As a business lawyer, I often come across clients who have questions about advertising services agreements. To help provide some answers, I’ve compiled this FAQ. I hope that it will be a useful resource for anyone considering engaging an agency or service provider to perform advertising services on their behalf.
One thing to keep in mind is that every advertising services agreement is unique, and the terms and conditions of the agreement should be tailored to meet the specific needs and goals of the advertiser and the advertising campaign. That being said, if you’re just starting out and don’t have a lot of experience with advertising services agreements, you may find it helpful to use a basic template at the end of this blog.
What is an advertising services agreement?
An advertising services agreement is a contract between an advertiser and an advertising agency or other service provider. It sets out the terms and conditions under which the advertiser engages the agency or service provider to perform advertising services on their behalf.
What types of advertising services might be included in an advertising services agreement?
An advertising services agreement may cover a wide range of services, including:
- Media planning and buying (e.g., placing ads on television, radio, print, online, or other media)
- Creative development (e.g., designing and producing ads)
- Account management (e.g., coordinating with the advertiser to develop and implement the advertising campaign)
- Research and analytics (e.g., measuring the effectiveness of the advertising campaign)
Can an advertising services agreement be terminated early?
Yes, an advertising services agreement can usually be terminated early by either party. The terms of the agreement should specify the circumstances under which the agreement can be terminated and any consequences of termination (e.g., payment of fees for work completed up to the date of termination).
What happens if the advertising services are not satisfactory?
The terms of the advertising services agreement should specify how disputes or complaints about the quality of the services will be resolved. This may include provisions for mediation or arbitration, or a process for working with the agency or service provider to address any issues and come to an acceptable resolution.
Can an advertising services agreement be amended?
Yes, an advertising services agreement can usually be amended by mutual agreement of the parties. Any changes to the agreement should be made in writing and signed by both parties.
Who owns the intellectual property rights in the advertising materials produced under an advertising services agreement?
This will depend on the specific terms of the agreement. The advertising services agreement may specify that the advertiser owns all intellectual property rights in the advertising materials, or it may provide for the agency or service provider to retain certain rights (e.g., for use in their portfolio). It is important for the parties to clearly define their rights and responsibilities with respect to intellectual property in the advertising services agreement.
Can an advertising services agreement be transferred to a third party?
This will depend on the specific terms of the agreement. In some cases, the advertiser may have the right to assign or transfer the advertising services agreement to a third party (e.g., if they sell their business). The advertising services agreement should specify any restrictions on assignment or transfer, and any requirements for the other party’s consent.
Can an advertising services agreement be oral or does it have to be in writing?
An advertising services agreement can be oral or in writing. However, it is generally advisable to have a written agreement in order to clearly document the terms and conditions of the arrangement and avoid misunderstandings. A written agreement provides a record of the agreement in the event of any disputes.
What if the advertising services agreement is silent on a particular issue?
If the advertising services agreement is silent on a particular issue, the parties may need to rely on industry customs or practices, or may need to negotiate a resolution. It is generally a good idea to include as many details as possible in the advertising services agreement in order to avoid ambiguity and minimize the risk of disputes.
What should I do if I have a problem with the advertising services I have received?
If you have a problem with the advertising services you have received, you should first try to address the issue with the agency or service provider directly. If the problem cannot be resolved to your satisfaction, you may wish to seek legal advice or pursue other remedies, such as mediation or arbitration, as provided for in the advertising services agreement.
Who is responsible for obtaining any necessary permits or approvals for the advertising campaign?
This will depend on the specific terms of the advertising services agreement. In some cases, the advertiser may be responsible for obtaining any necessary permits or approvals, while in other cases the agency or service provider may be responsible. It is important for the parties to clearly define their responsibilities with respect to obtaining any necessary permits or approvals in the advertising services agreement.
What should I consider when negotiating an advertising services agreement?
When negotiating an advertising services agreement, you should consider the following:
- The scope of the advertising services to be provided
- The term of the agreement
- The fee or compensation for the advertising services
- Any performance or delivery milestones
- Any warranties or representations made by the agency or service provider
- Any confidential information or intellectual property provisions
- Dispute resolution provisions
- Governing law and jurisdiction
You should also consider the specific needs and goals of your advertising campaign, and make sure that the advertising services agreement reflects those needs and goals.
What should I do if I’m not sure if an advertising services agreement is fair or reasonable?
If you are not sure if an advertising services agreement is fair or reasonable, you may wish to seek legal advice or seek the opinion of an industry expert. You may also want to consider negotiating the terms of the agreement to better meet your needs and goals.
What should I do if I want to terminate an advertising services agreement?
If you want to terminate an advertising services agreement, you should review the terms of the agreement to determine the conditions under which the agreement can be terminated and any consequences of termination (e.g., payment of fees for work completed up to the date of termination). You should also notify the agency or service provider in writing of your intention to terminate the agreement.
Is it necessary to have an advertising services agreement in place?
It is generally advisable to have an advertising services agreement in place when engaging an agency or service provider to perform advertising services on your behalf. A written agreement helps to clearly define the terms and conditions of the arrangement and minimize the risk of misunderstandings or disputes.
What if one party to an advertising services agreement breaches their confidentiality, intellectual property, representation or warranty, payment, performance or delivery, or other obligations?
The other party may be entitled to seek remedies for the breach. The specific remedies available will depend on the terms of the advertising services agreement and the laws governing the agreement.
One possible remedy for breach of contract is damages. Damages are a monetary compensation that is awarded to a party in the event of a breach of contract, and are intended to compensate the non-breaching party for any harm or losses they have suffered as a result of the breach. There are several types of damages that may be available in an advertising deal, including compensatory damages (to compensate for actual losses or damages), consequential damages (to compensate for indirect or consequential losses), and punitive damages (to punish and deter particularly egregious conduct).
Another possible remedy for breach of contract is specific performance. This is an order requiring the breaching party to fulfill their obligations under the advertising services agreement. Specific performance may be granted if damages are not an adequate remedy, or if the non-breaching party can show that they are entitled to specific performance based on the terms of the agreement.
The availability and extent of damages and specific performance as remedies for breach of contract will depend on the specific terms of the advertising services agreement and the laws governing the agreement.
Template
This short basic template outlines the terms of a contract for advertising services between an Advertiser (a company seeking advertising services) and an Advertising Agency (a company providing the advertising services).
Section I: Employment of Agency. This section outlines the services that the Agency will provide to the Advertiser, including all services typically performed by a modern advertising agency of the Agency’s size.
Section II: Commission of Agency. This section outlines the commission that the Agency will receive in exchange for their services. It includes details on the percentage of gross charges for advertising placed with media, as well as the percentage of charges for suppliers of services or properties. It also includes provisions for services involving no commission to the Agency, such as direct mail advertising or market analyses, which must be agreed upon in advance.
Section III: Billing. This section outlines the billing process, including the frequency (monthly) and payment terms (due and payable within a certain number of days from receipt).
Section IV: Discounts. This section outlines the discounts that may be applied, including cash discounts received by the Agency and passed on to the Advertiser.
Section V: Termination of Agreement. This section outlines the process for terminating the Agreement, including the required advance notice period.
Section VI: Accounting on Termination. This section outlines the process for accounting on termination of the Agreement, including the payment of commissions and the delivery of materials. It also outlines the Advertiser’s responsibility for any outstanding contracts made on their behalf.
Advertising Services Agreement
Agreement for advertising services made __________________ (date), between __________________ (Name of Advertiser), a corporation organized and existing under the laws of the state of __________________ (name of state), with its principal office located at _____________________________________________ (street address, city, county, state, zip code), referred to herein as Advertiser, and __________________ (Name of Advertising Agency), a corporation organized and existing under the laws of the state of __________________ (name of state), with its principal office located at _____________________________________________ (street address, city, county, state, zip code), referred to herein as Agency.
I. Employment of Agency. Advertiser engages Agency to render, and Agency agrees to render to Advertiser, all the services customarily performed by a modern advertising agency of the size of Agency.
II. Commission of Agency. In consideration of the services rendered by Agency to Advertiser, Agency shall receive an amount equal to _______% of the gross charges of owners of media for advertising placed with those media by Agency pursuant to this contract; and _______% after volume discount, of the charges of suppliers of services or properties, such as finished art, comprehensive layouts, type composition, photostats, engravings, printing, radio and television programs, talent, literary, dramatic, and musical works, records and exhibits, purchased by Agency on Advertiser’s authorization during the term of this Agreement; provided that:
A. No percentage will be added to Agency charges for packing, shipping, express, postage, telephone, telex, FAX, and travel expenses of Agency personnel.
B. Agency’s commission for outdoor advertising will be the standard rate allowed advertising agencies when such rate is less than _______%.
C. Should Advertiser desire Agency to perform services involving no commissions to Agency from owners of the media, such as direct mail advertising, speech writing, publicity and public relations work, and market analyses or surveys, Agency and Advertiser shall, in advance of the performance of such services, mutually agree on Agency’s compensation for the same.
III. Billing. Agency shall bill Advertiser on a monthly basis. All bills shall be due and payable by Advertiser within __________________ (number) days from the date of receipt.
IV. Discounts. When Agency receives a cash discount from owners of media and Advertiser has provided funds for Agency to take this discount, Advertiser shall receive full allowance for each such amount. Cash discounts allowed by suppliers of materials and all cash discounts earned by Agency’s use of its own funds shall not be passed on to Advertiser.
V. Termination of Agreement. This Agreement may be terminated by either party at any time, by sending to the other party, by certified or registered mail, return receipt requested, a __________________ (number) days’ advance written notice of termination.
VI. Accounting on Termination. On termination of this Agreement by either party, Advertiser shall pay Agency the cost of any material finished or in preparation, which Advertiser has previously approved, plus _______%. Agency shall also be entitled to receive full commissions on any advertising that it has prepared and that is subsequently used by Advertiser.When all of Agency’s invoices are paid, Agency shall deliver to Advertiser all materials in its possession that were paid for by Advertiser.
Advertiser shall assume Agency’s liability under all outstanding contracts made on Advertiser’s behalf.
Witness our signatures, this __________________ (date).
(Name of Advertiser)
By: _________________________
(Signature of Officer of Advertiser)
________________________
(Title of Officer of Advertiser)
________________________
(Name of Advertising Agency)
By: ________________________________
(Signature of Officer of Advertising Agency)
________________________
(Title of officer of Advertising Agency)
