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Meta Platforms’ Reels, the rival to TikTok, is rapidly growing among users and advertisers, catching up to the ByteDance-owned app. The number of Reels video plays on Facebook and Instagram now exceeds 200 billion per day, up from 140 billion last fall. Reels’ annual revenue run rate has increased to $10 billion, up from around $3 billion as of last fall. This growth is attributed in part to Meta’s improving recommendation software and its seamless ad platform. Over 75% of Meta’s advertisers are placing ads on Reels, contributing to its monetization potential. Sheila Dang,Katie Paul reported
Meta Platforms’ Reels Witnessing Rapid Growth
Reels, the short-form video feature introduced by Meta Platforms (META.O) in 2020, has been experiencing significant growth among users and advertisers. Initially, the launch of Reels was met with skepticism, with many viewing it as Meta’s attempt to mimic TikTok, the popular short video app owned by ByteDance.
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Reels Closes in on TikTok’s Success
Meta revealed on Wednesday that the popularity of Reels videos is increasing rapidly. The feature, available on both Facebook and Instagram, is quickly catching up to TikTok, which has a significant youth following and has dramatically transformed the social media scene.
Reels’ Impressive Growth and Meta’s Evolving Strategy
Meta credits the exponential growth of Reels to the company’s enhanced recommendation software. “We can display Reels that align with your interests based on our discovery engines,” said Justin Osofsky, Meta’s head of online sales, operations, and partnerships. The number of Reels video plays on Facebook and Instagram has risen from 140 billion last fall to over 200 billion per day.
Reels’ Revenue Increase and Advertiser Appeal
Meta’s CEO, Mark Zuckerberg, disclosed that Reels’ annual revenue run rate has surged from about $3 billion last fall to $10 billion. This fast-paced growth of Reels provides a solid base for further monetization, according to Osofsky. Moreover, Meta’s ad platform allows advertisers to easily promote their products on Reels, contributing to its growth.
Reels vs. TikTok: A Close Competition
According to estimates from research firm Insider Intelligence, this increase means Reels is almost on par with TikTok’s business size last year, which generated $9.9 billion in worldwide ad revenue. Despite TikTok’s leading position in terms of time spent on social media apps, Reels is becoming a strong competitor, with more than three-quarters of Meta’s advertisers placing ads on the platform.
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Meta’s Focus on AI and Content Recommendations
Meta’s focus on artificial intelligence and content recommendations are central to the company’s business strategy, and have been instrumental in improving its services. Despite concerns about Reels consumption affecting ad sales by diverting users’ time from high-earning areas of its apps, Meta expects advertisers to accept the format over time.
TikTok Still Leads in User Engagement
As per Insider Intelligence estimates, the average U.S. user spends 53.8 minutes per day on TikTok, compared to 48.7 minutes on YouTube, 33.1 minutes on Instagram, and 30.9 minutes on Facebook. However, with the rapid growth of Reels, this dynamic may change in the future.
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