TikTok-style reels boost Meta's engagement, reveals Mark Zuckerberg

On Wednesday, Meta held its Q1 2023 quarterly earnings call where Meta CFO Susan Li and CEO Mark Zuckerberg fielded questions from analysts about the company's recent results.

During the call, Zuckerberg revealed that time spent on Instagram has increased more than 24 per cent since the launch of Reels on the platform. This increase in engagement is attributed to AI-powered content recommendations similar to those that made TikTok so popular.

Li expressed her satisfaction with Reels' impact on the platform and acknowledged that short-term videos are highly valued by users. She further added that Instagram has seen a significant increase in sharing around Reels in recent months, with re-shares doubling over the last six months.

However, when asked about Reels' impact on Facebook, Li was hesitant to answer. She did note that AI-driven recommendations that don't come from direct connections are increasing engagement among users on Facebook.

Despite the increase in engagement on Instagram, Reels' impact on revenue has been limited. Li acknowledged that Reels are cannibalizing revenue from Stories and feed-based posts, as users spend more time engaging with Reels. Nevertheless, Li stated that overall user time is increasing, and Reels are on track to be revenue-neutral by the end of the year or early 2024.

Li also highlighted the need for product work to figure out proper monetization for Reels since they are structurally different from existing Instagram content types. Although they do not have a clear path to getting Reels to monetization parity with feed or Stories, Li said that they are confident that Reels will eventually become a key contributor to monetisation as they continue to drive incremental growth.

Overall, Meta's Q1 2023 earnings call revealed that Reels are driving engagement on Instagram, but there is still work to be done to turn that engagement into revenue.