Meta: Over 140B Reels are played daily on Instagram, Facebook

Meta continued to boast high user engagement levels for Reels – its short form video content – for the third quarter. Users across Facebook and Instagram now play more than 140 billion Reels daily, yet Reels monetization is still not on par with that of Feed or Stories on either platform.

Third quarter revenue totaled to $27.7 billion, down 4% from $29 billion in Q3 2021. Meta previously revealed Instagram Reels achieved a $1 billion annual revenue run rate in Q2. Factoring in both Instagram and Facebook engagement, the combined run rate for Reels now sits at $3 billion, according to Meta Founder and CEO Mark Zuckerberg.

Despite that progress, Zuckerberg noted Reels are causing a headwind of over $500 million quarterly revenue. Speaking on Wednesday’s earnings call, he highlighted closing the monetization gap between Reels and Meta’s other content as a “high priority.”

“I've discussed in the past how the growth of short-form video creates near-term challenges since Reels doesn't monetize at the rate of Feed or Stories yet,” said Zuckerberg. “That means as Reels grows, we're displacing revenue from higher-monetizing surfaces.”

But Zuckerberg anticipates Reels monetization levels will reach “a more neutral place” over the next 12-18 months.

In relation to Reels engagement, CFO David Wehner said aggregate time spent on Facebook and Instagram was up year-over-year both in the U.S. and worldwide.

“We aren't specifically optimizing for time spent because that would tend to tilt us towards longer-form video,” he said. “And we're actually focused more on short-form and other types of content.”

After testing a feature which made all Instagram video posts shared as Reels, Meta this summer announced any video posts shorter than 15 minutes will automatically become Reels.

Though Meta is optimistic about Reels engagement, some analysts have expressed doubts about the content. GlobalData’s Tammy Parker previously told Fierce Video Reels “is basically TikTok Lite,” and that younger people already familiar with TikTok will likely gravitate towards the more popular app instead of Reels.

Meta executives also touched upon the company’s advertising outlook. Ad impressions across Meta’s Family of Apps increased by 17% year-over-year, while average price per ad went down by 18% from Q3 2021.

Susan Li, Meta’s current VP of finance (and incoming CFO, effective November 1), said Meta is seeing a slowdown in advertising demand related to economic pressures such as inflation and supply chain issues.

“In the short and the medium term, what we've been very focused on is evolving our ad system by growing on-site conversions with products like lead ads and ads that click-to-message,” said CBO Marne Levine. “And we’re continuing to make investments in AI and machine learning to improve measurement, targeting and delivery.”