Get ready to see more ads on Instagram, especially when it comes to short-form video formats.

Parent company Meta announced on Tuesday it will create new ad formats for its platforms, which includes showing short ads in between Reels replays, called post loops, and using AI to aid in music selection for some types of Reels ads. Recently, it also announced artificial intelligence-powered templates called Advantage+ which can help e-commerce companies make Reels ads more efficiently.

“We’ve been on the forefront of creating the tools businesses need to get discovered and drive consumer demand, and today’s new products are another way we’re helping businesses tap into the popular Reels format, while helping creators better monetize their content,” said Nada Stirratt, Meta’s Vice President of Americas.

Stirratt also said Meta is working to get advertising agencies and brands to create ads tailored for Reels, instead of just creating one-size-fits-all videos like those made for 30-second commercials on television.

However, some companies currently have fewer resources they can put towards making bespoke productions, so it’s harder to get brands to dedicate time and talent for “experimental” formats. 

Adding AI may help bridge that gap. A Meta spokesperson said in the future the company believes its technologies will be able to scan a brand’s website to create an entire advertising campaign and know which customers to target without violating privacy laws.

Reeling Them In
Meta sees potential in Instagram Reels as more audiences shift toward shorter videos, as popularized by TikTok. Video viewing already makes up more than half of the time people spend on its platforms, the company said. Reels, in particular, consumes about 20 percent of the time users spent on Instagram.

"As video advertising continues to evolve based on consumer preferences, marketers are finding new, creative ways to tell their stories,” Stirratt said.

Still, a recent Wall Street Journal report claimed internal documents from Meta showed Instagram Reels was falling behind TikTok in terms of hours spent and engagement. Meta said the stats are outdated and were misinterpreted in the article, and would be providing new data in its upcoming earnings report on October 26.

In particular, Reels could provide a great opportunity for revenue. The format has already reached $1 billion in annual revenue according to the company, which was achieved at a faster rate than Instagram Stories. In particular, social media-based e-commerce provides a huge money-making opportunity. Consumers are projected to spend $1.03 billion on products they see on social media this year, according to Insider Intelligence. About 48.7 percent of users buy things they see on their social media feeds.

It isn’t only Reels getting new ads. Instagram will also add augmented reality in feeds and Stories, carousels of AI-suggested companies on relevant Instagram posts, and more ads on Explore and profile feeds. Other styles of ads will be tested on Facebook Stories before being integrated into Instagram.

The ability to create more ad revenue for Instagram could also mean more money for creators - and a way to convince people to make content for Instagram as opposed to competitors. Currently ad revenue will be split 45-55 for ads that appear on post loops as well as carousel-formats. Meta is still exploring the revenue split for Advantage+ ads.
Updated October 4, 2022 at 11:20 a.m. ET to correct when Advantage+ was announced. It was announced in August, not Tuesday.