This thesis investigates how retention and memorability influence the perceived effectiveness of paid advertisements for small Swedish businesses on Instagram Reels. As small Swedish companies often lack the financial resources compared to larger corporations, it is crucial to understand which factors make advertisements more impactful in fast-paced, algorithm-driven environments.

Instagram Reels has rapidly become one of the largest platforms for fast-paced videos, showing us the relevance of where to focus our study. This study identifies the content-related elements that affect retention and memorability in paid Reels advertisements through a mixed-method approach consisting of usability testing, semi-structured interviews, and an exploratory industry survey.

This analysis is based on four theoretical frameworks: the Elaboration Likelihood Model (ELM), Limited Capacity Model (LC4MP), Nudge Theory, and Attention Economy Theory. These models help to explain how users process short-form ads cognitively and emotionally.

The results show a weak correlation between longer retention and higher memorability. Instead, elements such as strong visuals, storytelling, sound design, and personal relevance had a more considerable impact on which ads were remembered. These findings suggest that for small businesses to improve effectiveness on Instagram Reels, they should focus on creating emotionally engaging, visually unique, and relevant content for their target audience.