Analysts Estimate That The Reels Feature Of Instagram Could Add $2.5 Billion In Advertising Revenue For Facebook By The Year 2022

According to Jefferies analysts, the new Reels feature of the Instagram app could drive $2.5 billion in yearly advertising revenue for the company by the year 2022. The company rolled out the Reels feature earlier this month, and it allows users to record and post 15-second clips on Instagram’s platform. Facebook rolled out Reels at a perfect time since ByteDance-owned TikTok has been under intense pressure from US President Donald Trump. While some branded Reels a poor TikTok knock-off, many influencer industry players are optimistic about this feature as a potential revenue driver for the company.

The EVP and head of marketing at Collab Inc., Dave Rosner, stated that brands are comfortable with Facebook-owned Instagram’s platform. According to a research note distributed Sunday, Jefferies analysts estimate that the Reels feature of Instagram could drive $2.5 billion or more in yearly advertising revenue for the company by 2022.

Jefferies analysts conducted a survey and found that the feature has the potential to keep more people inside the Instagram app for longer. Analysts used survey results from more than 800 respondents who were 13-years old or above, and other information to look at early usage trends and feedback from Reels users. According to the survey, 25% of those people who use the feature said that they use Reels once daily, while 24% said that they use the feature more than once daily. Furthermore, it is interesting to note than over 80% of users indicate that they are likely to continue using the feature in the future. As of August of this year, 32% of people who use Instagram said that they have used Reels.

Reels content is attracting 5-10 times more views as compared to other video content on Instagram’s platform like IGTV. Surprisingly, some Reels posts had ever more than sixty million views. 36% of respondents to the survey who had used the feature stated that they found Reels ‘very engaging.’ On the other hand, 42% of users stated that they preferred other applications such as TikTok, only 12% said that they found Instagram Reels ‘boring.’

Instagram Reels gives 9 million marketers of Facebook a new channel to reach a highly coveted audience. Analysts believe that Instagram Reels could follow the growth trajectory of the Stories feature of Instagram. Instagram Stories reached 100 million daily active users in only three months.



Hat Tip: Businessinsider.

Read next: Healthcare, Gambling, Finance: Study shows top industries that had the most effective Instagram influencer-marketing campaigns in the last quarter

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