For years, local media companies have been told that digital services are essential to future revenue growth. Many publishers listened. They trained sales teams, expanded product menus and began offering search, social, programmatic display, connected TV, streaming audio and other forms of extended reach to local advertisers.
But according to Zack Watson, founder and CEO of Rambunctious Rhino, the bigger question today is no longer whether publishers should sell digital advertising services. It is whether they are making enough money after the sale is made.
“What organizations often don’t realize is that we’re overpaying due to a litany of things,” Watson said during a recent E&P webinar. “It’s the arbitrage loss in paying wholesale CPMs for programmatic. It’s different platform fees, software fees for reporting, software fees for CRMs, whatever it may be.”
Watson said many publishers are doing the hard part correctly. Their sales teams are building relationships, earning trust and closing business. The challenge is that once fulfillment costs, software expenses, labor and hidden markups are added into the equation, profitability often disappears.
“We’re selling this stuff, we feel like we’re doing the right thing. Our frontline people are grinding, they’re working hard, they’re getting the sales,” Watson said. “But at the end of the day, we’ve got a big top-line number, but there’s nothing at the bottom.”
Where margin leaks out
One of the biggest concerns Watson identified is what he calls margin leakage — the hidden costs that quietly erode profitability after a digital campaign is sold.
Among the most common culprits are programmatic arbitrage, software subscriptions, reporting tools, platform fees and operational inefficiencies.
Watson pointed to programmatic advertising as a particular problem. In some fulfillment models, media companies purchase inventory at wholesale CPM rates that are substantially higher than the actual inventory cost.
“That’s where you see a lot of lost margin across the programmatic landscape,” Watson said.
He noted that some publishers working with Rambunctious Rhino have recovered more than 30% of lost margin, while many have regained roughly half of the margin previously lost through programmatic arbitrage.
The challenge, Watson said, is that many publishers simply do not know where the money is going once campaigns move into fulfillment.
Why reporting can become its own cost center
Reporting is another area where publishers may be spending far more than they realize. According to Watson, some larger organizations can spend $20,000 to $25,000 per month on reporting software alone. Even smaller organizations often dedicate the equivalent of a full-time employee to maintaining dashboards, connecting APIs and generating reports.
“Reports and dashboards don’t run themselves,” Watson said. “They expect the local media companies to have folks who own that, making sure everything’s set up, connecting all the different APIs, creating the dashboards for every single client, making sure the dashboards work.”
Rambunctious Rhino includes reporting as part of its fulfillment model, creating custom dashboards aligned with a publisher’s branding and sales process. More importantly, Watson said the people managing the campaigns are directly involved in the reporting process.
“Our campaign managers are involved in that piece too, which I found to be extremely effective because now you have the folks who are pulling the levers on the campaign bought into the end results,” he said.
The value of talking to the person pulling the levers
A recurring theme throughout the webinar was communication. Watson argued that many fulfillment models create unnecessary layers between the salesperson and the person actually running the campaign. Account managers often serve as intermediaries, creating additional cost while limiting direct access to campaign expertise.
“The people on those calls are the people who are pulling the levers,” Watson said. “We don’t just have a well-spoken account manager who doesn’t understand all the basics and the nuances of the campaign. We actually have a person who’s doing it.”
That direct connection, he said, improves responsiveness, accountability and campaign performance while reducing the costs associated with maintaining additional management layers.
Why cheap fulfillment can become expensive
Watson also warned against relying solely on low-cost fulfillment providers. Many publishers, he said, choose outsourced solutions that rely heavily on offshore or junior staff operating in highly standardized production environments.
“Here’s a ticket, run the thing. Here’s a ticket, run the thing,” Watson said. “There’s not the cultural context. There’s a lack of communication with your campaign manager. Quite frankly, it’s just run like a quick factory.”
While those models may appear less expensive initially, Watson argued they often create hidden costs through rework, advertiser dissatisfaction, credits and campaign underperformance. “Good things aren’t cheap, cheap things aren’t good,” he said.
New platforms require new capabilities
The digital advertising landscape continues to fragment, creating both challenges and opportunities for publishers.
Watson noted that advertisers increasingly ask about platforms beyond Google and Meta. Reddit, TikTok, Pinterest and Bluesky are becoming part of the conversation, particularly among advertisers seeking niche audiences and specific targeting capabilities. “The fragmentation of media has been continuing since the internet and keeps compounding exponentially,” Watson said.
Some Rambunctious Rhino partners are already seeing strong results from emerging platforms. Watson cited examples of TikTok campaigns producing lead-generation costs comparable to paid search.
The lesson for publishers, he said, is not that they must immediately embrace every new platform. Instead, they must be capable of supporting the platforms advertisers want to discuss. “If they ask them about Reddit and they can’t do it, or TikTok, ‘Hey, we’re not there yet,’” Watson said, competitors may gain an advantage.
The opportunity in connected TV
Watson also highlighted connected TV and OTT advertising as major opportunities for local media companies.
While many publishers continue to focus heavily on traditional display advertising, he believes CTV offers strong growth potential because inventory costs have declined while advertiser demand remains high.
“The cost of CTV inventory has gone down,” Watson said. “I don’t know if anybody’s experiencing that from their vendors, but I don’t know if anybody’s been lowering their prices.”
Combined with improved targeting capabilities, Watson believes CTV can help publishers become more competitive while delivering stronger value to local advertisers.
The in-house versus outsourced debate
For publishers evaluating fulfillment strategies, Watson described three primary options: build a team in-house, outsource through a traditional wholesale model or partner with a white-label fulfillment provider.
While some organizations successfully operate internal teams, Watson said the economics can become difficult. “The fully loaded math is tough,” he said.
A modern fulfillment operation requires expertise across search, social, analytics, tagging, reporting and campaign management. Publishers also need supervisors, backup personnel and ongoing training. “You can’t just hire a search person. You can’t just hire a social person. You can’t just hire somebody to do all the tag management and all the analytics,” Watson said.
He added that many publishers underestimate the staffing requirements necessary to scale effectively. “One of the biggest problems with in-house is that you have to overhire,” he said.
Some organizations solve this challenge through hybrid models, maintaining internal resources while using external partners to handle specialized services or overflow capacity.
Questions every publisher should ask
Watson encouraged publishers to carefully evaluate their current fulfillment arrangements.
Among the most important questions:
“Can you show me every placement?” Watson asked. “Most people won’t show you every placement. They’ll show you some of them. They won’t show you all the stuff at the bottom.” For Watson, transparency remains one of the most important indicators of quality.
AI is real, but so is the hype
Artificial intelligence was another topic of discussion. Watson sees genuine opportunity in AI-driven optimization, particularly helping advertisers improve visibility within large language model results and AI-powered search environments.
However, he remains skeptical of fully automated campaign management. “Who wants to hand their advertiser’s budget to big tech’s AI bots and hope for the best?” Watson asked. “Nobody does, and neither do the advertisers.”
He believes local businesses will continue to rely on trusted advisors to guide strategy, execution and measurement rather than handing complete control to automated systems.
Your margin problem may not be a sales problem
Watson’s central message was that publishers should not assume weak profitability means their sales teams are failing. Instead, many organizations need to examine the structure behind fulfillment.
“Your margin problem, if you have one, is usually a structure problem. It’s not a sales problem,” Watson said. “That’s things from high-cost reporting to CPM-based pricing and hidden markups that work against you.”
His final recommendation was simple: improve communication, understand the economics behind fulfillment and ensure sales teams have confidence in the products they are offering.
“Move with the market,” Watson said. “In order to be competitive, you’ve got to be able to effectively execute across multiple platforms your clients want to be on. Every day there’s a new one. That doesn’t mean you have to jump to it, but you need to know about it.”
For local media companies looking to grow sustainable digital revenue, Watson believes success will come not just from selling more services, but from understanding what happens after the sale is made.
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