Instagram's Growing Influence in Ad Revenue

According to research firm Emarketer, Instagram is projected to account for more than half of Meta Platforms' advertising revenue in the United States by next year. This growth is attributed to the platform's enhanced monetization strategies.

Why This Matters

Instagram's Reels feature directly competes with ByteDance's TikTok and YouTube Shorts. The increasing user engagement with short-form videos is prompting marketers to adopt this format. Meta, in turn, is aiming to boost revenue by placing more ads within these video formats.

Context and Potential Impact

Should a TikTok ban be enforced in the U.S., Reels and YouTube Shorts could emerge as attractive alternatives for advertising, potentially accelerating Instagram's revenue growth.

Key Insights from Analysts

"Instagram is now a video-first platform, with users spending close to two-thirds of their Instagram time watching videos," noted Jasmine Enberg, principal analyst at Emarketer. Enberg further added, "If the TikTok ban is enforced in 2025, Instagram could capture over one-fifth of reallocated TikTok ad dollars in the U.S."

By the Numbers

In 2024, Instagram's ad revenue was primarily derived from its Feed and Stories features, contributing 53.7% and 24.6% respectively. However, with the rise of Reels' revenue, the combined revenue share from Instagram Explore, Reels, and potentially Threads is projected to rise to 9.6% in 2025.