Commercial messaging market set to reach $3.2 bn by 2028: Gartner report

Mumbai: India’s commercial messaging market is expected to more than double to $3.2 billion by 2028 from $1.3 billion in 2023, with global advanced messaging channels such as Google’s RCS (rich communication services) and Meta’s WhatsApp Business intensifying their competition for a bigger share of this growing market.

WhatsApp currently has a head start over Google’s RCS with some enterprises saying they have deployed a majority of their messaging on that platform. However, both are set to reach a combined market of $1.6 billion and capture 50% of value share of India’s commercial messaging market, according to research firm Gartner.

While basic messaging channels in India such as SMS are set to grow at an annual rate of 12% through 2028, advanced channels such as RCS and WhatsApp will grow at 58% at the fastest pace for any country globally, Gartner said.

“Globally, while basic messaging is set to grow at a modest 4.2%, advanced messaging is scaling in double digits at 34.4%,” said Pankil Sheth, industry research analyst at Gartner.

“Meanwhile for India, both these segments are registering a higher double-digit growth due to the evolution of various digital services. However, we believe that by 2028, nearly 50% of the CPaaS (communication-platform-as-a-service) industry will be dominated by these two channels – RCS and WhatsApp – in terms of value.”

He added that even as Google's RCS has started picking up steam, rival WhatsApp Business has already matured in India's CPaaS market and will continue to grow further by deepening its presence in rural markets.

Enterprises like Apollo 24/7, PolicyBazaar, and MaxLifeInsurance said WhatsApp has become an integral part of their communication strategy, while at the same time, they are in early stages of experimenting with Google’s RCS which carries the promise of lower costs.

“We have allocated nearly 70% of the communication spend to WhatsApp Business Messaging as the platform has enabled features like flows, payments and the upcoming voice calls,” said Prateek Tomar, head-martech and insurance, Apollo24/7.

In terms of volumes, WhatsApp still accounts for 15% of messaging as the brand refrains from making it a spam channel and invading customer privacy, Tomar added. “Almost 60% of communication is through push notifications because it is free to use, 10-15% would still be SMS for sending OTPs primarily”.

Google is aggressively experimenting with RCS which has the potential to create similar user journeys at one-fourth of WhatsApp’s cost, he said. “However, coverage is still a challenge, which means it is difficult to use RCS without failover to SMS today.”

Meanwhile, Policybazaar said it has cut promotional SMS volume to almost nil since a year-and-a-half, and 95% of its spends are currently dedicated to WhatsApp.

“We have developed a fair understanding of where the user is, which means, we don’t spray-and-pray anymore, in terms of our marketing, utility, and service messaging needs,” said Nishant Malsisaria, business head-growth, Policybazaar. “In fact, with its new pricing update, WhatsApp has made OTP messaging so competitive to SMS.”

He added that the brand is also ready with RCS use-cases and will explore the channel, as per user demands.

ET has previously reported about the emergence of Google’s RCS as an alternate mobile phone messaging system in the country that could disrupt the growing use of WhatsApp by enterprises because of its cost which is 70-75% lower. However, challenges such as user coverage and stalling partnerships with telecom firms continue to plague the US search giant.