Instagram's Ad Revenue Outlook

(Reuters) – Instagram is set to account for more than half of Meta Platforms (NASDAQ:META)' advertising revenue in the United States next year, as the social media platform improves monetization of its products, according to research firm Emarketer.

Why It's Important

Instagram's Reels competes with ByteDance's TikTok and YouTube Shorts, as users find short-form videos more engaging. This trend drives marketers to adopt the format, especially as Meta seeks to enhance revenue through increased ad placements.

Context

If a TikTok ban takes effect in the U.S., Reels and YouTube Shorts could become attractive alternatives for advertising, potentially accelerating Instagram's growth.

Key Quotes

"Instagram is now a video-first platform, with users spending close to two-thirds of their Instagram time watching videos," said Jasmine Enberg, principal analyst at Emarketer.

"If the TikTok ban is enforced in 2025, Instagram could capture over one-fifth of reallocated TikTok ad dollars in the U.S.," Enberg added.

By The Numbers

In 2024, Instagram's ad revenue primarily came from its Feed and Stories features, contributing 53.7% and 24.6%, respectively. However, as Reels' revenue increases, the combined revenue share from Instagram Explore, Reels, and potentially Threads is projected to rise to 9.6% in 2025.