Advertisers Are Struggling with Instagram’s TikTok Clone, Reels
Reels — the short videos that Facebook and Instagram are pushing — are getting more popular, parent company Meta Platforms Inc. says. The hard part will be turning that attention into advertising revenue.
Advertisers say that the format, which Facebook copied from ByteDance Ltd.'s hot app TikTok, is difficult to get right. Videos are more complicated than still images, the cultural trends are always changing, and users expect Reels to be entertaining, enjoyable and relevant to each individual person— including the ads — as they take up an entire phone screen.
“You have to make more compelling content because the consumer, the viewer — their guard against bad content is up higher than ever,” says Barry Hott, an advertising consultant whose clients spend hundreds of thousands of dollars on digital ads per month.
Meta executives Wednesday asked for patience, after reporting the company's first-ever decline in quarterly revenue. Meta has been pushing Reels in order to keep up with shifting consumer tastes and ensure that users will remain engaged with its apps. If attention doesn't grow, advertising revenue doesn't either.
The first step of the process has worked: Reels led people to spend more time on Facebook and Instagram, the company said Wednesday. Users are spending 30% more time on Reels than they did in the prior quarter. But until advertising spending follows, the shift is hurting Meta's business in the short term, by cannibalizing attention from features where the company makes a more predictable stream of revenue, Meta explained.
It's a rough time to reinvent the business, as advertisers are cutting their budgets in general due to economic uncertainty. “We could mitigate the short term headwind by pushing
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