technology in which text is sent from software used by a business to a customer’s device. Smartphone users can subscribe to text message notifications using a mobile internet connection. In A2P communication, the line of communication is usually one-way, which means that the recipient does not always wait for a response; with approximately 98% of all text messages being opened by the recipient, A2P communication is a cost-effective way for businesses to increase engagement with customers. Popular forms of A2P messages include marketing campaigns, discount codes, appointment reminders, account PINS, banking notifications, and delivery notifications. Many major industries have adopted A2P technology, such as retail, banking, telecommunications, healthcare, and travel.
The rise of e-commerce websites driving the A2P messaging market
As online shopping is on the rise, it is one of the main driving factors for A2P messaging market demand. Companies are increasingly using A2P communications to communicate with their consumers. E-commerce companies are adopting A2P to increase sales, services to send targeted ads, discount codes, and other promotions. E-commerce companies adopt A2P messaging platforms and encourage consumers to buy their products. In person at the show, messages are sent to the customers based on their purchase history or browsing behavior. Using A2P messaging tools, businesses can increase customer engagement and conversions.
A2P messaging enables real-time, automated, and targeted communication between applications and individuals. The increasing use of mobile phones and the need for secure and real-time communications is driving the growth of the A2P messaging market.
Strict government regulations and policies- The A2P messaging market is highly regulated, including compliance with data protection and privacy laws such as the European General Data Protection Regulation and the US Telephone Consumer Protection Act. Complying with these regulations can result in significant fines and reputational damage. Industry groups such as the Cellular Telecommunications and Internet Association, National Regulatory Authority, TRAI, and the Federal Communications Commission have established complex rules and regulations governing the use of text messaging. The range of rules and regulations, however, varies from country to country, affecting how companies collect, store, and use customer data and A2P restrictions on the messaging marketplace.
Rising adoption of A2P SMS by OTT players, increasing MNOS revenue- The A2P traffic from corporate customers is rising rapidly. With the steady growth of OTT platforms and online services, there is increasing adoption of A2P messaging by OTTs and enterprises for verification, public services, and notification alerts on MNOs to generate revenue. Industries such as BFSI, tourism, and healthcare are adding complementary SMS services to keep their customers informed. Therefore, revenue is estimated to grow as A2P messaging traffic increases.
The A2P messaging market is large, so it could be an opportunity for MNOs to recoup revenue if lost. MNOs have network connectivity and direct operator agreements to integrate new profitable in-house services via A2P SMS traffic. A2P messaging is one of the largest contributors to SMS revenue. As the A2P messaging market is influenced by OTT providers, A2P messaging presents an opportunity for MNOS to generate revenue from enterprise consumers. In addition, it makes A2P SMS more secure and filters messaging traffic, thus increasing A2P fees and further increasing MNO revenue.
The A2P messaging market has been on the rise for quite a while now. However, the COVID-19 outbreak had a very positive impact on this market as IT technology advanced and every second person tried to operate through a virtual mode. This A2P messaging strategy proves to be a very cost-effective way of reaching the potential target audience. As e-commerce websites and online stores emerged as a result of the lockdown, A2P messaging platforms proved to be the easiest way of marketing for these online retail stores.
Furthermore, the government encouraged the A2P messaging market by using these platforms to provide information and updates about the pandemic to the general public. Educational institutions preferred the online mode of education over physical classes. Thus, schools started using and developing A2P messaging software and services.
Depending on the component, the market size of the service segment of the A2P messaging market is anticipated to increase over the forecast period. A2P messaging services use SMS, MMS, and other communication platforms to ensure effective and efficient communication between applications and individuals. A2P messaging services are widely used by companies, organizations, and service providers to deliver important information, notifications, alerts, and promotional messages to their consumers.
Based on the application, the authentication service is estimated to grow at the highest CAGR over the forecast period. With increasing cyber threats, fraud, and privacy concerns, organizations are prioritizing implementing authentication services to protect sensitive information and verify the legitimacy of messages. Authentication services provide an additional layer of security by verifying the identity of both the senders and recipients, ensuring secure and reliable communications. By using authentication services, organizations can reduce the risk of unauthorized access, protect their brand reputation, comply with industry regulations, provide a secure messaging experience for their customers, and provide authentication in the A2P messaging market.
On the basis of vertical, the BFSI segment of the A2P messaging market will be higher throughout the forecast period. The need for real-time event notifications, an emphasis on security and authentication, customer engagement and support initiatives, anti-fraud initiatives, regulatory compliance, cost efficiency through automation, and the growth of mobile banking and financial services. Together, these factors are driving the proliferation of A2P messaging solutions in the BFSI sector, enabling effective communication, better customer experience, and smoother operations.
By region, Asia Pacific will hold the largest portion of the A2P messaging market, driven by factors such as rapid growth of mobile subscribers, spread of mobile-first culture, and expansion of e-commerce and mobile banking.
North America is next to Asia Pacific in leading the dominant shares owing to rising demand for notifications and alerts and regional expansion of business, increase in technological advancements, infrastructure development, cost-effectiveness, and reach of A2P messaging. These factors collectively contribute to the introduction of A2P messaging service, enabling businesses to effectively engage with customers, provide real-time updates, and facilitate secure transactions within this region.
Europe A2P messaging market growth rate is anticipated to grow at a higher rate during the forecast period.
Key Players in the Market:
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