Image credit : Search Engine Journal
On the company’s quarterly earnings call for the first quarter of 2023, held on Wednesday, Meta CEO and founder Mark Zuckerberg was joined by CFO Susan Li to answer questions from analysts about the company’s performance. Since the business put Reels on the platform, time spent on Instagram has increased by more than 24%, according to Zuckerberg. These AI-powered content suggestions are similar to the non-connection recommended films that TikTok essentially built its whole brand on.
“We’re very pleased with what we’ve seen Reels drive in terms of incremental engagement on the platform so far,” Li said later in response to an analyst question, adding that “it’s clear that people value short-term video” on the platform. She further clarified that Instagram is also seeing a lot more sharing around Reels in recent months.
“We’re seeing the sharing flywheel take off with Reels re-shares, with re-shares doubling over the last six months,” she said.
Li didn’t directly respond to an analyst’s query on if Reels was having a similar effect on Facebook itself, but she did frequently mention how on FB, AI-driven recommendations that don’t originate from direct connections are raising user engagement.
While Reels and AI suggestions are increasing Instagram engagement, this has not yet directly increased income. Li also admitted that because Reels are taking up some of the user time that would have been spent engaging with Stories and feed-based postings, they are actually eating into some of the income generated by those sources. However, the greater tendency is incremental, meaning that total user time is increasing, which Li predicted will eventually be a plus for income possibilities.
Also read : Facebook’s maximum reel length has been increased by Meta to 90 seconds
Reels is on target to achieve revenue neutrality by the end of the year or in the first quarter of 2024, she added, and she anticipated positive contributions in the future. She did note that because Reels are “structurally different” from other Instagram video categories, there will be product effort involved in determining the best method of monetizing.
Because of those structural disparities, she said, “We don’t have line of sight to getting Reels to monetization parity with feed or Stories per time.” However, because it’s generating incremental growth, she said they’re certain they will eventually play a significant role in monetization.
