The straight skinny on Reels: How hyped should advertisers get?

If Reels, the ad type launched across Facebook and Instagram in early 2022 as a direct response to TikTok’s surge, didn’t have your attention before Meta’s Q3 earnings call, it probably does now. And you’re a little late to the hype game. 

For months, I’ve fielded questions from journalists, investors, and big-brand marketers wondering just how big a game-changer they might be for advertisers. Meta’s stoking the fire with updates, including some fun ones from October. 

I run a digital marketing agency with a hefty portfolio of high-growth B2C and eCommerce brands. You know who isn’t asking as many questions about Reels? Those marketers, who tend to care about one thing above all else: performance. 

Reels is doing lots of things well, but there are issues that still need work, and there’s a theme for updates that could truly tilt the short-form video landscape in Meta’s favor.  

Winning the users 

This is pretty basic, but it bears repeating: where users go, advertisers will follow.  

Just about every social media platform (Snap, Pinterest, Meta) big in the B2C space had a better-than-expected Q3 2023 earnings call, which is an indicator of a rising macroeconomy more than any individual platform developments. Much more impressive, and a more positive development for Meta’s growth prospects: the estimated 40% jump in user time spent on Instagram since the Reels launch.

As much as advertising capabilities related to Reels will be good for business, new UX-related features like swipe-left functionality and easily added music are investments directed at keeping people on the platform longer, which is the surest bet to earn more advertising spend.

Winning the advertisers

Back to the people controlling the budgets: why, in November 2023, would they spend more on Reels than other Facebook or Instagram placements, let alone take budget from other platforms like TikTok? It all comes down to performance – that is, whether they think a dollar spent on Reels will bring them more return than a dollar spent anywhere else. 

Since Reels isn’t as friendly of a direct-response format, this isn’t all that easy to prove, although Meta is trying (more on that in a second). I think the potential is absolutely there—Meta’s AI-powered targeting has brought the platform’s effectiveness back to pre-iOS 14 days—but connecting the dots between an impression or view and a conversion is still where many performance marketers struggle. Single-image ads, for example, have a much more linear path to purchase that makes revenue attribution easy, and I still have advertisers in my portfolio who lean that way because of it. 

Is this an inherent weakness of Reels? From an advertising adoption perspective, yes—although more advanced advertisers are doing work to connect the measurement dots that show a more complete picture.

Recommended updates 

Meta has invested a ton in measurement upgrades in the past couple of years. Features like lift tests that quantify upper-funnel value and Robyn, Meta’s open-sourced media mix modeling tool, are giving advertisers more ways to measure the value of user activity at all points of the customer journey. We’ve used both and seen some eye-popping results: namely, that advertisers spending to build awareness, where CPMs are cheaper, are seeing very clear benefits in lowering acquisition costs and bringing new users into the funnel.

And this is where I’d double down if I were Meta: educating advertisers about measurement releases, not necessarily Reels releases (unless they’re focused on UX), and making them as broadly accessible and easy to implement as possible. Where Reels is concerned, any releases Meta can make to lower production costs and barriers to entry will always be well received by advertisers; as it stands, the resources needed to produce the volume of Reels needed to optimize performance are fairly heavy—much more than, say, single-image ads.

All of this is to say that, yes, there’s potential for Reels to win Meta some market share. The last piece of that is proving it to the people in charge of the budgets.

Bryan Karas is the CEO of Playbook Media. He co-founded Facebook's Disruptors team years ago. Here he takes an objective look at the pros, cons, and path ahead for Reels— and what's at stake if Meta gets it right.