Mark Zuckerberg Says AI Reels Made People Spend More Time on Instagram

• Meta reported revenue growth in the first quarter, reversing three consecutive quarters of decline.
• Mark Zuckerberg is crediting higher engagement in Instagram Reels for part of this growth.
• Zuckerberg said time spent on Instagram has risen by 24% since the company launched the product.

Meta reported a 3% year-on-year revenue growth in the first quarter of 2023, reversing three consecutive quarters of revenue decline — and Mark Zuckerberg’s crediting higher engagement in Reels for part of this growth.

On an earnings call on Wednesday, Zuckerberg said that time spent on Instagram had risen by 24% since the company launched its short-form video product Reels — a TikTok challenger.

“Reels also continue to become more social with people resharing Reels more than 2 billion times every day, doubling over the last six months,” Zuckerberg said on the earnings call, per a transcript.

Zuckerberg also attributed part of the company’s boosted earnings to AI — he lauded Meta’s AI investments for helping to push Reels videos to users.

“Our investment in recommendations and ranking systems has driven a lot of the results that we’re seeing today across our discovery engine, Reels, and ads,” Zuckerberg said, per the transcript.

The company didn’t break down the daily active users for its Reels product. But Meta said that monthly active users on the company’s family of apps rose by about 5% year-on-year to over 3.8 billion. Facebook, meanwhile, saw a 4% year-on-year increase in daily active users to over 2 billion, the company said in its earnings release.

When asked by an analyst if she had a benchmark for the increase in time spent on Reels, Meta CFO Susan Li said the company isn’t quantifying “expected engagement growth” but is “pleased” with the “incremental engagement” they’ve seen. Li added that “it’s clear that people value short-term video” on the platform.

These comments from Meta’s C-suite come after a rocky road in the company’s foray into Reels. The Wall Street Journal reported in September — citing internal documents from Meta — that the Reels rollout was failing to capture market share from TikTok.

One of the reasons for Reels flopping was low levels of content creation. While there were roughly 11 million creators on the platform at the time, most Reels users got “no engagement whatsoever,” per one of the Meta documents seen by The Wall Street Journal.

A Meta spokesperson disputed The Wall Street Journal’s report but admitted to Insider that Meta still had “work to do” to keep Reels afloat.

Meta reported first-quarter revenues of $28.6 billion, up 3% year-on-year. These earnings bucked FactSet analysts’ expectations of revenues of $27.7 billion, according to a Wednesday report from The Wall Street Journal. Meta also reported a net profit of $5.7 billion during the quarter, a 24% drop year-over-year — partly due to the company’s restructuring.

Meta did not immediately respond to Insider’s request for comment.