Mark Zuckerberg attends the UFC 320 event at T-Mobile Arena on October 4, 2025 in Las Vegas, Nevada.
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More than half of all ads meta Instagram will be adopted by the service’s short-form video reels product in 2025, up from 35% in 2024, according to data from market intelligence firm Sensor Tower.
In the US, Reels accounted for 46% of time spent on the Instagram app in 2025, up from 37% in 2024, according to data presented to CNBC by Sensor Towered. For the Facebook app, this number will reach 29% in 2025, an increase from 2024.
The changes highlight Reels’ growing role in Meta’s efforts to drive engagement and ad revenue across its Instagram and Facebook services.
Vertical video continues to be a valuable artificial intelligence role for these social media platforms. Companies such as Meta; Google YouTube and TikTok use AI-powered recommendation systems to show users personalized videos designed to keep them engaged for long periods of time.
Dan Flax, senior research analyst at Neuberger Berman, said the platform’s value in AI tools comes from its ability to serve relevant content to users.
“They’re showing content to their users, and as they receive more signals based on what their users are looking at… that helps improve their recommendation engine, and that shows up in Reels’ revenue numbers,” Flax said.
Advertisers have also followed this trend, shifting their focus to short-form videos over the past year to reach more consumers on Reels.
Abraham Youssef, senior insights analyst at Sensor Tower, told CNBC that “advertisement volumes are decreasing on traditional services, and advertisers are prioritizing having more Reels available where users are.”
But the rise of Reels has posed a monetization challenge for Meta, as short videos typically generate less revenue than Instagram’s main feed. Meta CEO Mark Zuckerberg pointed out this tradeoff during an earnings call in 2023, when Meta stopped paying creators directly for Reels posts.
“Right now, the monetization efficiency of Reels is much lower than Feed,” Zuckerberg said at the time. “So the more Reels grows, the more engagement they have with the whole system, the more time they spend leaving the feed, and the more they actually lose money.”
Data shows that while Reels viewership is up, so is all activity on the app. According to Sensor Tower, Instagram’s daily active users are up 2% from last year, driven by increased usage of Reels.
Mehta declined to comment.
Analysts say increased viewership on Reels could still lead to an increase in Meta’s overall ad revenue.
“Even though it replaces some feeds with higher monetization rates than Reels, advertisers are still spending more on Meta overall,” Flax said.
During an October earnings call, Zuckerberg announced that Instagram and Facebook Reels had an annual run rate of more than $50 billion. Analysts will be watching to see how that growth pans out when Meta releases its fourth-quarter and full-year 2025 results on Jan. 28.
Reply to TikTok
Instagram launched Reels in August 2020 in direct response to the growing popularity of TikTok. Meta embedded the feature into Facebook the following year.
Last September, Meta announced that Instagram had 3 billion monthly active users, a major milestone for the photo-sharing app it acquired in 2012 for $1 billion.
As Reels gains a larger share of the way users and advertisers interact with Meta’s app, focus shifts to whether the format can maintain its edge in competition with TikTok and YouTube. YouTube offers a similar short-form video product called Shorts.
In December, Meta introduced the Instagram TV app, available on Amazon Fire TV streaming devices. This app allows users to watch reels on their TV.
“What Meta has done incredibly well with Reels is that Reels is getting better and better at the recommendation engine,” Flax said. “I give Mark Zuckerberg and Meta’s leadership a lot of credit for effectively wrapping Reel, and frankly I think they have a very strong outlook.”
While Meta’s Reels share continues to grow year over year, YouTube’s short watch time remained flat last year, according to Sensor Tower data.
Nevertheless, YouTube continues to outperform both Instagram and TikTok on mobile, with Sensor Tower estimating that daily active users in the US will grow by 3% in 2025. However, TikTok still leads in terms of user time spent on the app, with users spending an average of 81 minutes per day on the app, compared to 80 minutes for YouTube and 55 minutes for Instagram.
As this three-way race continues, algorithm-driven vertical video has become a central battleground for how social media companies attract users, sell ads and sustain growth.
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