Digital Economy in Germany

Digitalisation is transforming every economic sector, but it’s important to know where real growth and opportunities lie. What is the impact of artificial intelligence and how rapidly is it re-shaping the business landscape in Germany?
“Smart cities” has become a buzzword. But how is tomorrow’s urban future taking shape today? How is Germany, the home of mobility, driving the mobility services of the future? Digitalisation is also transforming advertising. How big is ad tech in Germany, and what are German companies looking for in this sector? The coronavirus pandemic has accelerated the process of digitalisation, including in education. Our infographic also provides key questions and answers about the rapidly expanding field of education technology.
Take a closer look to learn how and why you can benefit from Germany’s digital economy.

Download our briefing on Germany’s digital economy as well.

Why is Artificial Intelligence the future of growth?
AI’s countless possibilities offer unique growth opportunity.
The global market for AI software, services and hardware is forecast to grow at between 15-25% annually and reach $130 billion by 2025.
What role do German universities play?
Germany is ranked 4th globally in AI knowledge-transfer. There are more than 220 AI professors at German universities, with an additional 100 planned in the government’s AI strategy.
Why are German corporations attractive to investors?
German companies have a major interest in AI, but tend to adopt existing applications, ranging from modular software solutions to AI-as-a-service, rather than develop their own.
What's the pace of change?
Rapid. 78% of AI specialists say the technology will alter their company in the next three years while 72% foresee an impact on their entire industry in a similar timeframe.
Why are municipal regions attracting investors?
Germany has 81 cities with at least 100,000 inhabitants and one-third of Europe's 15highest metropolitan area GDPs. Thrivingsectors include new energy, environmental, IT,and security infrastructure.
Why is Germany the perfect business location?
The decentralised systemof government means excitingideas and approaches, from public-private partnerships to innovative funding models, can be tested with less outside interference.
Will local governments embrace digital solutions?
Germany's recent Online Access Act requires all 11,000 local governments to make their administrative services digitally accessible by theend of 2022.
How strong will funding be?
95 lighthouse projects (“Modellprojekte Smart Cities”) throughout the country will be funded infive separate rounds to the tune of €850 million in total.
How about an example?
The Wolfsburg city government and public utilities provider are expanding the local fiber-optic network to connect 7,100 homes, 2,600 business, and 200 public authorities.
And another one?
The Future City Ulm 2030 project uses data to develop innovative projects like bike sharing, autonomous living for senior citizens, and a more creative and flexible city administration.
And one to finish off?
Hamburg is pioneering new, sustainablemobility solutions in the form of intelligent traffic systems. One project involves testing a regular, electric, autonomous mini-bus service.
Why is AdTech a hot topic?
Strong start-ups in e.g. affiliate marketing and mobile advertising are helping international marketing, data management, and customer targeting companies gain a foothold in Europe's biggest economy.
How big is the market?
Germany is Europe's second-largest advertisingmarket and as big as the next three markets combined, with spending hitting €24.8 billion in 2019.
What's the potential for growth?
Digital marketing is currently worth €11.82 billion in Germany, accounting for nearly half the total advertising market. Growth of 10.6% is expected in 2021 as part of a continuous upward trend.
Is AdTech attracting strong investment?
In 2019, German AdTech start-ups attracted €207 million in capital. Innovative concepts such as sell-and-demand side platforms and AdTech hubs like Berlin are prompting further investment.
Evolution or revolution?
A bit of both. Alongside exciting new concepts, 39% of German companies seek outside help to refine or automate existing marketing operations, 24% to improve their use of programmatic technology.
What about networking in Germany?
Having an office in Germany puts AdTech companies in the mix with some of the industry's leading players, while the country is full of highly-qualified and experienced potential employees.
What if I want to go big?
Then Germany is the place for you. Home to nine of the Fortune Top 100 brands, a base in Germany is the perfect launch pad to connect with some of the world's biggest companies.
How did the pandemic change learning?
The coronavirus pandemic accelerated digitalisation in education, creating a unique situation for anyone in the Education Technology(EdTech) field. Growth in higher education is also predicted.
Is the market big enough for me?
Yes! The global EdTech market is set to hit $360 billion by 2025. Greater adoption of EdTech, growth in higher education, and making up for past under-funding could see investment soar to $2.7 trillion.
What about corporate training?
Alongside formal education, EdTech companiesservice the corporate training market, which is worth about $31 billion per year and boastsan 11% annual growth rate.
What’s so special about German education?
Germany's renowned dual education system means students work and learn at the same time, while its research institutes, often with ties to universities, drive innovative ideas and technologies.
Which niche is especially interesting?
Private education is a growing sector and stands to benefit as people look for fresh training opportunities, particularly in IT, to fill Germany's 82,000 unfilled IT positions.
Why can German education cross borders?
The boom in online and remote learning is opening doors to transnational learning products, which allow people living outside Germany to participate in its renowned education system.
Which areas have major growth potential?
While the whole sector is bursting with potential, in particular augmented and virtual reality, artificial intelligence, and robotics are seen as dynamically growing markets.



Germany Trade & Invest: Education and Digital Learning in Germany, Issue 2020/21, Fintech in Germany, Issue 2019/2020,¸Smart Cities in Germany: Video “From Pilot to Market” (Nordic Edge Expo 2020); The Digital Economy in Germany. Issue 2018/2019; Berlin TXL: The Project; Bitkom e.V.: KI Forschung in Deutschland; Smart City Atlas - die kommunale digitale Transformation in Deutschland, Smart City Index 2019 - Wie digital sind Deutschlands Städte; CITI Group: Education: Fast Forward to the Future – CitiGPS; Deloitte: State of AI in the Enterprise - 3rd Edition, 2020; Ernst & Young: EY StartUp Barometer 2020; SIMD World Competitiveness Center: Smart City Index digital; WIFOR / BMWi: Analyse der deutschen Bildungswirtschaft im Zeichen der Digitalisierung; World Economic Forum: This is how digital literacy can transform education; ZAW: Nettowerbeeinnahmen erfassbarer Werbeträger 2018 und 2019