The Online Video Mistake Everyone's Making
Why pulling back from OLV means breaking your funnel—not fixing it
Marketers are quietly retreating from online video (OLV). Not loudly, not all at once, but consistently. The IAB Tech Lab’s updated video classification standards created confusion about what qualifies as “instream” versus “standalone” inventory. In response, buyers are rejecting inventory they’ve purchased happily for years simply because it now carries a different classification label.
This is a mistake. Online video hasn’t lost effectiveness. It’s lost some legacy terminology. There’s a meaningful difference.
Publishers report buyers blocking inventory that performed well last quarter because updated classifications suggest it’s not “premium” enough. The inventory hasn’t changed. Performance metrics haven’t changed. Only the label changed.
Marketers responding to taxonomy shifts rather than performance signals risk breaking funnels that work.
What Actually Changed
The IAB Tech Lab updated video placement classifications to bring clarity to a historically messy taxonomy. Previous definitions of “instream,” “outstream,” “interstitial,” and “standalone” varied by vendor interpretation. Publishers classified inventory one way, DSPs classified it differently, measurement vendors used third definitions.
The new standards create consistency. Good for the industry long-term. But implementation created short-term problems.
Inventory previously labeled “instream”—video ads appearing in video content—might now classify as “interstitial” or “standalone” depending on specific placement characteristics. The ad itself didn’t change. The viewer experience didn’t change. The performance didn’t change. The classification changed.
Buyers with targeting strategies built around “instream only” suddenly found their campaigns couldn’t access inventory they relied on. Rather than adjusting strategies to new classifications, many simply excluded the reclassified inventory.
This overcorrects. If inventory performed well under the old classification and nothing substantive changed except the label, it should still perform well.
The CTV False Choice
Some marketers interpret the OLV pullback as strategic shift toward CTV. Connected TV is premium, brand-safe, scales effectively—everything marketers want. Why bother with online video?
This framing creates a false choice. CTV and OLV serve different functions even when both deliver video advertising.
CTV excels at top-of-funnel brand building. It reaches audiences in lean-back environments where attention is high and context is premium. Perfect for awareness and consideration.
But CTV has limitations for mid-funnel and lower-funnel objectives. Targeting capabilities are less granular than digital video. Frequency management is harder. Creative testing is slower. Optimization happens on longer cycles.
OLV fills these gaps. It offers precise targeting, real-time optimization, immediate creative testing, and granular frequency control. These capabilities matter for moving audiences from awareness to action.
The most effective video strategies use both. CTV for broad reach and brand impact. OLV for targeted follow-through and conversion support. Together they create full-funnel coverage that neither accomplishes alone.
Choosing between them means accepting incomplete funnel coverage.
The Social Saturation Problem
When marketers pull back from OLV, many redirect spend to social video—TikTok, Instagram, YouTube. Social platforms promise real-time optimization and proven performance.
But many brands are already overinvested in social. They’ve pushed spend to the point of diminishing returns, saturating their addressable audiences.
Social platforms also create specific challenges:
Attribution blind spots. Social platforms control measurement. Third-party verification is limited. Brands can’t independently verify reported performance with the same rigor as programmatic video.
Walled garden limitations. Data stays within platforms. You can’t use social learnings to optimize other channels or integrate into broader marketing analytics.
Creative constraints. Social formats demand specific creative approaches. Content optimized for TikTok doesn’t translate to display, CTV, or traditional video. This creates parallel creative workflows and limits asset reuse.
Platform dependency. Overreliance on any single platform creates risk. Algorithm changes, policy shifts, or pricing increases immediately impact results with limited alternative options.
Shifting OLV budget to social when social is already saturated doesn’t solve problems. It compounds them.
What OLV Actually Does
Online video’s role in modern marketing differs from CTV and social, which is precisely why it matters.
Mid-funnel bridging. CTV creates awareness. Social drives engagement. OLV connects them by reaching audiences who’ve seen CTV ads and targeting them with more specific messaging before social conversion paths.
Flexible targeting. OLV allows precise audience segmentation using first-party data, behavioral signals, and contextual targeting. This enables testing and optimization that premium environments don’t support.
Creative experimentation. Faster iteration cycles mean you can test messaging, offers, and creative approaches more quickly than in CTV or traditional social. Learnings inform broader strategy.
Scalable reach. While individual OLV placements offer less reach than major CTV inventory, aggregate scale is substantial. For campaigns needing volume beyond premium inventory, OLV provides necessary capacity.
Cost efficiency. CPMs are lower than CTV, making OLV effective for campaigns requiring frequency or where awareness is already established and the goal is reinforcement or conversion support.
These aren’t capabilities CTV or social provide as effectively. Eliminating OLV means losing these functions from your marketing mix.
The Infrastructure Evolution
The classification confusion is real but solvable. New tools address the complexity:
Curated marketplaces. These provide pre-vetted, high-quality inventory organized by campaign objectives rather than technical classifications. Buyers access contextually relevant inventory without managing classification details.
video.plcmt specifications. This OpenRTB protocol allows granular inventory description including format, screen type, context, and publisher preferences. Buyers can define needs precisely without relying solely on broad classifications.
AI-powered buying. Automated systems handle classification complexity, optimizing toward performance objectives rather than manually managing placement types. This reduces operational burden and improves results.
Together, these tools make OLV easier to execute even with more complex taxonomy.
What Actually Matters
Here’s what should guide OLV decisions:
Performance, not classification. Does the inventory drive your KPIs? If yes, buy it regardless of how it’s classified.
Audience fit, not format purity. Does it reach the right people in the right context? That matters more than whether it technically qualifies as “instream.”
Funnel coverage, not channel concentration. Do you have full-funnel video coverage? If pulling OLV creates gaps, performance suffers even if you optimize other channels.
Cost per outcome, not cost per placement. Lower CPMs don’t matter if conversion rates also drop. Higher CPMs don’t matter if conversion rates improve enough. Optimize for total cost per acquisition or other business outcomes.
Strategic flexibility, not operational simplicity. Managing fewer channels is easier but potentially less effective. Complexity should be managed, not eliminated if it drives results.
Moving Forward
For brands currently reconsidering OLV:
Audit actual performance. Before cutting spend, confirm that the inventory being eliminated actually underperforms. Don’t make decisions based on classification changes alone.
Test systematically. If you’re uncertain about OLV effectiveness, run controlled experiments comparing performance with and without it. Make evidence-based decisions.
Work with partners who understand taxonomy. Many DSPs and agencies have adapted to new classifications. They can access high-performing inventory even with updated standards. Partner with those who’ve solved the technical challenges.
Maintain full-funnel strategy. Ensure video strategy covers awareness, consideration, and conversion. OLV often plays the consideration role that CTV and social don’t fill as effectively.
Communicate with vendors. If specific publishers or inventory sources have been reclassified but historically performed well, work with them to understand what changed and whether it affects quality. Often the answer is nothing substantive changed.
The biggest risk isn’t taxonomy complexity. It’s responding to complexity by eliminating effective channels rather than adapting strategies to new classifications.
Classification standards exist to improve transparency and consistency. But they’re means to an end—better marketing performance—not ends in themselves. When standards change, adjust tactics to maintain access to effective inventory rather than abandoning that inventory because labels changed.
Online video remains a valuable part of full-funnel video strategy. The infrastructure for buying it effectively is improving, not deteriorating. The challenge is navigating a transition period where new classifications haven’t yet been fully integrated into buying workflows.
That’s a solvable problem, not a reason to fundamentally alter strategy.