Will RCS Messaging Eat App Budgets?
After 25 years, SMS is getting an upgrade. The world’s mobile operators, handset manufacturers, Google and messaging aggregators are now working together to make RCS (sometimes called SMS 2.0) the default messaging option on millions of phones. Juniper Research forecasts that the market value of RCS will exceed $9 billion by 2022.
Unlike SMS, RCS (Rich Communications Service) offers an app-like experience to every consumer inside a chat session – without the pain of downloading a native app. An RCS message is also far cheaper than deploying an app, without the download friction or non-use associated with them.
So will RCS messages directly compete with mobile apps? We asked a handful of industry experts for their views…
Gavin Thomas, Senior Android Developer, Big Radical
RCS messaging protocol will open up some great opportunities, not just for brands, but also in making life easier for mobile phone users. Whether we’ll see the decline of app usage is not certain. Brands will still want their own tailor-made digital experience for their users.
However, RCS messages will expose another platform for companies to reach their users, be it with promotional content or enhancing client user journeys, it will help continue to push the future of digital mobile products.
Magnus Jern, Chief Innovation Officer, DMI
RCS will complement rather than compete with the popular messaging apps, although its adoption will admittedly be slow. While messaging apps are generally ‘must-have’ apps for consumers, RCS messaging faces a few hurdles. It is not encrypted, SMS has already been replaced by messaging apps like WhatsApp so there is no great customer demand, and the proprietary messaging apps will continue to evolve faster than an open standard like RCS ever could.
Also, due to Apple’s proprietary iMessenger it’s unlikely that it will support RCS before it’s a de facto standard, which will further slow down adoption.
The big upside of RCS however, is integration of chat into apps to communicate with customers. This is something that Apple already launched in 2017 for iMessenger, so the opportunity really lies with Android. A new start-up that relies on messaging as part of their app could take advantage of RCS instead of implementing their own messaging functionality.
Gavin Patterson, Chief Data Analyst & Head of Data Books, Mobilesquared
RCS messaging is clearly on its way – first in the peer-to-peer environment, and then with enterprise A2P RCS messaging, so it seems safe to assume that app-replacement would be the logical next step. Indeed, if you look at the RCS carousels being developed by the likes of FC Bayern Munich in Germany then you may consider RCS messaging could compete with mobile apps in the short term.
However, the take up of RCS is still quite slow – with just 57 network launches by end, 2017, rising to around 92 by the end of this year, and 133 end-2019. Over the same period, RCS users are forecast to rise from just 159 million to 1.09 billion and, according to Mobilesquared research, RCS traffic driven by app-replacement will account for just 10% of the total A2P RCS traffic by end-2019.
So, RCS messaging is clearly on its way – but until it is ubiquitous, across all devices on all networks in your market, you still have time to monetize those apps.
Bart Vandekerckhove, Head of Mobile Messaging, BICS
RCS has the potential to become a valid alternative to certain types of mobile apps. For example, hotels struggle to encourage their customers to download their apps because they are only occasionally used to book rooms or services. In instances such as this, where the use case is well-defined, RCS is perfectly suited, as it provides the same level of interaction while enabling businesses to increase user engagement.
In addition, as there is no download needed for RCS, it is likely to resolve friction issues with customers. RCS offers users the same level of interaction and engagement as apps do, such as two-way messaging and the ability to make a payment, but removes the complexity of the customer needing to download the app.
However, the success of RCS hinges on the size of the ecosystem, making it vital that a sufficient number of mobile operators join to reap its full benefits.
Ted Woodbery, VP Marketing at Synchronoss
An RCS messaging ecosystem, powered by common features and a single onboarding environment for brands creates a powerful interactive environment for brands to engage with subscribers in the messaging application. Rich cards and automated chat bots, powered by AI give brands a contextual opportunity to converse, interact and transact with subscribers in pinpoint ways based on a conversation cue, or a specific use case. We are already seeing this take place in OTT messaging communities like WeChat, Line and to some extent, Facebook Messenger.
In this sense, subscribers may eventually interact with brands more through specialized and fluid chatbots and less through downloaded applications. This is certainly a trend that’s in heavy discussion throughout the industry as experts forecast the rise of AI-driven micro-services and the eventual decline of today’s downloaded applications.
In the near term, RCS will enable new tentacles and tools for brands to reach subscribers in ways – ostensibly creating a link between downloaded applications and chatbot functionality. For example, Starbucks will be able to prompt a shortcut to a specific function of their app (if downloaded) through a messaging interface. This could prompt the launch of the application for fulfillment or it could simply pass on the fulfillment through the messaging app itself. In this sense, RCS messaging can create greater stickiness with downloaded apps.
Rob Malcolm, VP of Marketing and Online Sales, CLX
RCS gives brands and enterprises the tools to deliver an app-like experience to consumers. Boarding cards, chat sessions, wayfinding maps, video and more can all be delivered within the container of a message. This means there’s no need to develop an app and no need to set aside budget to promote it.
This is significant because currently, most people only use messaging apps to stay in touch with friends, not brands. As a result, apps like WhatsApp still lack one important quality: ubiquity. Most consumers don’t care about ubiquity but businesses do. They want one channel to reach everyone.
This explains why SMS use has fallen among consumers but soared among Enterprises. We’re all familiar with use cases: authentication, notification, marketing offers etc. SMS messages are concise, direct and personal. RCS now promises to make this richer and more engaging – a universal channel that enterprises can use for an entirely new kind of customer engagement.