RCS presents significant opportunities for brand and operators but why are so few using it?
Brands are continuously looking for ways to interact and engage with their customers, writes Nick Lane, the chief insight analyst of Mobilesquared, particularly in an age when consumers have less time to make informed decisions and are increasingly more sceptical around a company’s advertising.
For example, recent research found that approximately 12% of served display ads are actually looked at, with only 4% being looked at for more than a second. It goes without saying that the longer an ad is seen, the more likely it is that the visual engagement it conjures will result in higher retention rate, brand engagement and conversion rates.
However, with consumers paying less attention to digital advertising, brands are continuing to place a significant amount of faith in mobile advertising. And for good reason. It is expected, reports Statista, that the number of mobile phone users will reach five billion by 2019, with 67% of the world’s population owning a mobile device.
The numbers speak for themselves as brands and advertisers continue to utilise the power of mobile to engage with their customers. In fact, mobile surpasses any other platform for digital advertising, with 75% of a brand’s marketing budget now spent on mobile advertising. Good news for operators who are able to generate profits from these ads. Nevertheless, mobile advertising still has its challenges and despite being one of the most effective platforms to deliver highly personalised communications to customers, the need to produce creative, informative and engaging ads still exists.
As brands look to reach their distracted audiences via their mobile devices, they are continuing to invest in new platforms and driving mobile operators to back these channels. As a result, rich communication services (RCS) has gained traction within the industry and is expected to transform the way brands communicate with mobile customers.
Combining the power and effectiveness of SMS, the engagement and interaction of over-the-top (OTT) messaging apps such as WhatsApp and the functionality and richness of an app, the platform sparked a lot of interest at this year’s Mobile World Congress but still has a way to go in terms of becoming mainstream. Nevertheless, the potential for brands and the monetary value for the operators is palpable.
Taking a deeper look into industry views towards RCS, we discovered that whilst uptake has been slow, the platform is anticipated to gain significant momentum over the next few years as brands and operators unleash its revenue-increasing potential. In fact, we can expect over 65% of brands to utilise the messaging platform within the next few years and the user base to grow to 3.23 billion monthly active users by the end of 2023.
With 57% of mobile users inclined to use RCS, as long as it delivers an experience that is at least as good as existing OTT and app platforms, the opportunity for brands to leverage this new channel is apparent. Total spend by brands on RCS business messaging (RBM) is currently forecast at just $184.14 million in 2019 but, as consumer adoption increases and more businesses leverage the platform, we can expect this to significantly increase to over $18 billion by 2023.
However, our research found that just 5.7% of brands said they would look to utilise RBM immediately. Yet, with such a prominent opportunity for brands and operators to increase revenues, why are so few using it?
Firstly, a significant problem lies with the operators who are notoriously slow to adopt new platforms with many still using tried and tested channels such as application-to-peer (A2P) SMS messaging. Whilst this platform functions perfectly well, it lacks the richness and ability for interaction that RCS offers. This could very well remain the case until more industry heavyweights launch their own RCS services to demonstrate how it really works and the cost implications it carries.
Similarly, brands need the reassurance that not only would RCS messaging be a cost-effective tool to reach customers but also one that generates significant ROI and warrants investment. We are already beginning to see evidence of this, however, as Subway recently revealed the success of its own rollout. The restaurant chain reported a 50-60% lift in conversion rates as a result of using the RCS.
RCS undoubtedly represents a natural evolution of messaging as it delivers a richer and more immersive IP-based experience combined with actionable analytics on par with OTT messaging services. Whilst the uptake may be slow to date, it will gain significant traction within the next few years with a sudden increase of adoption. The challenge for brands and operators will be knowing when to strike and those that wait too long could find themselves lagging behind and struggling to keep up with this brave new world of enterprise messaging.