Having long promised to enable operators and brands to increase subscriber engagement and create new revenue streams in an increasingly media-rich communications market, rich communications services (RCS) look set to make good on their promise and divert billions of dollars from digital banner advertising to mobile operator-led RCS campaigns over the coming years, according to the findings of a report by business messaging intelligence firm Mobilesquared.
The report, RCS: The game changer the industry has been waiting for, published in association with Out There Media, highlights the comparative potential return on investment achieved by RCS and current digital banner advertising.
The analyst calculates that for every $1m invested, just 0.1%, derives value for brands. By contrast, the report suggests that brands’ RCS spend will be worth more than $52.2bn by 2028, with mobile operators able to claim a significant portion of this revenue.
Moreover, it says that if brands fail to divert budget to more impactful digital platforms like RCS, they stand to waste $70.7bn on digital banner advertising in 2020 and as much as $917.2bn by 2028.
The study observed that mobile operator-owned RCS gives brands a new channel of engagement that delivers a highly engaging, extremely interactive digital platform right into the hands of consumers. RCS combines messaging, the richness of an app and the same levels of interaction offered by existing messaging apps such as WhatsApp.
It forecast that there will be 700 million RCS users by the end of 2020, a number that it says will grow to nearly five billion in the next eight years, reaching 61% of total smartphone users. This, said the analyst, is twice the size of the addressable audience that Google and Facebook can reach today and would make RCS the single biggest medium in the world.
If this growth is realised, it would see that by 2022 RCS will generate $1.5bn from the natural evolution of brand spend from SMS to RCS. This is said to be on a continued growth trajectory, and by 2024, RCS revenue is projected to increase to $11bn as brands also adopt the channel for P2A customer care, starting to supplement, and eventually replace, call centre voice solutions with RCS chat bots. Overall, RCS revenue for mobile operators is forecast to reach $52.5bn by 2028.
The study showed that brands are waking up to the chronic waste that surrounds the average digital advertising campaign, said Kerstin Trikalitis, CEO and co-founder of Out There Media.
“Consumers are growing increasingly tired of Facebook, Google and other digital platforms due to concerns over data privacy and inaction regarding hate speech, ad fraud and disinformation,” said Trikalitis.
“This is being reflected by the poor levels of brand engagement and ROI their platforms offer brands. The digital advertising world is desperate for a compelling alternative to the Facebook and Google duopoly. RCS is it: it is the alternative for brands that are no longer willing to spend millions on digital advertising and see poor returns.
“As operators view to monetise their 5G investments and race to create new streams of revenue amidst a backdrop of flattening ARPU and increasingly squeezed bottom lines, ensuring they are able to benefit from this migration in digital spend could be key to their future success.”
Mobilesquared chief insight analyst added Nick Lane said: “RCS is a really exciting opportunity for consumers, brands, agencies and mobile operators. Brands can no longer waste vast swathes of their digital budget on ineffective channels, and mobile operators need to deliver a rich messaging experience to their subscribers and remain central in the messaging landscape – otherwise they face the risk of losing this massive opportunity to the likes of WhatsApp and other challenger messaging apps.”
