‘Building up a community first’: Instagram Reels has little on offer for advertisers — for now

Instagram has announced its TikTok competitor Reels is launching in the U.S. and 50 other markets this week. The feature, which sits in the app’s Explore section, currently carries no advertising — a deliberate strategy, experts say, for Instagram to cultivate new types of users and content on its app before it attempts to monetize it.

Reels allows users to create 15-second videos, soundtracked by music and edited with special effects. Like the TikTok “For You Page,” the emphasis of Reels is to discover new content and users — including those owned by businesses — can opt to share their reel with the wider Instagram audience.

However, for businesses used to advertising on Instagram and Facebook there are some key differences at launch. An advertising agency buyer said the product hadn’t been pitched extensively to their agency yet.

“Instagram [is] working on building up a community first,” the buyer said.

There are currently no ad formats available on Reels, which could prove a key early point of differentiation with TikTok as Instagram looks to tempt over its users. Advertisers and influencers can’t pay to boost their videos or to have them displayed in the “featured” section, which is hand-picked by Instagram employees. Similarly, there aren’t any branded content tags available for use at launch, unlike within the main Instagram feed, where influencers can signal they have been paid by an advertiser to promote a product. 

Elsewhere, while businesses are able to create Reels, much like on Instagram Stories, business accounts won’t have access to music in Reels due to licensing restrictions.

“We are currently focused on making Reels a great experience for people and creators, but are evaluating monetization opportunities for the future,” said an Instagram spokesperson. On the subject of branded content tags, the spokesperson added, “We are planning to integrate these tools in the future.” A specific timeline wasn’t shared.

Advertisers, agencies and publishers will get access, however, to a regular newsletter showcasing the latest Reels trends and creators, according to a person familiar with the plans.

Instagram Reels’ international launch lands at a particularly challenging juncture for TikTok, which has been caught in the intensifying political crosshairs between the U.S. and China. President Trump has given its parent company ByteDance until just September 15 to find a buyer for TikTok in the U.S., or else he has indicated he would look to ban the app, citing national security concerns. The precise details of how a ban could legally work are unclear at this stage. Microsoft has confirmed it is in discussions to purchase TikTok in the U.S. and operate the app there and also in Canada, Australia and New Zealand.

TikTok has acknowledged Instagram Reels is a direct competitor — or “copycat product,” as CEO Kevin Mayer put it in a blog post last week. Speaking on the Digiday Podcast, which was recorded before the Instagram Reels launch, TikTok vp of global business solutions for the U.S. and Europe Blake Chandlee said Reels would be “competitive.” 

“They are going to be aggressive in bringing some TikTok influencers over. We know that they’re doing that; that they’re targeting some of those creators,” said Chandlee. “There’ll be a handful that probably do go over and that’s OK, that’s just competition. We actually embrace, and accept, and really want competition. Competition makes you better.”

Last month, a day after The Wall Street Journal reported Instagram was offering some of TikTok’s stars attractive financial offers to switch to Reels, TikTok said it would increase the size of its U.S. “creator fund” to $1 billion, up from an initial commitment of $200 million, to be paid out over three years.

The most-followed accounts on TikTok tend to be stars who made their fame on the app — or other video apps like Vine that preceded it — while the most popular Instagram accounts are primarily celebrities that found their fame in sports, music and traditional entertainment. The three most-followed TikTok accounts below to Charli D’Amelio (77 million followers,) Loren Gray (46 million) and Zach King (47 million,) according to analysis from content platform PostBeyond. Instagram’s official account is the most followed on Instagram (359 million) followed by Cristiano Ronaldo (234 million) Ariana Grande (196 million) and Dwayne Johnson (192 million).

“Instagram does still have a significant number of users who enjoy TikTok to convert over and install,” the Instagram app, said Owen Landefeld, growth manager at Abacus Growth. The marketing agency’s TikTok partner manager said back in May that around 60% of TikTok users aren’t on Facebook and 30% aren’t on Instagram.

Amy Luca, chief executive at influencer marketing company TheAmplify, said Instagram will face a challenge in luring loyal TikTok fans away from the app.

“Trump has now made it very popular with his recent news and there’s nothing like a potential ban on something to get younger generations to rally behind it,” said Luca. “Reels will likely become another fun feature for the existing [Instagram] users but I’m not sure how likely it is to help with immediate user growth for Gen Z.”

With at least 1 billion global users, even just swaying existing Instagram users over to Reels could make it an attractive proposition for advertisers further down the line. (TikTok has said it has 100 million users in the U.S. The TikTok app and its Chinese version, Douyin, have been downloaded more than 2 billion times to date, according to measurement firm Sensor Tower.)

“The problem we have with feeds in general across multiple social platforms is saturation of the feed: How do you stand out, especially as an advertiser,” said Elliot Georgiou, media activation director at media agency Essence.

He added, “People are used to putting their feed on mute and scrolling by really quickly … [with its emphasis on music] that attention and potential for cut through is that much more powerful on Reels.”


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