Instagram officially brings ads to its TikTok competitor Reels

UKRAINE - 2020/11/06: In this photo illustration an Instagram logo is seen displayed on a smartphone. (Photo Illustration by Valera Golovniov/SOPA Images/LightRocket via Getty Images)

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Instagram is bringing ads to its short-form video service and TikTok copycat Reels on Thursday, following a test. 

The Reels feature, which launched in August of last year, allows users to create short video clips and share them publicly or with friends within the Instagram app. Instagram's chief operating officer, Justin Osofsky, said the company wanted to get the organic experience for users right first, then moved on to how advertising would work. The company declined to share usage figures on Reels.

The ads will be full screen and vertical, and appear in between individual posts. They'll be up to 30 seconds long and will run on loop.

"When you go into Reels, you're going to find the kind of creators who entertain you. And also to go and be in a mode of having fun, which is a bit different than maybe how you approach the feed on Instagram, or on Stories," Osofsky told CNBC in an interview this week. "I think brands are getting quite sophisticated in how they use new short-form video formats, including Reels, to tell their own stories. And then advertising is a natural opportunity for brands to reach consumers they want to reach." 

Instagram leadership has been clear about TikTok's role in popularizing the short-form video format. Instagram's CEO, Adam Mosseri, told CNBC in November that TikTok "gets all the credit for pioneering the space" and said that Instagram itself was in a "catch-up phase" in that realm. Google's YouTube has followed suit with its own short-form video feature called Shorts.

When it comes to usage, TikTok is increasingly a challenger in the U.S. An eMarketer report released this month said adult users of TikTok will spend more time on TikTok than adult Facebook users spend on Facebook this year. The report also said TikTok will have more Gen Z users than Instagram this year. 

But as it pertains to advertising, Instagram's parent company, Facebook, is still a juggernaut in comparison. Facebook is expected to command nearly a quarter of digital ad spend globally in 2021, according to eMarketer.

Osofsky said he believes Reels is positioned well as an advertising option.

"The breadth of the audience that you can reach and the ability to target ads to reach the right people at the right time in the right format, I think is a real opportunity on Instagram," Osofsky said.

But one wrench in that targeted piece could be Apple's latest changes that make it easier for users to block advertisers from tracking them. Facebook has been outspoken about the changes, but Osofsky wouldn't say what kind of impact the company is seeing so far with its ad tests for Reels. 

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