Meta has reported significant growth in user engagement on Instagram since the introduction of Reels, its TikTok-inspired short-video feature. On Meta’s Q1 2023 quarterly earnings call, CEO Mark Zuckerberg and CFO Susan Li revealed that time spent on Instagram increased by more than 24 per cent following the launch of Reels, largely due to AI-powered content recommendations.
“We’re very pleased with what we’ve seen Reels drive in terms of incremental engagement on the platform so far,” said Li, emphasizing the growing popularity of short-form video content. She added that sharing has also surged, with Reels re-shares doubling over the past six months.
Li acknowledged that while Reels and AI recommendations have boosted engagement on Instagram, this has not yet directly translated into increased revenue. She explained that Reels were cannibalizing some revenue from Stories and feed-based posts but emphasized that overall user time is rising, which will eventually lead to greater revenue potential.
According to tech giant, Reels will be revenue-neutral by the end of 2023 or early 2024, with positive contributions to follow. However, Li noted, monetizing Reels presents unique challenges due to their structural differences from existing Instagram content types. “We don’t have line of sight to getting Reels to monetization parity with feed or Stories per time because of those structural differences,” Li said, but she expressed confidence that Reels would eventually become a significant contributor to monetization.
Zuckerberg also highlighted the role of AI in enhancing content discovery on both Facebook and Instagram, with more than 20 per cent of content in users’ feeds now recommended by AI from people, groups, or accounts they don’t follow. “Across all of Instagram, that’s about 40 per cent of the content that you see,” Zuckerberg added.
Reels’ monetization efficiency has improved by over 30 per cent on Instagram and over 40 per cent on Facebook quarter-over-quarter, according to Zuckerberg. He also cited the expanding social aspect of Reels, with users resharing Reels more than 2 billion times daily, a figure that has doubled in the last six months.
In response to the popularity of Reels, Instagram has introduced new features aimed at creators, such as a unified editing screen for easier access to video clips, audio, stickers, and text tools. The platform has also added a dedicated destination for trending audio and hashtags, two new metrics to Reels insights, and expanded the availability of gifts on Reels.
