The SMS market is a prosperous niche, as SMS messaging stays one of the top communication tools. With the appearance of A2P messaging, the market players have gained another opportunity to find their place and generate profits.
A2P messaging will stay in demand for a long time. Businesses have already understood the real value of bulk SMS marketing and implemented regular campaigns into their day-to-day operations. Hence, there is a big need for great, reliable SMS aggregators that will help companies to work with this communication channel.
Starting an SMS business is not that difficult. However, you may encounter many difficulties along the way. So, if you made a decision to enter the A2P SMS market, what information should you obtain to succeed and how to become an SMS aggregator? Testelium shares the main insight that every SMS aggregator should know before starting their business.
What is an A2P SMS messaging and how does it work?
Before going into business aspects, let’s talk about what A2P messaging is. A2P stands for “Application-to-Person” meaning that messages are sent from SMS sending service to subscribed mobile users.
A2P SMS messaging is perfect for businesses, as it simplifies the process of sending bulk SMS messages. Imagine if you have thousands of subscribers you need to contact. Typing and sending messages one by one will be an impossible task.
Usually, A2P messages are used for:
— marketing campaigns, offers, promo codes and to win back customers;
— appointment reminders;
— one-time-passwords (they are used to log in to different services, for example, through two-factor authentication).
A lot of businesses in different industries use A2P messaging, for example, banks, retail businesses, healthcare providers, delivery services, etc.
What is an A2P SMS Aggregator?
SMS aggregator service is an intermediary between them and subscribers of mobile operators. The SMS A2P aggregator has agreements with several mobile operators to send and receive messages between their system and the operator’s SMSC, it makes the job much easier for brands and businesses.
What’s the difference between a Tier-1 and Tier-2 SMS aggregator?
Before starting a bulk SMS business, you should learn the differences between Tier 1 and Tier 2 aggregators.
A Tier 1 SMS aggregator is directly connected to four of the five wireless carriers.
A Tier 2 SMS aggregator only connects to three of the five wireless operators.
The Tier 1 operator provides the most direct connection, eliminating the need to use additional third-party services.
Are SMS gateways and SMS aggregators the same thing?
In general, yes, it is. Speaking of gateway refers to a technical term that describes the SMS path from sender to recipient.
Once sent, the SMS is sent to the nearest cellular tower, and from there to the operator’s SMSC center, then sent to the tower closest to the recipient. But the problem is that each major cellular operator has its own SMSC and uses its own, personal communication protocol. An SMS gateway is needed to support different SMSCs and to send text messages in bulk without hindrance.
How to start your own bulk SMS business: 5 practical tips
So, how to become a bulk SMS service provider and benefit from it? Here are five practical tips to help you realize your vision:
- Start by studying your competitors: how they work, what are their strengths, what are their weaknesses, and where could you beat them? It can take a long time to analyze, but it’s worth it.
- Be clear about your goals and business model. This way you won’t waste time and money. Stay on track.
- Be clear about your budget, how much are you willing to spend? This will affect the choice of form of realization of your bulk SMS service: will you become a retailer and buy text messages from reselling operators, or will you be able to place your SMPP-server at the provider and set rates for SMS independently.
- Keep track of processes, don’t forget about updates, respond to problems in a timely manner, so that they don’t accumulate.
- Scale up, move to another level when you are confident in your actions, take risks, but with caution.
Three ways to become an SMS aggregator
People are asking online, “How can I start my own bulk SMS business?” Well, there are many nuances, but generally there are three ways you can go.
Become an owner of an SMS Gateway (Acquisition mode)
If you buy your own bulk SMS business and special equipment for it, it gives you several advantages:
— you don’t have to pay rent;
— you control the connection of the equipment yourself;
— you do not depend on the supplier.
But it is not without disadvantages:
— you definitely need to have experience to get started;
— you need a large capital investment;
— you need to deal with technical support issues, which requires at least one hired worker.
Rent an SMS Gateway (Cloud mode)
This SMS business model implies a lower cost than buying. Its other advantages are:
— you will also be able to control the connection;
— the provider provides updates and guarantees support;
— capacity and costs are controlled according to demand.
Disadvantages of this solution:
— you would still want to have some experience in this area;
— the monthly costs associated with the lease;
— at least one employee is required for technical support.
Become a white-labelled reseller of an existing platform (Reseller mode)
The most suitable option for those who are just starting out in this field.
— you do not need to have a lot of knowledge and years of experience;
— quick entrance to the market;
— you do not need the infrastructure and staff to perform technical tasks.
— less profit and control;
— no influence on connection and upgrade parameters;
— little flexibility in pricing.
Some interesting global A2P SMS market stats
Are you still wondering how to become an SMS aggregator and do you need it? Want some proof that the A2P SMS industry is the one you need to enter? Here is some statistical data that shows the rise of the niche and its perspective over the span of the coming years.
— According to Statista, the worldwide revenues of this industry will grow from 42 billion dollars in 2020 to 51 billion in 2023.
— According to MEF and their report “A2P Business Messaging 2020”, around 2 billion mobile users receive A2P SMS. It’s 38% of the adult population of the whole world, meaning that there is still a place for the market to grow and expand.
— Gray routes, or unlicensed ways of sending A2P SMS messages, will lead to 37.1 billion dollars lost between 2020-2024, according to Mobilesquared “Protecting A2P SMS revenues in the roaring 20’s”.
— At the same time, Markets and Markets in their research of A2P Messaging Market states that more than half of A2P messages are going through gray routes.
— Despite the telecom industry crisis, A2P SMS providers managed to induce their growth. The importance of remote communication increased, and bulk SMS aggregators used all their capacities to cater to the needs of businesses and institutions. And they gained a great result: for example, Twilio A2P, a SaaS communication platform, announced that they experienced a 90% rise in demand from healthcare providers in March 2020.
— The businesses are ready to spend around 50 billion dollars on SMS services by 2025, according to the report “A2P Messaging: SMS, RCS & OTT Business Messaging 2020-2025”.
How does an A2P SMS aggregator work?
The A2P industry has a lot of layers, hence, there are a lot of players you need to cooperate with. Typically, the link goes the next way:
— a telecom operator, or an MNO
— an SMS aggregator
— possibly an SMS reseller
— the end-point user who will receive a text message.
An SMS aggregator company is crucial in this sequence, as it becomes a connector between a mobile network operator and a business that needs to send bulk A2P SMS messages.
Aggregator takes care of actual agreements with different MNOs and ensures that SMS will be delivered through the operator short message service center (SMSC).
Businesses, on the other hand, don’t need to worry about technical aspects, negotiations with operators, or other communication with MNOs.
These tasks are fully in the hands of the aggregator, and that’s also an explanation why A2P aggregators are so in favor and needed.
What are the benefits of becoming an A2P SMS aggregator?
So, why is the A2P business worth investing in?
We collected the main advantages of why message aggregators are a profitable line of work that can not only quickly pay off, but also open a gate to the telecommunication industry and become the start of something bigger and more diverse.
The SMS market seems to stick for a long time
A2P SMS messaging has already proved itself as a reliable, functional communication tool, and even the rise of the Internet and Internet-based services can’t remove it from the spotlight.
The market dynamics are definitely positive. There are a few explanations: firstly, SMS has an impressively high open rate, so their reach is almost absolute.
Secondly, in many parts of the world, the Internet is still unavailable for a big percent of the population, and mobile connection is the main way to access them.
The majority of the estimations predict the constant growth of the SMS market, including the A2P segment, so you can hope for a stable niche and permanent demand.
There are a few ways to start a message aggregator business
If you are new to the telecom industry, you may want to be careful and avoid large investments till you figure everything out and gain some confidence.
The main issue you need to take care of in the beginning is to obtain an SMS gateway to ensure the sending of the bulk SMS.
You have two options: to buy and set up your own SMS gateway or go with the options with less pressure and rent a cloud gateway. Either way, you will be able to connect first clients and start operating.
However, you will have a chance to try yourself and pay for the resource used with cloud gateway, instead of investing a big sum into buying. But at the same time, if you’re not a newcomer to the industry, you can make this big purchase and grow volumes exponentially.
It may become a starting point for a big telecom business in the future
With the right management and adequate decision-making, you may grow your A2P aggregator into a telecom company that will provide other, additional services, for example, an international SMS testing platform.
As we have already mentioned, the SMS messaging market engages a lot of players, and it’s your chance to expand the company, make agreements with new clients.
Operating as an A2P aggregator from the beginning will help you to establish yourself as a reliable partner in the eyes of mobile network operators, build up the base of loyal clients, and generate the necessary expertise for successful work in telecommunications.
What do you need to become a premium SMS aggregator?
If the decision is made, and you are on your way to conquering the A2P market as an aggregator, you may ask a justified question: what main step should we take? Testelium gives you a checklist that should help you navigate the initial stages.
Step 1: SMS Gateway
We have already discussed the importance of gateway: it is software that is in charge of SMS exchange in big volumes. Gateways usually work through HTTP and SMPP interfaces. Your goal is to evaluate your financial capabilities and your plans.
With the cloud, or hosted, gateway, you will need to pay only for the text messages you’ve sent and no other expenses. The time-to-market will also take a short period, so you can start your work without any problems. However, when your volumes start to multiply, your expenses will do the same.
The benefit of your own gateway is full control over it. You can design it for your needs, you won’t need to rely on other stakeholders, and you can easily accommodate the growth. But it’s a matter of spending: obtaining a gateway is costly, and don’t forget about its constant maintenance.
Step 2: Routes
You need to cooperate with route providers to establish messaging. And here is where the great dilemma arises: white or gray routes? With the latest, you can hope for higher profits, but at the same time, you become a dishonest A2P SMS provider that engages in fraudulent activities.
We suggest working only with white routes, as it’s the legitimate option. Besides morale, it’s also a question of your brand: for example, with test SMS API, sender ID check, or other tools, your clients, partners, or MNOs may discover that you use gray routes and refuse to do business with you.
Step 3: Support
Take care of your customers and ensure that they can always apply to your team and get the help or advice they need. Great customer support sometimes becomes the major factor that distinguishes you from another SMS aggregator platform, and it’s unwise to neglect it.
Train your employees to know the platform and be client-oriented, establish different communication channels (e-mail, social media, chatbot, etc.) and genuinely look after your customer.
The A2P messaging business is interesting, perspective, and profitable. By making a bulk SMS service company, you can get a good profit.
We wish you luck and hope that our article will help you!