During Meta’s Q1 2023 earnings call, CEO Mark Zuckerberg and CFO Susan Li shared that time spent on Instagram has grown over 24% since the launch of Reels. Reels use AI-powered content recommendations to suggest videos to users. This is similar to how TikTok recommends videos to its users and has contributed to Instagram’s growth in engagement.
Meta’s CFO Susan Li stated during the Q1 2023 earnings call that they are happy with the increased engagement on Instagram since the launch of Reels. People seem to value short-term video content on the platform. Susan Li also noted that there has been an increase in sharing Reels on Instagram in recent months.
Susan Li stated during the Q1 2023 earnings call that the sharing of Reels on Instagram has doubled over the last six months. However, when asked if Reels was having a similar impact on Facebook, she did not provide a direct answer. Instead, she noted that on Facebook, AI-driven recommendations that are not from direct connections are increasing user engagement.
Although Reels and AI recommendations are increasing user engagement on Instagram, they have not yet led to a direct increase in revenue. In fact, Reels are cannibalizing some revenue from Stories and feed-based posts. However, overall user time spent on the platform is increasing, which is positive for revenue potential. Susan Li expects Reels to be revenue-neutral by the end of 2023 or early 2024, with positive contributions coming after that. She notes that monetizing Reels will require product work, as they are structurally different from existing Instagram content types. While Reels may not reach monetization parity with feed or Stories per time, they are driving incremental growth and will eventually be a key contributor to monetization.
