📸🫤 Instagram Has Got Some 'Reel' Issues
Happy Hump Day everyone,
We posted our second video featuring our new IRL video format. I take to the streets of downtown San Francisco to sell Spam Musubi and see how much money I can make. Please give the video a watch if you haven’t yet, and let us know what you think! We have a lot more interesting videos to come and we’re really excited to make them for you so stay tuned!
Enjoy this week’s Hump Days!
- Humphrey, Rickie & Tim
Tweet of the Week
Make sure to follow me on Twitter! https://twitter.com/humphreytalks
Featured Story
Meta Platforms’ Chief Executive Mark Zuckerberg placed the social-media powerhouse’s near-term future on Instagram Reels, the short-form video feature he touts as a competitor to TikTok; or maybe just a copy.
Instagram’s own internal research shows that Instagram Reels has a lot of ground to make up in regard to competing with TikTok. Instagram users only spend 17.6M hours a day watching reels, compared to 197.8M hours TikTok users spend on their platform. Additionally, Reels engagement has been declining as of late, falling 13.6% over the previous four weeks. In fact, an internal document published in August went as far as to say that “most Reels have no engagement whatsoever.”
There are many issues with Instagram Reels but possibly their most prominent one is that they cannot recruit people to make original content. Approximately 11M creators are on the platform in the U.S. but only 20.7% post each month. Additionally, nearly 1/3 of Reels videos are created on another platform (usually TikTok) suggesting the creative tools within the Instagram app leave much to be desired.
While Instagram Reels’ struggles are real, where Meta stands strong is their ad business which generates more than $50B compared with $3B for TikTok. Apple is throwing a wrench in this business, however, following their privacy-related changes towards targeted ads; to which Meta previously acknowledged they could take a $10B hit to revenue this year.
The push to keep users on their platform is crucial to the social media giant’s growth and Reels as a service is central to their effort to reinvent the way the company operates: prioritizing video. The big question is whether Instagram users, particularly creators, follow suit.
Weekly News Roundup
Instagram Stumbles in Push to Mimic TikTok, Internal Documents Show (WSJ)
Instagram’s attempt to steal market share from the king of short-form video: TikTok has been a failing effort and the company’s own internal research shows that Meta has a lot of catching to do. Instagram users are spending less than one-tenth of the 197.8M hours that TikTok users spend each day on the platform. Moreover, engagement has fallen 13.6% and most Reels have no engagement whatsoever.
RH: Why would people want to see 3 week old recycled TikTok content on Instagram when they can go straight to the source?
HY: Reels are a bit lacking compared to Tik Tok. According to someone I talked to at Google today, about 4 months ago Google was indexing short form videos and Tik Tok made up 1/3 of all short form videos on Google search. Now, it’s 75% - Tik Tok is still dominating market share.
TC: Agree with both Rickie and Humphrey here. Most of the Reels I see are just screen recorded TikToks lol
Inflation Showed Signs of Easing in Several Industries in August (WSJ)
U.S. consumer-price inflation showed moderation for the second straight month after August’s CPI report came in at 8.3%. While this is a positive sign that inflation is hopefully on a downward trajectory from June’s peak, the decrease was uneven across sectors, and remains unclear whether the slowdown will continue. Gasoline prices fell sharply in August, rent increases gave hints of slowing but food prices continued to soar.
HY: So even though it slowed in some sectors, the Consumer Price Index rose 0.1% monthly and 8.3% on a 12-month basis, the market took a huge tumble yesterday.
TC: After the inflation report, the market is actually pricing a chance for a 100 basis point hike… Crazy!
Payments Giants to Apple New Code Identifying Sales at U.S. Gun Stores (Reuters)
The International Organization for Standardization approved the creation of a new merchant code on Friday following pressure from gun-control activists who say it will help track suspicious weapons purchases. Visa, Mastercard, and American Express all confirmed they would work in tandem with third-party processors and partners on implementation. The code will show where an individual spends money but not what items were purchased.
Charts of the Week
Ark’s ETFs have come under a ton of pressure in 2022 at the hands of a historically aggressive Fed. A series of rate hikes battered the market’s speculative corners and dragged ARKK down by more than 55% in 2022. But nonetheless, Cathie Wood and Ark Invest have been buying the dip pretty aggressively in recent weeks. Will buying the dip work?