Recommendation Engine Market Size (2024 - 2029)

Recommendation Engine Market Analysis

The Recommendation Engine Market size is estimated at USD 6.88 billion in 2024, and is expected to reach USD 28.70 billion by 2029, growing at a CAGR of 33.06% during the forecast period (2024-2029).

With the growing number of enterprises and the rising competition among them, many companies are trying to integrate technologies, like artificial intelligence (AI), with their applications, businesses, analytics, and services. Most organizations globally are pursuing digital transformation, focusing on improving the experience of customers and employees, which is being leveraged by automation solutions.

• The advancement of digitalization across emerging economies, coupled with the growth of the e-commerce market, has driven the demand for recommendation engines. Integrating the machine learning model across AI-based cloud platforms drives automation across multiple end-user industries.
• Consumers traditionally make purchase decisions at the store shelf, providing institutional brick-and-mortar retailers a high-power level to learn about and influence consumers' behavior and preferences. However, with the rise of internet penetration and the emergence of new sales channels through e-commerce, mobile shopping, and smart technologies, the retail industry is adapting to new and advanced technologies. These technologies, such as smart point-of-sale solutions and self-checkout kiosks, transform traditional brick-and-mortar stores into omnichannel ones. According to ZDNet, 70% of the companies either have a digital transformation strategy or are working with one.
• Digital transformation provides opportunities for retailers to acquire new customers, engage with existing customers better, reduce the cost of operations, and improve employee motivation. These benefits, among others, positively impact the revenue and margins. This positive impact will create significant opportunities for adopting recommendation engines over the forecast period.
• The challenge of incorrect labeling due to changing user preferences is an ongoing concern for the recommendation engine market. However, developers are continually working to improve the accuracy and relevance of recommendations. As technology advances, we can expect to see more effective solutions to this challenge in the future.
• According to the recent "Agents of Transformation Report" from AppDynamics, part of Cisco, technology priorities during the COVID-19 pandemic changed within 95% of organizations, and 88% reported that digital customer experience was the priority for their organization. Customers turned to self-service tools in the form of chats, messaging, and conversational bots. As a result, companies enabled these tools to deliver a great customer experience while reducing traditional dependencies on brick-and-mortar and live events, which were not feasible in a time of social distancing. This was further expected to increase the benefits achieved by recommendation engines due to the increased adoption of technologies in these companies.

Recommendation Engine Industry Segmentation

Recommendation engines are data filtering tools that use various algorithms and data to recommend the most relevant items to a particular customer. They first capture the past behavior of a customer. Based on that, they recommend products the users are likely to buy. The integrated software analyzes the available data to suggest something a website user might be interested in (products/services), among other possibilities. Recommendation engine systems are common in e-commerce, social media platforms, and content-based websites. The recommendation engine market study includes the revenues generated from the recommendation engine type, such as collaborative filtering, content-based filtering, hybrid recommendation systems, and other types used in various end-user industries through different deployment modes globally. The study also analyzes the overall impact of the COVID-19 pandemic on the ecosystem. The study includes qualitative coverage of the most adopted strategies and an analysis of the key base indicators in emerging markets.

The recommendation engine market is segmented by deployment mode (on-premise, cloud), type (collaborative filtering, content-based filtering, hybrid recommendation systems), end-user industry (IT and telecommunication, BFSI, retail, media and entertainment, healthcare), geography (North America, Europe, Asia-Pacific, Latin America, Middle East and Africa). The market sizes and forecasts are provided in terms of value in USD million for all the above segments.