The global recommendation engine market size was valued at USD 1.77 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 33.0% from 2021 to 2028. The increasing need to enhance customer experience is fueling the demand for recommendation engines. The growing adoption of digital technologies among organizations is also resulting in the increased demand for recommendation engine solutions. The COVID-19 pandemic affected several industries, leading to a notable change in how businesses operate and buyers shop. These changes are expected to endure beyond the pandemic as well, having a lasting impact on businesses and people. For instance, the e-commerce giant Amazon.com, Inc. made approximately USD 33 million an hour in sales in the first quarter of 2020.
Due to the rising fear of getting infected, people were compelled to make the shift from physical stores to online shopping. This shift is resulting in the growing demand for recommendation engines. According to Adobe Research 2021, approximately 34% of shoppers are expected to shop even more if they receive recommendations based on their past purchase history.
However, rising concerns about the safety of customer information could hamper the market growth. Despite this hindrance, the growing volume of quantitative and qualitative data and the emergence of deep learning technology are anticipated to bode well for the market in the forthcoming years.
The collaborative filtering segment accounted for the largest revenue share of over 40.0% in 2020 and is projected to retain its lead over the forecast period. This can be attributed to the rising demand for reliable recommendation engines from e-commerce platforms to enhance their customers' shopping experience by suggesting products based on their tastes and preferences. For instance, Spotify uses collaborative filtering to recommend “Discover Weekly” and other playlists to the listeners based on their listening history.
The hybrid recommendation segment is projected to expand at the highest CAGR of 34.4% over the forecast period. The growth of this segment can be attributed to the increase in demand from organizations that need features of both collaborative filtering and content-based filtering. For instance, Netflix uses a hybrid recommendation engine to get insights on features of a show or movie and viewers’ preferences.
The cloud segment accounted for the largest revenue share of over 85.0% in 2020 and is projected to register the highest CAGR over the forecast period. This can be attributed to the increase in demand from players adopting cloud technologies to integrate recommendation engines onto their web-based applications, including businesses across industries such as media and entertainment and retail.
The on-premise segment accounted for the second-largest revenue share in 2020. The growth of this segment can be attributed to the demand for on-premise recommendation systems from large enterprises owing to their higher spending capacity for on-premise infrastructure and data security solutions.
The personalized campaigns and customer delivery segment accounted for the largest revenue share of more than 40.0% in 2020. The dominance of this segment can be accredited to the increase in the need to provide better customer experience and services to customers.
The product planning and proactive asset management segment is anticipated to account for the second-largest revenue share by the end of the forecast period. Additionally, this segment is projected to expand at the highest CAGR of 35.1% during the forecast period. The growth of this segment can be mainly attributed to the rising adoption of machine learning and AI technologies by numerous organizations to make better business decisions. These technologies help users generate insights through the data collected from their customers’ choices, preferences, and habits.
The retail segment accounted for the largest revenue share of nearly 26.0% in 2020 and is expected to retain its lead over the forecast period. This can be attributed to the growing adoption of recommendation systems by e-commerce and retail organizations to provide better and quick services to their customers owing to the increasing competition in the industry.
The information technology segment held the second-largest revenue share in 2020. The BFSI segment is anticipated to expand at the highest CAGR during the forecast period owing to the increased demand from banks to enhance their profit and customer engagement by providing customers various offers based on their profiles.
The large enterprise segment accounted for the largest revenue share of more than 55.0% in 2020. This can be attributed to the higher demand for recommendation engines from large enterprises to make better decisions, efficiently manage their business portfolio, and gain a competitive edge in the global market.
The SMEs segment is projected to exhibit the highest CAGR of 34.6% during the forecast period. The rising need to offer a better user experience in the highly competitive market is driving this segment. The increased need to find alternative solutions for saving marketing and advertising costs due to limited budgets is also boosting the demand for recommendation engines among small and medium organizations.
The North American regional market accounted for the largest revenue share of over 33.0% in 2020 and is expected to retain its lead over the forecast period. This can be attributed to the growing adoption of advanced technologies and increase in government support for emerging technologies in the region.
The Asia Pacific market is anticipated to expand at the highest CAGR of 35.5% over the forecast period. Factors such as the rising penetration of e-commerce, an upsurge in online shopping transactions, and an increase in the number of Over the Top (OTT) service providers are fueling the demand for recommendation engines in the region.
The market for recommendation engines is fragmented owing to the presence of several global as well as regional players. Key participants are entering into strategic collaborations and partnerships to expand their business footprints and survive the highly competitive environment. Moreover, service providers are spending considerably on research & development activities to incorporate new technologies in their offerings and develop advanced products to gain a competitive advantage over other market players.
For instance, in June 2019, Amazon.com, Inc. announced the availability of its machine learning service, Amazon Personalize. It is a service that enables users to make personalized as well as non-personalized recommendations for their applications, allowing them to curate recommendations without requiring any machine learning experience. Some prominent players in the global recommendation engine include:
Amazon Web Services, Inc.
Hewlett Packard Enterprise Development LP
International Business Machines Corporation
Market size value in 2021
USD 2.29 billion
Revenue forecast in 2028
USD 17.30 billion
CAGR of 33.0% from 2021 to 2028
Base year for estimation
2016 - 2019
2021 - 2028
Revenue in USD million/billion and CAGR from 2021 to 2028
Revenue forecast, company ranking, competitive landscape, growth factors, and trends
Type, deployment, application, organization, end-use, region
North America; Europe; Asia Pacific; Latin America; MEA
U.S.; Canada; U.K.; Germany; France; Italy; China; India; Japan; Brazil; Mexico
Key companies profiled
Adobe; Amazon Web Services, Inc.; Google LLC; Hewlett Packard Enterprise Development LP; International Business Machines Corporation; Intel Corporation; Microsoft Corporation; Oracle; Salesforce.com, Inc.; SAP SE
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This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2028. For this study, Grand View Research has segmented the global recommendation engine market report on the basis of type, deployment, application, organization, end use, and region:
Type Outlook (Revenue, USD Million, 2016 - 2028)
Deployment Outlook (Revenue, USD Million, 2016 - 2028)
Application Outlook (Revenue, USD Million, 2016 - 2028)
Personalized Campaigns and Customer Delivery
Strategy Operations and Planning
Product Planning and Proactive Asset Management
Organization Outlook (Revenue, USD Million, 2016 - 2028)
End-use Outlook (Revenue, USD Million, 2016 - 2028)
Media & Entertainment
Regional Outlook (Revenue, USD Million, 2016 - 2028)
Middle East & Africa
b. The global recommendation engine market size was estimated at USD 1.77 billion in 2020 and is expected to reach USD 2.29 billion in 2021.
b. The global recommendation engine market is expected to grow at a compound annual growth rate of 33.0% from 2021 to 2028 to reach USD 17.30 billion by 2028.
b. North America dominated the recommendation engine market with a share of 33.2% in 2020. This is attributable to the growing technological advancements & their adoption and increase in government support in the region.
b. Some key players operating in the recommendation engine market include Adobe; Amazon Web Services, Inc.; Google LLC; Hewlett Packard Enterprise Development LP; International Business Machines Corporation; Intel Corporation; Microsoft Corporation; Oracle; Salesforce.com, Inc.; SAP SE.
b. Key factors that are driving the recommendation engine market growth include the growing adoption of digital technologies and an increase in the need to enhance customer experience.
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