Unlocking the Future of the AI-Based Recommendation System Market: Growth Rate, Key Trends, and Opportunities for 2025-2034
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How has the ai-based recommendation system market size evolved in recent years?
In the past few years, the market size for AI-based recommendation systems has made significant progress. It’s estimated to expand from $2.21 billion in 2024 to $2.44 billion in 2025, with a Compound Annual Growth Rate (CAGR) of 10.5%. The historical growth is primarily due to the increased need for personalized recommendations, access to more data, effective workforce management requirements, the boom in e-commerce, the demand for cross-selling and upselling strategies, and applications in education and e-learning.
What are the predictions for the ai-based recommendation system market size in the coming years?
Forecasts suggest a swift expansion in the market size of AI-based recommendation systems in the coming years, with it predicted to reach a value of $3.62 billion in 2029, growing at a compound annual growth rate (CAGR) of 10.3%. The growth in this projected timeframe can be linked to factors like the surge in subscription to streaming services, the application of recommendation systems in healthcare, stringent compliance and regulatory standards, growth in digital advertising, and the refinement of content delivery networks (CDNS). The forecast period is likely to see trends such as a rise in personalization, real-time suggestions, adaptive learning models, multi-modal recommendations, improved user feedback methods, and social influence analysis.
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What key factors are fueling the growth of the ai-based recommendation system market?
As the use of smart devices continues to rise, it’s anticipated to fuel the development of the market for AI-based recommendation systems. Digital advertising, which takes place across online platforms such as websites, streaming content, and more, utilizes a variety of media formats including text, image, audio, and video. The growth of digital advertising is due to its ability to reach broad audiences, its targeting capabilities, its measurable outcomes, its cost-effectiveness, and personalization. AI-based recommendation systems are commonly used in digital advertising to enhance targeting and personalization, and to optimize campaign effectiveness, while also increasing user engagement and conversions. For instance, Kochava Inc., a US-based technology firm, reported in August 2024 that US marketers were projected to invest $3.1 billion in digital out-of-home (DOOH) advertising in 2024, marking a 28% surge from the previous year. Hence, the increased use of smart devices is spearheading the growth of the AI-based recommendation system market.
Implications of Smart Devices on The Development of AI-Based Recommendation Systems
How is the global ai-based recommendation system market divided into key segments?
The AI-based recommendation system market covered in this report is segmented –
1) By Type: Collaborative Filtering, Content Based Filtering, Hybrid Recommendation
2) By Deployment Mode: On-Premise, Cloud
3) By Application: E-Commerce Platform, Online Education, Social Networking, Finance, News And Media, Health Care, Other Applications
Subsegments:
1) By Collaborative Filtering: User-Based Collaborative Filtering, Item-Based Collaborative Filtering, Memory-Based Collaborative Filtering, Model-Based Collaborative Filtering
2) By Content-Based Filtering: Profile-Based Content Filtering, Attribute-Based Content Filtering, Model-Based Content Filtering
3) By Hybrid Recommendation: Hybrid Collaborative And Content-Based Filtering, Ensemble-Based Hybrid Recommendation, Knowledge-Based Hybrid Recommendation
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Who are the key firms paving the way for growth in the ai-based recommendation system market?
Major companies operating in the AI-based recommendation system market are Alphabet Inc., Microsoft Corporation, Alibaba Group Holding Limited (Alibaba), Meta Platforms Inc., Amazon Web Services, Huawei Technologies Co. Ltd., Tencent Holdings Limited, Intel Corporation, International Business Machines Corporation, Oracle Corp, SAP SE, Netflix, Hewlett Packard Enterprise (HPE), Salesforce Inc., Adobe Inc., Sentient Technologies, RecomTech, Kibo Commerce, SmartRecs, AIRecom, IntelliChoice, Unbxd Inc., Coveo Solutions Inc., Algonomy Software Pvt. Ltd., Recolize GmbH, Dynamic Yield Inc., IntelliSuggest, RecomAId, SuggestAI, AIAdvise
Which trends are expected to transform the ai-based recommendation system market?
Leading enterprises in the AI-based recommendation system markets are investing in breakthrough technologies, like recommender system support, to amplify the efficiency and productivity of recommendation engines. These setups involve algorithms or software utilities that examine user data and preferences to curate customized recommendations for various products, services, content, and other relevant items. For example, in January 2024, Arthur, an American AI performance platform, debuted its recommender system support for AI-powered recommendation engines, marking a substantial development in AI technology. This pioneering technology is set to transform how e-businesses employ recommender systems, enhancing customer satisfaction and augmenting revenue growth. It further strengthens the recommendation engines by integrating AI to deliver highly precise and customized recommendations. In addition, it incorporates features like the model overview page, metrics dashboard, data drift monitoring, advanced querying, and filtering, which enhance the overall user experience on their platforms via personalized recommendations.
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What regions are contributing significantly to the growth of the ai-based recommendation system market?
North America was the largest region in the AI-based recommendation system market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the AI-based recommendation system market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East and Africa.
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