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Messaging Success

October 2014

The messaging world is changing fast

Dominance of SMS is under serious threat
In 2013, 20 years after the first text message was sent
from a computer to a mobile phone, global SMS traffic
reached 7.6 trillion1. Throughout these two decades,
Person-to-Person (P2P) SMS helped facilitate daily
communication, thanks to its cost-effectiveness, ease of
use and ubiquity. Meanwhile, over the same period, SMS
generated approximately US$821 billion worldwide for
mobile operators 2 . More and more are providing free SMS
bundles within their subscription deals.
Since BBM (BlackBerry Messenger) launched in 2006, we
have witnessed the rise of Over-The-Top (OTT) messaging
apps such as WhatsApp, Viber, Line and Kakao. Research 3
from Analysys Mason underlines this: more than half of
the 1.4 billion smartphone owners worldwide are already
active users of OTT messaging apps. This jeopardizes
mobile operator messaging revenue streams: Ovum
has estimated that operators will lose US$23 billion
between 2013 and 2018 to OTT messaging 4 .

Enterprise Messaging is a growing opportunity

for mobile operators
Gemalto considers Enterprise Messaging (also known as
Application-to-Person messaging or A2P messaging) as a
way for operators to respond to the negative long-term
outlook for SMS. SMS is the key media to reach end users

1
2
3
4
5
6
7

in a ubiquitous and simple way and all brands are eager

to use this powerful tool to engage with their customers.
91% of mobile phone owners read mobile messages
within 15 minutes of receiving a notification 5 .
As a result, businesses and government organizations are
increasingly using mobile messages as a key means of
communication with customers and citizens. Enterprise
Messaging allows brands and agencies to interact
seamlessly with their end customers, to propose tailored
offers and to enhance the customer experience with
Value-Added-Service (VAS), connected home, identity
verification, mobile commerce and banking on the go.
Ovum expects A2P SMS traffic to grow at a rate of 6%
CAGR (Compound Annual Growth Rate) between 2013
and 2017, which compares to a 3% CAGR decline in
overall messaging traffic. Over 2.19 trillion A2P messages
are forecast by 2018 6, representing a third of all text
traffic worldwide. This is in contrast to an estimated
share of 22% for 2014, and a total of 1.83 trillion A2P
messages7.
In conclusion, Gemalto anticipates a slow decline of P2P
traffic in developed economies due to the rise of the
OTT, but operators may compensate for it through the
development of their A2P messaging offer.

Ovum, Digital Services World Congress, June 2014

SAP Mobile Services, Portio Research / Long Live SMS, Dec 2013
Analysis Mason, OTT messaging volumes will nearly double in 2014, Jan 2014
Ovum, OTT app use undermining SMS revenue, Nov 2013
Infinite Convergence, Mobile Messaging Trends, 2013
Ovum, Mobile Messaging Traffic and Revenues Forecast, Sept
Ovum, Mobile Messaging Traffic and Revenues Forecast, Sept 2013

Success factor #1:

Clean your communication channels
Be aware of mobile spam

frauds sent for free through faking and spoofing, mobile

spam represents a clear revenue loss for both mobile
operators and enterprises.

Mobile operators own some extremely valuable and

scarce assets, such as the confidence of end users,
billing relationships and subscriber presence indicators.
All these assets are very valuable for businesses and
government agencies, but must be used carefully
to preserve the end user experience and maintain a
long term sustainable ecosystem. To monetize this
Enterprise Messaging opportunity, operators should open
communication channels between companies and their
customers, but avoid angering their subscribers with
unsolicited messages.

Control your A2P traffic

Fighting mobile spam is a prerequisite to ensure
subscriber satisfaction with the messaging experience,
reduce churn and protect operator revenues.

Gemalto commissioned IFOP, an international marketing

firm, to lead independent research into mobile marketing
worldwide. This survey was conducted on 5847 adult
respondents in seven countries from July 2012 to July
2014. It shows that a large majority of subscribers from 70% in Brazil to 95% in the western countries - are
irritated by unsolicited messages received on their mobile
phones. Since end users attention is reduced due to this
high volume of spam and most unsolicited messages are

The first mandatory step is to deploy a messaging

gateway. This solution centralizes and controls all the
A2P traffic. An advanced messaging gateway solution
protects subscribers against unsolicited messages
through MSISDN aliasing. It also protects operators
from undue charges through identifying and billing the
enterprise sending the message. Finally, the operator
will be able to regulate the messaging traffic and ensure
that subscribers are not bombarded with unsolicited
messages. It is in organizations interest to respect the
maximum frequency tolerated by end users, as shown in
Figure 1.

Figure 1 Marketing messages acceptable frequency varies

from one country to another
60%

50%

48%

47%

44%
40%

37%

37%
28%

28%

30%

20%

10%

0%

UAE

US

Brazil

France

UK

South
Africa

Nigeria

Once a day
Between 1 and 3 messages/week
Between 1 and 3 messages/month
Less often
Survey performed by Ifop from July 2012 to July 2014 on 18 year-old+ mobile phone owners

Another crucial step is to deploy an SMS Firewall.

This solution protects MNOs against fraud by providing
anti-faking and anti-flooding mechanisms, as well as
anti-spoofing and anti-spam technology. Like antivirus,
such solutions must be regularly updated in order to
maintain an adequate level of protection, adapting to the
ever changing threats posed by fraudsters.
Finally, SIM Boxes are unofficial voice/SMS over IP
gateways that can be used for test purposes. In most
mobile networks, their commercial usage is clearly in
violation of the operators terms and conditions and
should be detected and blocked by SIM Box Blocking
platforms. They use multiple SIM cards as the "black"

end of a "grey route" and generate massive mobile

spamming. Last year, over US$400,000 was lost in
Liberia due to a single SIM Box operation 8 . Infonetics
Research estimates that 210 billion spam messages were
sent worldwide in 2012 9. Dedicated infrastructure and
processes should be put in place to detect (through a
Fraud Management System or Active Testing) and block
SIM Boxes, ideally in an automated or near automated
way.
In conclusion, the fewer unsolicited messages received
by end users, the more attention they will pay to genuine
content, optimizing the value of Enterprise Messaging for
subscribers, mobile operators and brands alike.

All Africa, Liberia: LTA Bust SIM Box Fraud, Jul 2014

Infonetic Research, SMS/MMS Security Platforms for Mobile Operators, 2013

Success factor #2:

Enhance the end users quality of experience
Ask permission first
Mobile operators should ensure that companies always
request permission first, identify themselves clearly,
and give the right of opt-out to end users as these are
the top concerns from subscribers, shown in Figure
2. Even if end users initially choose to receive messages from a
brand, they may change their opinion at a later date. Thats why
end users appreciate a simple opt-out mechanism. As shown in
the IFOP survey, in an advanced A2P market such as Brazil, such
permission features become even more critical.

adoption rate than an immediate message , because the traveler

is no longer worried about retrieving his or her luggage or passing
through customs. Another well known example is that receiving a
discount message for a store nearby increases the probability of
an impulse purchase.
Figure 3 A majority of respondants still receive messages
not in line with their interests

100%

80%

Figure 2 Top concern from subscribers is to keep control

63%

77%

68%

78%

71%

65%

60%

55%
100%

40%

80%

20%

60%

0%

UAE

US

Brazil

France

UK

South
Africa

Nigeria

40%

Survey performed by Ifop from July 2012 to July 2014 on 18 year-old+ mobile

20%

0%

phone owners
UAE

US

Brazil

France

UK

South
Africa

Nigeria

Sender to ask permission

To easily identify the sender
To opt-out easily

Survey performed by Ifop from July 2012 to July 2014 on 18 year-old+ mobile
phone owners

Relevance is the key

Since mobile is the only device with which we can deliver a
contextually relevant experience, we could expect end users to
receive personalized messages. Unfortunately, the IFOP survey
shows the contrary: most messages received today are not
relevant to end users as you can see in Figure 3.
To create relevant messages, operators and corporations
should select the precise moment and location to generate the
most value for the end users. The IFOP survey taught us that
respondents in the UAE preferred to be contacted on weekends,
whereas American, UK and Brazilian respondents preferred to be
contacted in the evening.
An enlightening example is when mobile operators send a
Welcome SMS to subscribers traveling abroad. Promotional
messages sent one hour after their arrival have a 5% better
10

Use the right communication channel for the

right message
When end users receive a message in which they are interested,
but cannot figure out how to use the information easily, they
may give up and even feel annoyed and upset. This will not only
decrease revenue for enterprises by stopping the purchase
decision making, but also create negative feelings detrimental to
future purchases.
How can Enterprise Messaging simplify information access for
end users? Any messaging strategy should consider multiple
communication channels. The reach and reliability of SMS allows
organizations to reach all customers, while MMS will be used,
for example, by airlines to send plane tickets using QR code
pictures. Other channels, like USSD, app push notifications, or
Gemaltos exclusive Smart Message channel can maximize the
interactivity of the conversation. A Smart Message, for example,
will pop up on the handset or tablet idle screen, providing multiple
choice menus and one click action per screen, says Nadia
Gonzalez, VP Mobile Marketing at Gemalto and Member of EMEA
Mobile Marketing Association Board (MMA). This interactivity
makes end users feel that they do not need to type complex
information and increases, by between two and ten times, the
adoption rate of promotional offers and surveys.

Orange France presentation, at Mobile Roaming World Summit, Nov 2012

MMS
Smart
Message

SMS

App
Push
Notif.

USSD

Figure 4 Offer multiple channels through Messaging Gateway

Go one step further with device based Enterprise

Messaging
Any messaging gateway can support multiple
communication channels, but only an advanced
messaging gateway will allow businesses to select the
best communication channel, as shown in Figure 4,
according to the device used by the end user. Nowadays,
one in every five people in the world owns a smartphone,
while one in every 17 owns a tablet11.
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These percentages are growing rapidly, leading to

more and more usage of mobile apps. Consequently,
Enterprise Messaging can be used to promote the
download of companies mobile apps through SMS and
Smart Message, providing not only a smoother user
experience, but also generating additional revenues for
enterprises and operators.

Business Insider, smartphone and tablet penetration, Dec 2013

Marketing analysis based on device model highlights

consumption habits, behaviors and needs, while the
history of devices for an end-user can give insights
into business opportunities, says Daniel Mavrakis, Vice
President for Core Network at Gemalto. For example, the
golden hour after a change of device is the perfect time
to push promotions on accessories, data plans, phone
insurance and cloud offers.
In conclusion, relevant promotional messages will avoid
end user rejection, boost the organizations brand image
and increase the adoption rate. Mobile messages should
be based on permission and personalized, taking into
account the timing, location, right channel and right
content, as well as the device on which the message will
be read.

Success factor #3:

Develop your Enterprise Messaging strategy
How mature is your Enterprise Messaging today?

Messaging one step further by adding rich media such as

QR code pictures, mobile couponing and call-to-action
linked to sales channels or client services.

As we have seen, the two building blocks of an optimal

Enterprise Messaging strategy are the security of a
clean communication channel and research into the best
customer experience. But there are many more issues to
consider.

Last but not least, push notification and in-apps mobile

communication allow operators and companies to enter
into the mobile commerce era. Last Black Friday, the
day after Thanksgiving, one in five web purchases in the
USA were made with a mobile device, according to IBM . In
Asian countries, m-commerce is developing even faster as
customers are accessing the web via their mobile rather
than fixed broadband networks.

When defining a strategy, the first step should always be an

assessment of your current situation as shown in Figure 5.
Most operators already have a Value Added Services offer.
It can be complemented by SMS campaigns, promoting for
example government recommendations: the GSMA PanAfrican mHealth Initiative (PAMI) improved maternal and
child health of 15 million pregnant women and mothers
with children under five years old by delivering targeted
nutritional and health advice via mobile phones.

off

Dynamize
VAS Content

Empower SMS
Campaigns

Contextualize
Enterprise
Messaging

Enrich
Messaging
with Rich Media

Move to
Mobile
Commerce

Figure 5 Mobile messaging milestones

A key element needed to develop Enterprise Messaging

is an easy to use API allowing authorized third parties to
exchange mobile messages in a secure and controlled way.
Ease of use is the key, as the complexity of sophisticated
interfaces is often an entry barrier prohibiting companies
not versed in mobile messaging from using the SMS and
MMS channels. The Messaging Gateway should then
provide, in addition to standard but complex interfaces such
SMPP or NetOne API, a light and easy to implement web
based API.
The second step of your strategy should be to contextualize
the messages by adding location, time or device based
services and to integrate all interactions with your
customers into your Data Program Manager or any Big Data
solution you choose. You can even take your Enterprise
12

Gemalto, Gemalto joins GSMA pan-African mHealth nitiative, July 2014

13

IBM, IBM Digital Analytics Benchmark - Black Friday Report 2013

Which strengths can you leverage?

For mobile operators, the next step is to review the market
value chain and decide their positioning. Shall mobile
operators sell their services to the brands directly or
indirectly? For some dedicated partnerships with banks
or music providers, selling directly your A2P messaging
services makes sense in order to personalize, monitor
and improve the services in the most customized way. On
the other hand, many brands will first contact their media
agency or a multi-operator aggregator, such as Netsize,
to obtain a 100% mobile reach of their customers. As
pointed out above, the availability of an easy to use API on
the operators Messaging Gateway will widen the potential
customer base. Knowing the Enterprise Messaging
customers will help operators to define their strategy.

The first A2P Messages will probably be internal: within

a mobile operator, network directors, CRM directors, VAS
managers and internal ad agencies require frequent contact
with the subscribers. A2P messaging has a wide range of
use cases, and by nature will involve different business units
within a mobile operator.
For example, SMS alerts can be a powerful tool to warn
clients proactively in the event of problems: this improves
customer satisfaction by letting them know the issue is
being handled. Moreover it prevents numerous calls to
customer services, thus reducing the direct costs linked to
an incident.
Therefore, to succeed in making the most out of your
messaging strategy, adopting a proper organization is a
key success factor. We recommend that mobile operators
create a project group with all concerned departments.
Client services, sales channels, billing, logistics, purchasing
and even lawyers in charge of personal data compliance
should all be involved from the beginning. It is essential
to work with all departments involved in a project mode to
speed up the time to market, putting in place free trials to
see what works best.
Once the team is on board, and the local enterprise needs
are clear, the mobile operator should identify the key
partners to develop A2P revenues.

It takes time and effort, as well as trusted partners, to grow

a Messaging business:
> Media agencies or multi-operator aggregators can
provide additional business, promoting your activity to
many medium or large corporations that may not be using
mobile messaging yet.
> The Messaging platform provider is responsible for both
subscribers and the timely delivery of enterprise
messages thanks to SMSC and Messaging Gateway, and
for network protection through Anti-Spam and SIM Box
blocking platforms
> Mobile marketing campaign specialists or mobile app
developers are defining the end user customer
experience. As we mentioned, a communication
channel will only be used if subscribers find it helpful and
relevant.
Gemalto is happy to provide such services today for
mobile operators and to help create a complete Enterprise
Messaging value chain.
In conclusion, and as you can see below, the creation
of a winning Enterprise Messaging strategy requires
consideration of different factors in order to be customer
centric and maintain a healthy growing business.

Check your A2P strategy

WHY ?

PURCHASE

UP-SELL/
CROSS-SELL

CUSTOMER
RELATIONSHIPS

DRIVE TO
STORE

off

WHAT FOR ?

VAS
CONTENT

OPERATOR
SERVICES

BRANDS
SERVICES

COUPONS

ALERT /
OTP

1
3

#123#

HOW ?

PUSH
USSD

PULL
SMS

PULL
MMS

SMART
MESSAGE

APP PUSH
NOTIFICATION

MMS

WHEN ?

AWARENESS

ACQUISITION

CONVERSION

LOYALTY

RETENTION

ADVOCACY

While facing the infrastructure costs of 4G deployment,

mobile operators business is today challenged by the OTT
messaging offers and the pressures of roaming regulation.
To monetize their assets, the operators must firstly leverage
the potential of Enterprise Messaging, which far exceeds
the simple Value Added Services scope. IFOP survey results
show us that a clear strategy - secure communication
channels free from spam and a specific focus on the
end-user customer experience - can really boost the A2P
adoption.
In this white paper, we focused on how to build a successful
Enterprise Messaging offer today. But we should also bear
in mind that two fundamental trends will significantly impact
the Enterprise Messaging market in the years ahead.
The first one we mentioned briefly is Big Data. The more
information that is gathered about a subscribers interests,
location or device, the more relevant and personalized the
messages are and the more valuable such messages are
for a brand. This will impact the business model as well
reinforcing the importance of CPL (cost per leads) versus
the CPM (or cost per thousand M in Roman numbers).
14
15

The second trend is of course the Internet of Things. With

the growth of new consumer wearable devices, mHealth
devices and connected cars or homes, the question will
soon move from how to deploy them to how to monetize
their user interfaces. The Machine-To-Machine industry
has been talking for a long time of a world where machines
will communicate with people all day long. Google even
has well advanced plans to send ads and other content
to refrigerators, car dashboards, thermostats, glasses,
and watches, to name just a few possibilities.14 While
watching commercials on a fridge might not look so
exciting, wristwatches are already safeguarding people with
autism and Alzheimer's15, and smart cities are increasingly
promoting eco-friendly behaviors. This will boost messaging
traffic and generate new Enterprise Messaging use cases
for operators.
To sum up, the future for Enterprise Messaging is looking
bright.

Wall Street Journal, Google Predicts Ads in Odd Spots Like Thermostats, March 2014
Gemalto, Wristwatch Positioning to Help Safeguard People with Autism and Alzheimer's Disease, Feb 2013

About Gemalto
Gemalto (Euronext NL0000400653 GTO) is the world leader in digital security with
2013 annual revenues of 2.4 billion and more than 12,000 employees operating out of
85 offices and 25 research and software development centers, located in 44 countries.
> To know more on Gemaltos A2P offer messaging solution, enabling MNOs to provide
communication channels between enterprises and their customers, please click here
> To discover Gemaltos Mobile Marketing Services, please click here
> To discover Netsize messaging services, please click here

GEMALTO.COM

Gemalto 2013. All rights reserved. Gemalto, the Gemalto logo, are trademarks and service marks of Gemalto and are registered in certain countries. April 2013 - Credit photos: Thinkstockphotos

The Enterprise Messaging future