In a significant shift within the digital advertising landscape, Instagram Reels emerged as the leading format for advertisements in 2025, according to recent data from intelligence firm Sensor Tower. This trend aligns with Meta“s strategic push to enhance user engagement and boost ad revenue across its platforms.
As of 2025, Reels comprised 46% of the total time spent on Instagram by users in the United States, marking an increase from 37% the previous year. This surge in engagement has not gone unnoticed by advertisers, with the majority of Instagram ads now being served within Reels, a stark contrast to the one-third of ads placed in this format in 2024.
The transition to Reels has been significantly influenced by advancements in artificial intelligence, which power recommendation engines that analyze user behavior to deliver personalized content. Dan Flax, a senior research analyst at Neuberger Berman, noted, “They”re surfacing content to the user, and as they get more signals based on what the user watches … that”s helped their recommendation engines get better and you”ve seen it in the Reels revenue number.”
As audiences increasingly gravitate toward short-form video content, advertisers are adapting their strategies accordingly. Abraham Yousef, a senior insights analyst at Sensor Tower, remarked that “legacy services are seeing ad volume shift away, with advertisers prioritizing more Reels to meet users where they are.”
Despite the growing popularity of Reels, there are concerns regarding profitability. Reports indicate that while engagement metrics are improving, the monetization efficiency of Reels remains significantly lower than that of traditional Feed posts. Meta CEO Mark Zuckerberg acknowledged this disparity, stating, “Currently, the monetization efficiency of Reels is much less than Feed.” He explained that while Reels contribute to overall engagement, they also detract from the Feed, leading to financial losses.
Nevertheless, Zuckerberg highlighted the importance of scale, revealing that Instagram and Facebook Reels have reached an annualized revenue run-rate exceeding $50 billion. This figure suggests that even with lower ad rates, the expansion of inventory can help sustain growth.
As Instagram continues to evolve, it faces increasing scrutiny from regulatory bodies. The Gambling Commission of Great Britain has raised concerns about Meta“s failure to effectively monitor illegal gambling advertisements on its platforms. Executive director Tim Miller emphasized that if the commission can identify these ads, so too can the company, indicating a conscious choice to overlook the issue.
In a competitive landscape, TikTok has solidified its position as a dominant force, with users spending an average of 81 minutes daily on the platform. Comparatively, YouTube users average 80 minutes, while Instagram users spend about 55 minutes per day. As TikTok”s advertising revenue is projected to skyrocket to $33.1 billion by 2025, the pressure is on for platforms like Instagram to innovate and retain user engagement.
