In 2025, over half of all ads on Instagram ran on Reels, a significant rise from 35% the previous year. Reels also accounted for 46% of user engagement on Instagram, compared to 37% in 2024. This shift underscores Meta's strategy to enhance user engagement and boost advertising revenue across its platforms. Analysts note that as Reels gains traction, advertisers are increasingly focusing on short-form video to connect with users. Despite the growth in Reels viewership, monetization remains a challenge for Meta. Short-form video typically generates less revenue than traditional feed content. CEO Mark Zuckerberg pointed out this trade-off, explaining that while Reels increases overall engagement, it can lead to revenue losses. Still, analysts believe that the overall advertising revenue can grow, as advertisers are spending more with Meta, even if some of that comes from lower-paying Reels. Instagram launched Reels in response to TikTok's popularity, embedding it into Facebook shortly after. The platform recently reported 3 billion monthly active users, a significant milestone since its acquisition in 2012. However, as Reels grows, the competition intensifies against TikTok and YouTube, which offers a similar short-form product called Shorts. While Reels is gaining share, YouTube's growth in daily active users remains strong, and TikTok still leads in terms of time spent per user. The battle for dominance in vertical video is becoming increasingly critical for these social media companies.