Report: Brands will divert billions of dollars from ineffective banner ads to RCS messaging campaigns

RCS Messaging The digital advertising world is desperate for a compelling alternative to the Facebook and Google duopoly.

 

Kerstin Trikalitis, CEO, Out There Media

Brands will divert billions of dollars from ineffective digital banner advertising to mobile operator-led RCS messaging campaigns over the coming years, according to the findings of a new report by business messaging intelligence experts, Mobilesquared.

The report, RCS: The game-changer the industry has been waiting for, in association with Out There Media, highlights the extremely poor return on investment achieved by digital banner advertising today – for every $1 million invested, just 0.1%, or $1,000 derives value for brands resulting in $999,000 being wasted by brands.

If brands fail to divert budget to more impactful digital platforms like RCS messaging, they stand to waste a staggering $70.7 billion on digital banner ads in 2020 and $917.2 billion by 2028.

  • Brands will spend $329 billion of their $700 billion global advertising spend on digital advertising this year, a number which is set to increase to $390 billion by 2022 when the global advertising spend is expected to rise at $749.8 billion
  • Up to 74% of this budget will be shared across just seven companies, with Facebook and Google claiming the lion’s share, despite advertisers becoming increasingly disillusioned with these advertising giants due to concerns regarding ad fraud, issues around data privacy, brand safety and hate speech
  • Despite brands spending half their digital media budgets on Facebook, only 11% and 10% of consumers want brand communication via Facebook or Facebook Messenger respectively

For operators, this presents a significant opportunity to increase revenue from digital advertising. Mobile operator-owned RCS messaging gives brands a new channel of engagement that delivers an extremely interactive digital platform right into the hands of consumers. Mobilesquared forecasts that brand RCS messaging spend will be worth more than $52.2 billion by 2028, with mobile operators able to claim a significant portion of this revenue.

RCS combines the power of messaging, the richness of an app and the same levels of interaction offered by existing messaging apps such as WhatsApp. There will be 700 million RCS users by the end of 2020, a number that will grow to nearly five billion in the next eight years, reaching 61% of total smartphone users—this is twice the size of the addressable audience that Google and Facebook can reach today and, according to the report, will make RCS the single biggest medium in the world.

RCS Messaging Brands can no longer waste vast swathes of their digital budget on ineffective channels.

 

Nick Lane, Chief Insight Analyst, Mobilesquared

By the end of the report’s extended forecast period, a significant proportion of the 4.89 billion Android devices globally will be RCS users (3.7 billion). At which point, brands will be able to reach 61% of total smartphone users via RCS, this is twofold of what Google or Facebook can reach today. Just like SMS today, RCS will offer universality, and deliver unprecedented levels of customer targeting and 100% viewability for brands. The report further revealed that:

  • Brands will spend $52.5 billion on RCS by 2028.
  • RCS’s scale and reach has seen brands achieve average campaign ROIs of 207%; 730x better performance than existing digital advertising industry benchmarks; and read rates and engagement rates upwards of 70% and 80% respectively.
  • Based on Mobilesquared RCS data modelling, recent campaigns conducted by Out There Media, in partnership with Vodafone, for large global brands generated ROIs up to 279% as described in the report.

Further, in the year 2022, RCS will generate $1.5 billion from the natural evolution of brand spend from SMS to RCS. This 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. Overall, RCS revenue for mobile operators will reach $52.5 billion by 2028.