Instagram Reels has crossed a major milestone, now accounting for more than 50% of Meta-owned Instagram’s total ad inventory, signaling a decisive shift in how users consume content and how advertisers allocate budgets. The change underscores Instagram’s rapid evolution from a photo-first social network into a video-centric entertainment platform, with short-form video now sitting at the center of Meta’s growth strategy.
According to recent market intelligence from Sensor Tower, Reels has become the single most important surface for advertising on Instagram in 2025 and early 2026. The format’s expansion has helped parent company Meta generate an estimated $50 billion annual revenue run rate attributed directly to Reels-driven advertising, a figure that highlights how central short-form video has become to Meta’s broader monetization engine.
The surge in ad share mirrors a profound change in user behavior. In the United States, 46% of total time spent on Instagram now occurs within the Reels tab, making it the most engaged area of the app, according to Sensor Tower. This concentration of attention has effectively pulled advertising dollars away from traditional feed placements and Stories, accelerating the transition toward video-first ad formats.
Reels has also become the primary driver of platform growth. Instagram’s daily active users (DAU) increased by approximately 0.02 year over year, a modest but notable gain in a mature market. Crucially, that entire increase has been driven by Reels usage, reinforcing the view that short-form video is no longer a feature but the engine sustaining Instagram’s relevance.
From an advertiser’s perspective, the reach is massive. Reels ads can now tap into a total ad audience of roughly 726.8 million potential unique users worldwide, offering scale comparable to television but with the targeting precision of digital media.
Performance metrics explain why brands are following users into Reels. Data cited by Sensor Tower shows that Reels ads deliver a 41% higher click-through rate (CTR) compared with traditional static image ads. The combination of motion, sound, and algorithmic distribution appears to capture attention more effectively than feed-based formats, especially among younger audiences.
This advantage is amplified by advances in AI. Nearly 70% of marketers use AI as early as 2025 as part of their strategies, up from 61% just over two years ago, highlighting how rapidly AI adoption has accelerated across the marketing industry. The brands increasingly rely on automated optimization to test creatives, refine hooks, and maximize watch time. Meta’s systems now place a heavier weight on watch time and re-watch rate, reducing the importance of traditional text-based hashtags.
The success of Reels comes amid intense competition. Since its 2020 launch, YouTube Shorts has recorded 85% annual growth in views, with total watch time rising 65% year over year as of 2025, underscoring sustained viewer interest and rapidly increasing audience engagement. However, YouTube Shorts reportedly had watch-time growth remain largely flat recently.
About 37% of U.S. adults report using TikTok, highlighting the platform’s significant reach in the American market. Still, Instagram’s integration with the broader Meta ad ecosystem provides a powerful advantage for advertisers seeking cross-platform campaigns.
Strategists note that the shift from roughly 35% to more than 50% ad share on Reels reflects a deeper intent shift. User behavior is moving away from “information retrieval” through feed scrolling toward “entertainment discovery” via passive video consumption. As a result, content optimization now prioritizes compelling hook phrases in the first three seconds and strong audio-visual keywords rather than captions alone.
With Instagram’s total ad revenue projected to reach $67.3 billion in 2026, Reels is expected to remain the primary growth driver. For advertisers and creators alike, the message is clear: mastering short-form video is no longer optional; it is essential to staying visible in Instagram’s rapidly evolving ecosystem.
Eudaimonia and Co
Eudaimonia & Co
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Why Reels Is Now Instagram’s Top Ad Format, Surpassing 50% – Eudaimonia and Co
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