Instagram’s advertising landscape changed dramatically in 2025, with short-form video moving firmly into the spotlight. Most of Instagram’s ads appeared on Reels in 2025, according to data, marking a major shift from previous years. Market intelligence firm Sensor Tower reports that more than half of all ads on the platform were delivered through Reels, a sharp rise from about 35% in 2024.
This growth reflects how quickly short-form video has reshaped both user behavior and advertiser priorities across Meta’s platforms.
Users Are Spending More Time Watching Short Videos
Reels is not only attracting advertisers — it’s also capturing a growing share of user attention. In the United States, Reels made up 46% of the time people spent on Instagram in 2025, up from 37% the year before. On Facebook, Reels viewing climbed to 29% of total time spent on the app, showing that the format is becoming central across Meta’s ecosystem.
The surge highlights how vertical video has become one of the strongest drivers of engagement for both Instagram and Facebook.
AI Is Powering the Rise of Vertical Video
Short-form video has also become a crucial piece of social media companies’ artificial intelligence strategies. Platforms such as Meta, YouTube, and TikTok rely heavily on AI-driven recommendation systems that analyze what users watch, skip, and replay in order to deliver increasingly personalized content.
According to Dan Flax, senior research analyst at Neuberger Berman, the true value of these platforms lies in how effectively their AI tools match users with videos they are likely to enjoy.
As these systems gather more behavioral signals, their recommendations improve — and that improvement is showing up in the rapid growth of Reels and its expanding ad business.
Advertisers Follow the Audience
As users gravitate toward short videos, advertisers are doing the same. Over the past year, brands have increasingly shifted budgets away from traditional feed placements and toward Reels to reach consumers where they now spend the most time.
Sensor Tower analyst Abraham Yousef noted that older ad formats are seeing reduced volume as companies prioritize Reels placements to stay aligned with changing user habits.
Monetization Challenges Still Remain
Despite its explosive growth, Reels has not been without financial challenges. Short-form video typically earns less per view than Instagram’s traditional feed, making monetization less efficient.
Meta CEO Mark Zuckerberg previously acknowledged this trade-off, explaining that while Reels boosts overall engagement, it can temporarily pull attention away from higher-earning areas of the app. Even so, Sensor Tower data shows that total Instagram activity continues to rise, with daily active users up 2% year over year, largely driven by Reels usage.
Analysts argue that even if Reels monetizes at a lower rate, its ability to grow overall engagement can still increase Meta’s total advertising revenue.
A $50 Billion Run Rate and Growing
In October, Zuckerberg revealed that Instagram and Facebook Reels had surpassed a $50 billion annual revenue run rate. Investors are closely watching how that figure evolves as Meta reports its full-year 2025 results.
The expectation among analysts is that the expanding audience and ad load on Reels could offset lower per-ad returns over time.
Born as a TikTok Rival
Instagram launched Reels in August 2020 in direct response to TikTok’s explosive popularity, then rolled the feature into Facebook the following year. Since then, Reels has become a core pillar of Meta’s product strategy.
In September, Meta announced that Instagram had reached 3 billion monthly active users — a remarkable milestone for an app acquired for $1 billion in 2012.
More recently, Meta expanded Reels beyond smartphones, introducing an Instagram TV app for Amazon Fire TV devices, allowing users to watch Reels directly on their televisions.
Competing in a Three-Way Race
As Reels grows, competition remains intense. TikTok and YouTube Shorts continue to battle for dominance in short-form video. While YouTube saw steady growth in daily active users in 2025, TikTok still leads in average time spent per day. Instagram, though trailing in watch time, is closing the gap as Reels becomes more deeply integrated into everyday use.
Industry experts credit Meta’s improving recommendation technology for Reels’ momentum, noting that smarter algorithms have made the experience increasingly addictive and effective at keeping users engaged.
The New Battleground of Social Media
The rise of Reels underscores a broader shift across the industry. Algorithm-driven vertical video is now the central arena where social platforms compete — for users, advertising dollars, and long-term growth.
As Reels continues to take up more space within Instagram and Facebook, its performance will play a defining role in Meta’s future, shaping not only how people consume content, but also how the next generation of digital advertising evolves.
