Is Your Global Brand Using SMS Wholesale Aggregators? Watch Out For Hidden Costs

Is Your Global Brand Using SMS Wholesale Aggregators? Watch Out For Hidden Costs

Is Your Global Brand Using SMS Wholesale Aggregators? Watch Out For Hidden Costs

Your SMS vendor might be costing you more than you think. Read on to see why.

SMS messaging is one of the most ROI positive marketing strategies available to enterprise brands.

So why are we discussing the high cost of SMS? Because whether you know it or not, you may be using wholesale aggregators to send your messages. 

There are thousands of carriers around the world, and maintaining contracts with all of them can be quite a challenge. That's why businesses often rely on wholesale aggregators.

But using wholesale aggregators for SMS can cause spend to add up extremely fast.

Communication services like SMS account for 31% of global IT spending. When business leaders go on the hunt for expenses to cut, SMS often gets pulled under the microscope.

This brings us to our second point: while the cent-for-cent cost of SMS messaging might be low, the return on investment (ROI) may fall well short of its potential if you’ve partnered with an SMS wholesale aggregator.

Bad deliverability and other service issues are likely dampening your operations, revenue growth, and overall brand reputation—and your team may be none the wiser. In some cases, these aggregators even expose brands to potential legal action due to non-compliance with local regulations.

These limitations may not be obvious in your day-to-day operations, but a lack of global reach and direct carrier connectivity is probably costing your business a great deal, especially if you’re striving to show up as a cohesive global brand or run a cost-efficient marketing organization.

Discover the truth about how SMS wholesale aggregators are hurting your business—and find out what you can do about it.

The cost of saving a buck: How SMS wholesale aggregators really work

On the surface, wholesale SMS aggregators may seem like a logical vendor solution for enterprise brands in need of mass messaging services. These wholesalers contract with third parties to deliver SMS messages on your company’s behalf, including in global markets where that wholesaler isn’t present.

But while this business tactic results in lower per-message expenses for your business, it also introduces a laundry list of new costs and concerns to worry about, including:

  • The added cost of paying a middleman. When aggregators contract out your messages to other vendors, they always take a cut. And if you are not paying that cost, it might just be that they are dropping messages to create margin.

  • Your aggregators’ aggregator might be doing the same thing. This could take place six times, seven—and all the while, your business is footing the bill for vendor processing fees.

  • One bad link in the chain can lead to disaster. As messages are passed between aggregators, for example, things can go wrong. If even one vendor changes a sender ID, your messages could suddenly be classified as spam and ultimately not delivered.

  • Poor visibility leads to poor transparency. In the hands of unknown aggregators, your business is at greater risk of bad deliverability rates, impacting not only your campaign performance but your ability to evaluate your campaign’s results.

  • Increasing message latency lowers your ROI. Exchanges between aggregators can increase the time it takes to send these messages out. One-time passwords and flash sales, for example, have a short life expectancy and need to be delivered immediately.

  • Compliance. Messaging regulations vary by country, and not every SMS aggregator is going to follow the rules. A disregard for local regulations can expose your business to fines or other consequences.

  • Quality of service: Delivery rates, timing, and other variables affecting performance can be hard to track. In the worst-case scenario, certain aggregators may submit fake delivery receipts.

The troubling math behind low-cost SMS delivery

So the question is, if wholesale aggregators keep taking a commission, dropping messages, and passing along the work to someone else, how much are you actually paying for message delivery?

It’s tough to answer this because it requires you to know exactly how many messages are getting delivered. 

Unfortunately, delivery can’t be assumed with SMS wholesale aggregation. Since there’s a baseline cost for sending an SMS message, aggregators at the bottom of the food chain might decide to drop a percentage of those planned messages, deliver the rest, and pocket the difference. 

Let’s say messages are sold for one cent each, but the cost to route those messages is 1.1 cents. The only way for aggregators to make money is by dropping enough messages that they create a profit margin. It might be 20%—or it might be more.

Getting concrete numbers around deliverability is often difficult, and sometimes impossible. Some aggregators will submit fake receipts. Others may not report on deliverability at all. 

These local aggregators also don’t typically share accurate deliverability data, so businesses are just left guessing how many of their messages are actually being received. Even if you raise the issue with the aggregator, there’s often nothing to do but accept the poor results.

The business downsides of wholesale aggregators

Underwhelming marketing ROI is only part of the problem with SMS wholesale aggregators. In a worst-case scenario, these services could also saddle your business with lasting reputational damage and legal trouble in multiple countries.

Let’s review the possible ramifications of taking a low-cost, wholesaler approach:

Poor deliverability leads to lost conversions and broken customer journeys

SMS messages either won’t arrive or won’t arrive on time. This means your audience will be delayed or prevented from taking important actions like signing up for an account, making a purchase, or other goals targeted by your messaging campaign.

When messaging is handed off across multiple aggregators, carrier issues can take much longer to debug, reducing your messaging throughput and capacity.

If your SMS message isn’t delivered, all the resources spent on campaign design, content creation, and platform costs are for naught. The loss on your ROI here is nearly immeasurable because of its wide, rippling effects. This result is a broken customer journey that damages your reputation as a global brand and severs your connection to each customer’s brand experience.  

Regulatory fines and reputational damage

Messages sent through a wholesale aggregator are more likely to come under regulatory scrutiny due to altered sender IDs, unauthorized messaging practices, issues around opt-ins, and complaints from your target audience. 

The fines for non-compliance can be crushing for any business. In the United States, for example, violations of the Telephone Consumer Protection Act can result in fines of $500 per individual text message. On top of those material costs, a poor messaging experience can inflict lasting brand damage and break trust among your target consumers.

SMS fraud

Some SMS wholesale aggregators generate fake traffic to which real messages are sent—which your business ends up paying for. Since the fake traffic is generated with real phone numbers, there’s no way for businesses to catch aggregators in the act.

Even the world’s biggest brands are susceptible to this fraud: X, formerly Twitter, revealed earlier this year that it was losing as much as $60 million/year on fake two-factor authorization (2FA) messages.

Limited services and capabilities

An SMS wholesale aggregator can facilitate messaging to certain global audiences, but their overall value as a communications vendor is very limited when compared to alternatives. 

These aggregators offer limited geographic service, struggle to perform on the massive scale required by enterprise brands, and don’t offer support for WhatsApp, email, or other forms of messaging. Most importantly, they lack the quality of a direct-carrier relationship that delivers messages and adapts routing to maximize messaging ROI.

Calculate, and protect, your true ROI with Bird

Don't be lured in by low-cost SMS wholesale aggregators; the consequences for your ROI, brand reputation, and legal team simply aren’t worth it. Instead, connect your SMS spending directly to your business’s outcomes with a better solution. 

Bird is here to help: We’ll perform an analysis of your SMS spending and hop on a call with you to discuss the true costs of your current SMS strategy. Then we’ll demonstrate how our platform can help you optimize your messaging content, global engagement, compliance, and multi-channel strategy.

Want delivery receipts? We’ve got them. Global expertise? We’ve got that, too.

Find out for yourself

Your new standard in Marketing, Payments & Sales. It's Bird

The right message -> to the right person -> at the right time.

Your new standard in Marketing, Payments & Sales. It's Bird

The right message -> to the right person -> at the right time.