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RCS advertising set to generate $52bn by 2028

The new messaging technology will overtake digital banner advertising and boost mobile operator revenue

Joanna England
|Nov 21|magazine9 min read

A new report on the financial projections of Rich Communication Services (RCS) says the new messaging technology will generate $52.2bn for mobile operators globally by 2028.

The study by Out There Media, a global leader in mobile advertising and data monetisation, and the business messaging intelligence experts, Mobilesquared, says brands will divert billions of dollars away from digital banner advertising and redirect it towards mobile-operator led RCS campaigns. 

RCS messaging is the successor to SMS, which has been used since the late 90s and has now become outdated in terms of user expectation. The service is being replaced by RCS, which primarily offers a much more satisfying consumer experience and can be harnessed by businesses to expand their m-commerce and mobile marketing potential. 

Until now, many companies have relied on digital banner advertising which yields poor returns on investment. According to data, the service has a 0.1% ROI, which means that for every $1mn invested, only $1,000 derives value for brands. Failing to divert funds from digital banner adverts, will, says the report, lead to $917.2bn of wasted investment by 2028.

RCS presents an opportunity for mobile marketers seeking to increase returns on digital advertising because it offers the same level of interactions as other popular apps such as Facebook Messenger and WhatsApp. 

Data suggests 61% of smartphone users will access RCS by 2028. Approximately 700mn users will utilise the service by the end of 2020 and this number is set to increase to 5bn in the next eight years. This will make RCS the single biggest medium in the world, twice the size of the addressable audience that Google and Facebook can currently reach.

Kerstin Trikalitis, CEO and Co-Founder, Out There Media said, “Brands are waking up to the chronic waste that surrounds the average digital advertising campaign. 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.”

She continued: “This is being reflected by the poor levels of brand engagement and the 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.”

The report suggests that by 2022, RCS will generate $1.5bn from the natural evolution of brand spend from SMS to RCS. This popularity of the service will continue to grow and by 2024, RCS revenue will increase to $11 billion as brands also adopt the channel for P2A customer care, starting to supplement, and eventually replace, call centre voice solutions with RCS chatbots. 

Trikalitis explains, “We will start seeing brands diverting media spend to RCS this year and this will increase dramatically in 2021 and beyond. This is great news for mobile operators who are pivotal in the delivery of successful RCS campaigns for brands—they have the reach, the scale, and first-party deterministic data to really ensure maximum ROI from campaigns.”

She adds, “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.” 

Nick Lane, Chief Insight Analyst, Mobilesquared, believes the service presents businesses with another option for direct marketing that is proven to deliver greater returns. 

“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,” he said, adding, “Mobile operators need to deliver a rich messaging experience to their subscribers and remain a 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.”

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