This article is the first part of our SMS vs OTT Messaging series. Read Part 2 >

What is OTT Messaging?

OTT stands for over-the-top, which is not businesses bombarding customers with emoji-laden messages, but rather, messages sent over the top of users’ network provider.

So if you’ve used Skype, Facebook Messenger, or WhatsApp you’ve used OTT. They’re essentially communication services that piggy-back on a telco service, and let users call or text for free, rather than pay their telco additional usage fees. It’s not just the public taking advantage of this; marketers are applying social instant messengers for business as they enable greater targeting, easier data collection, and are cheaper to implement.

OTT’s popularity is only set to grow and is predicted to expand from 22.8 trillion messages in 2015 to 52.5 trillion messages in 2020, with SMS only expected to reach 4.9 trillion messages by the same date. In the meantime, OTT is costing telcos hundreds of millions of dollars in revenue, and with the growth in digital video streaming, this is likely to continue even further.

Networks are trying to counter this by bundling unlimited texts and minutes with data plans, and in some cases offering ‘data free’ streaming, like Optus does for Stan. Because of the rising popularity of OTT, telcos are also expanding the quality and quantity of their 3G and 4G networks, but this has the potential to accelerate the process of traditional phone and SMS services becoming obsolete.

SMS is dead, long live SMS

The benefits for consumers and businesses to transition to OTT are numerous. It’s cheaper (no per SMS costs), multi-platform (Facebook messenger can be accessed on phones, tablets and desktops), and it supports more features (GIFs, video, etc.). You also avoid roaming issues for international communication, and phone service dead spots, as all you need is an internet connection. Consumers are favouring OTT, even if they don’t realise it. This means SMS and other services may be phased out by telcos soon.

But how soon? SMS remains ubiquitous, and while the popularity of OTT is growing, it has a long way to go before it can match the reach of SMS. SMS can be carried out on any mobile phone, which means it’s possible to reach older demographics and emerging markets where feature phones still outnumber their more intelligent brethren. So for now, businesses want to invest in platforms that are SMS and OTT enabled.

The industry is beginning its transition to OTT

Businesses that rely on regular, targeted and personalised communications with customers must make sure they are keeping up with user preferences to remain competitive. And users are moving to OTT. They risk nothing, and market dynamics are moving in their favour. The future of this is social instant messenger for business, where customers and companies benefit from faster, more efficient, data-rich communication. Businesses also don’t need to invest in this technology internally, with third parties like Pendula offering social instant messengers for businesses that integrate into their existing platforms.

Companies are beginning to see the writing on the wall for SMS and are experimenting with the transition away from SMS to OTT messaging for business. Initial results show that OTT gets more engagement from customers, with OTT campaigns run by LEGO and KLM seeing a 31% reduction in click-ad costs and a 40% increase in customer interactions respectively. Facebook messenger for business is also becoming increasingly popular, due to its effectiveness at reaching younger demographics.

Whilst SMS may not quite be dead, it’s been moved to intensive care, and for good reason. Customer communication platforms that can integrate OTT can begin to benefit from better responsiveness, engagement, and retention from users.

The future of personal communication is OTT messaging apps, which means the future of customer communication is too.

Photo by rawpixel on Unsplash

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