Brands playing it safe with CPaaS – report

The majority of brands that use a CPaaS (Communications Platform as a Service) solution are failing to fully leverage them, according to a new report from the analyst, Mobilesquared. The report, CPaaS 2020-2026: The path to brand/consumer engagement, finds that in 2022, 80.1 per cent of total CPaaS spend globally by brands was on one-way channels (SMS, MMS, email, in-app push notifications, and video) that will not drive interaction with the consumer. Just 19.9 per cent of CPaaS spend was on two-way engagement channels such as voice, social media, rich messaging channels, and WebRTC. Mobilesquared projects this will increase to 31.2 per cent of total spend by 2026.

“CPaaS is not the engagement platform everyone believes it to be… yet,” said Mobilesquared Chief Insight Analyst and author of the report, Nick Lane. “Right now $1 in every $5 spent on CPaaS by a brand in 2022 had the potential of generating engagement activity with the consumer, with $4 in every $5 spent on non-interactive, one-way channels. This will increase to $1.5 in every $5 invested by brands in CPaaS by 2026, but this shows that brands are playing safe and spending the mainstay of their CPaaS budget on reliable and robust one-way, channels, like email, SMS and in-app notifications, that will not generate a truly interactive experience with the consumer.”

The Mobilesquared data reveals that brands’ existing CPaaS investment strategy will generate, on average, one engagement opportunity with a consumer per day in 2022. This will increase to twice per day in 2023, and to 3.6 times per day by 2026.

The brand-consumer engagement opportunity over CPaaS varied greatly around the world in 2022, with brands generating one engagement opportunity every 65 days in Africa; one engagement opportunity every 2.5 days in Asia; and 6.7 engagement opportunities per day in Western Europe. Brands in North America had the most effective CPaaS engagement strategy, generating 11 engagement opportunities per day.

“It’s all relative, and the more a brand invests their CPaaS strategy in engagement channels, the more engagement they will potentially drive with the consumer,” said Lane. “There has been so much hype associated with CPaaS in recent years, that we think expectations need to be revised in the short- to medium-term as brands’ evolution to truly engaging strategies will be a slower-than-expected process. On average, brands spent 20 per cent of their CPaaS on engagement channels, and this will only increase to 30 per cent by 2026. CPaaS remains hugely under-utilised by brands.”

Mobilesquared’s report and accompanying dataset, which covers 14 channels across 200 markets, finds that CPaaS was worth $29.7bn (£24.3bn) in 2022, up from $16.9bn in 2020, and will grow to $52.8bn by the end of 2026. Brands will increase their spend in CPaaS by 212 per cent over the forecast period (2020-2026), generating a CAGR of 17.7 per cent.

SMS dominates CPaaS spend throughout the forecast period, accounting for 75 per cent of total spend in 2020 and then sequentially dropping year-on-year to 50.1 per cent by end-2026. SMS is one of the ‘Four pillars of CPaaS, which also include voice, email and WhatsApp (which can be abbreviated to VEWS). These are the four core channels used by brands around the world. VEWS accounted for 91.2 per cent of total CPaaS spend, and that will drop marginally to 89.4 per cent by 2026, highlighting that brands are reluctant to shift their CPaaS spend onto alternative channels.

Mobilesquared’s defines CPaaS as “the capability to provide real-time, cloud-based omnichannel communications via an API to connect brands and consumers at scale”.

There’s more information here.