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Home / Business Contracts / Advertising Agreement

What is an Advertising Agreement?

It’s a contract reached between an advertising agency and a company or individual that wishes to have its products and/or services advertised. This document spells out exactly what either party is supposed to do.

The advertising company agrees to develop a strategic advertising plan that will profit the firm or sole proprietor. The client, on their part, consents to grant access to the necessary documentation needed to create killer ads.

When do I need an Advertising Agreement?

An advertising services agreement is a superb way to make everything clear between the parties involved. It’s particularly handy in the following situations:

  • You need of an advertising agency to promote your products and/or services
  • You’re an advertising company that’s being hired to market a company’s or brand’s goods and services
What are the Key Clauses in an Advertising Agreement?
Parties to the agreement

As with most contracts, the first thing to include entails the names of the parties involved.

Their identities should be explicitly specified as early as in the first paragraph. All the names ought to be spelled correctly, and their respective addresses included.

Scope of work

This clause is the most common cause of contention, which makes it all the more important in an advertising contract.

It needs to be as ironclad as possible, outlining the specific services that the ad agency will provide. For instance, what platforms will the ad agency use to promote the brand’s products or services? Print, television, social media, or a combination of all?

Similarly, will the ad agency prepare all advertising material such as web content, artwork, photography, and documentary? Or are some of the advertising materials subject to an additional cost? If the said works are provided by an outsourced agency, who will pay for these other expenses?

Handling of revisions and rejections of deliverables

There are times when the ads created by an agency fail to live up to the client’s expectations. To avoid misunderstandings, it’s good to have a section that outlines how revisions and rejections will be handled.

This clause helps to answer questions such as, just how many revisions does the ad agency accept? How soon can an ad’s content be revised? Will the agency charge extra for revisions and rejections?

Exclusivity

Both the advertising agency and the client should pay extra attention to the exclusivity clause. This section specifies whether or not the ad company has a right to market products and/or services of a competing brand. If you have a startup, you may want the agency to commit to advertising your brand only to avoid competition.

However, the restriction remains valid only for the duration of the contract. Similarly, it doesn’t restrict the ad agency from promoting brands in other industries.

Take note that the exclusive nature of an advertising agreement cuts both ways. In other words, the ad agency can also restrict the client from hiring other third-party suppliers to conduct operations related to advertising.

For instance, the company may be prohibited from hiring a web developer, social media influencer or other types of advertising entities.

Term of an Advertising Agreement

The contract should also indicate when an ad campaign will start, how long it will run, and when it will end.

As we know, some ads are quite time-sensitive, and a client may want their product or service promoted immediately to maximize their market share. So if an advertising agency promises to deliver an ad within a particular deadline, this clause should be included in the agreement.

How Should an Advertising Agreement Terminate?

Apart from outlining the start and completion dates, the contract should also specify what a wrap-up of the advertising campaign will look like.

Will the company end the contract as soon as the agency publishes an ad? Or, does the brand wish to see tangible results like increased traffic and sales- before terminating the agreement?

In that regard, there ought to be a termination procedure included in the agreement. It states who has the right to terminate the contract, whether a notice should be given beforehand and how the termination process will be handled.

Upon termination, will the agency hand over the advertisement material? Will the client make any payment if the ad agency breaches the contract?

Payment

The agreement should also lay out detailed terms of payment. For instance, does the ad agency prefer to be paid regularly or on a performance basis? What action should be taken if the client delays payment?

Confidentiality

If you’ve entrusted your advertising operations to an agency, chances are that you’ll have to disclose sensitive information about your business. This way, the ad agency will have all the data they need to run an effective marketing campaign.

Taking this into account, it’s crucial that you identify any piece of information that you don’t want to be shared with others. So even though the agency can use it to improve the advertising campaign, it’s not at liberty to disclose it to third-parties.

A confidential clause is a two-way street, meaning the client is also prohibited from disclosing sensitive data about the ad agency. Once the contract expires, both parties should return each others’ confidential information.

The Bottom Line

An advertising contract is made between a brand/company and an advertising agency. It sets out the rules that the advertiser and client (company) have to comply with to guarantee a successful working relationship.

If you need an advertising contract drafted or reviewed get in touch today!

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