Instagram Reels Dominated Ad Revenue in 2025 — Here’s What It Means for Digital Marketing
Instagram's short-form video feed didn't just grow—it devoured the advertising pie.
Forget static posts and Stories. Data from 2025 confirms a seismic shift: Reels became the primary engine for ad share on Meta's visual platform. Brands that hesitated got scrolled past. Those that leaned in captured attention—and wallets—in seconds.
The Algorithm's New Darling
Reels didn't just attract users; it hoarded their screen time. The format's immersive, full-screen experience proved irresistible for advertisers aiming to bypass ad fatigue. Creative that worked elsewhere fell flat here. Native, authentic, and fast-paced content won.
Why Video Killed the Static Star
The numbers tell a brutal truth. Engagement metrics for traditional feed posts stagnated while Reels' share of platform ad revenue skyrocketed. The platform's own tools increasingly pushed budgets toward video, creating a self-fulfilling prophecy of growth. It was a classic platform pivot: adapt or become irrelevant.
The Bottom Line for Brands
This isn't a trend—it's the new baseline. Marketing budgets must follow eyeballs, and in 2025, eyeballs were glued to looping, sound-on clips. The barrier to entry? Not money, but creativity and speed. The playbook for '26 is being written by those who mastered the hook, the value, and the call-to-action in under 30 seconds.
Of course, for every brand celebrating these metrics, a finance VP somewhere is groaning about the 'viral tax'—the skyrocketing cost of looking authentic while chasing algorithmic gold. The market, much like the Reels feed, never stops moving. Pause for a second, and you're already behind.
Reels drives engagement across Instagram
As of 2025, Reels accounted for 46% of total time spent on Instagram by US users, an increase from 37% one year prior. Advertisers took notice of the increase. Sensor Tower estimates that the majority of Instagram ads are served within Reels, instead of about one-third of them being served in Reels in 2024.
The shift to Reels has also been powered by AI systems, which allow the platforms to utilize recommendation engines that analyze viewing behaviors and personalize vertical video for all users.
“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,” said Dan Flax, senior research analyst at Neuberger Berman.
Advertisers have chased the format as audiences migrate.
“Legacy services are seeing ad volume shift away, with advertisers prioritizing more Reels to meet users where they are.”
Abraham Yousef, a senior insights analyst at Sensor Tower.
The number of people actively using Instagram every day went up 2%, compared to the previous year, largely because of how much more frequently people used Instagram Reels to view content.
But Reels’ growth doesn’t translate to profitability
According to reports, there is a trade-off in the way that social media platforms employ different methods to monetize their content. Instagram continues to experience pressure for revenue generation, which has caused Meta to stop making direct payments to creators who create “Reels”.
“Currently, the monetization efficiency of Reels is much less than Feed,” Meta CEO Mark Zuckerberg said.
“So the more that Reels grows, even though it adds engagement to the system overall, it takes some time away from Feed and we actually lose money.”
Zuckerberg.
Despite this, the importance of scale should be noted. As Mark Zuckerberg has stated, Instagram and Facebook Reels have hit an annualized revenue run-rate above $50 billion; indicating that the expansion of inventory allows for growth in scale to compensate for the slower revenue growth due to lower ad rates.
While this is happening, Instagram remains subject to scrutiny, and Facebook Reels continues to grow.
Regulatory scrutiny has recently become another focal point. The Gambling Commission of Great Britain has claimed in previous reports issued by Cryptopolitan that Meta has failed to adequately monitor illegal gambling advertisements on Facebook and Instagram.
Speaking at the ICE gaming conference in Barcelona, executive director Tim Miller said the issue exposed broader risks. “If the commission can find these illegal ads, Meta can too, but the company just chooses not to look for them.”
Meta has not made any statements regarding either the advertising data or the claims made by the regulators.
TikTok is now more widely available than ever before; with TikTok attracting an average of 81 minutes daily, compared with 80 minutes for YouTube and 55 minutes for Instagram on a per-user basis, it will be challenging for any platform to catch up to or overtake TikTok. YouTube Shorts Watch Time remained steady during the previous year, while the number of U.S. Daily Active Users increased by 3%.
Revenue for TikTok’s Advertising business is projected to have an explosive growth rate, with estimated revenues reaching $33.1 billion by 2025, or a year-over-year growth rate of 40.5%. Revenue estimates for 2024 are approximately $14.15 billion. Over 7 million businesses in the US used TikTok to promote their products in 2022.
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