What Is an Advertising Contract?
Advertising contracts are legally binding agreements that document the relationship between advertisers and their clients, or sponsors, detailing the specifics of an advertising campaign. A contract is essential in advertising for a number of reasons. First, it ensures that the terms of a campaign are clearly defined, removing any ambiguity about what is being provided, when and for how long. This is critical, as good advertising takes time and if there is a dispute between a sponsor and ad provider about the timeframe and manner in which ads are being delivered, this could lead to a significant financial cost either way. For example, if a sponsor has paid for a series of ads over a period of months, but the advertiser cannot deliver them for some reason, then the client will have recourse through the contract. Conversely, if the advertiser is unable to work to the specifications or timeframe of the contract , they can be compensated through the contract for the costs of this.
The second reason advertisers need contracts is for liability protection. An advertiser may associate itself with a third party. This may be a company promoting a legal operation, or this may be a party operating outside of the law. There is nothing illegal about associating with groups that have no legal merit, but advertisers do have a duty to ensure they are not dealing with a rogue operator. This means that if, for example, a person were to use an ad campaign to promote Ilegal gambling, drugs, weapons, and so forth, and include the names and logos of legitimate companies in their work, that company could be liable. However, if a client of your advertising knows that your production is focused on a retail product, and has signed a contract specifying that the content will only be associated with legitimate and law abiding companies, you have taken steps to reduce your liabilities. The same can apply where a client places a number of limitations on your work; where you have agreed to such restrictions, a contract reduces your liability by making it clear what you have offered.
Key Elements of an Advertising Contract
Every advertising contract template should include a number of key components, which include the following:
Scope of Work – The scope of any advertising contract template provides both parties with knowledge of the requirements of the project. This section of the contract will detail all information needed to complete the contract, from the design concept to the approved artwork.
Payment Terms – Without payment terms, the contract is incomplete. Payment terms should address the total cost of the work, how it will be paid for (lump sum, hourly, per item, etc.), and when the payment is due (upon receipt, within 30 days of receipt, etc.).
Deliverables – Deliverables are anything that is created for the client. For example, the deliverable may be something simple, such as a flyer, or something large, such as signage. The deliverable section of the advertising contract template will detail exactly what is expected of both parties.
Timeframe – It is very important to include a timeframe in the advertising contract. This is the time in which there can be no changes to the project. This is crucial as it holds the client accountable to the contract as well as the designer, ensuring that there are no surprises at delivery.
Termination Clause – Every contract should have a termination clause, even an advertising contract template. The termination clause will detail under what conditions either party may terminate the contract and therefore stop work on the project. This clause is crucial in ensuring that the client does not attempt to back out of the contract without paying the designer for work that has been completed.
Perks of Using a Template
A Standard Advertising Contract template promotes consistency across the board. This can help minimize miscommunication or possible misunderstandings with clients. By developing this template, you are providing a clear framework for contract negotiations, while also leaving room for customization and additional clauses. It can be very time consuming to create a contract from scratch for each new client. However, this template provides a simple base that can be easily edited. You can fill in the blanks as necessary and edit for particular products and services. For example, maybe you want to provide a discount if the initial publishing fee is paid for on a certain date, but this payment information should only be included in contracts for a quarterly basis or for larger companies.
Legal Aspects and Compliance
Laws and regulations governing commercial transactions in specific jurisdictions may differ, and it is the responsibility of the advertiser or marketer to ensure that their advertising contract template complies with all relevant laws and regulations. General compliance considerations include:
Intellectual property rights: The advertising contract template should include provisions addressing ownership and use of intellectual property, such as copyrights and trademarks, in the content created or produced pursuant to the contract. If the company is hiring someone else to create content—such as a freelancer creating a video or a copywriter writing an advertisement—it should retain ownership of that content.
Confidentiality agreements: Advertisers should consider whether the use of any confidential information—including trade secrets—will be disclosed to the advertiser during the course of the business relationship between the advertiser and advertised. If confidential information may be disclosed, the advertiser and advertiser should enter into a mutual confidentiality agreement. If no confidential information will be disclosed, the confidentiality provision can specify that the parties agree that there is no confidential information, but that the advertiser agrees not to disclose any information about the advertiser’s products or marketing that might be "confidential" in accordance with the common understanding of that term.
Termination provisions: Parties to the advertising contract template should include termination provisions under which they may terminate the contract on a certain day or in certain conditions occur.
How to Customize Your Advertising Contract Template
Customization of an advertising contract template is key to its successful implementation for specific clients, campaigns, or even marketing strategies. Altering the language within the document to address specific industries is the most obvious way to ensure that the language remains relevant. For example, a blog or news outlet may have different language than a company placing a billboard ad. Though both entities are involved in advertising, their campaigns work, and should be written, differently.
Clarity of language can also reduce time spent working with clients or advertising firms to ensure that the contract is clear. If a generic advertising contract template fails to specify regional differences in advertising laws, both the advertiser and ad network potentially face legal consequences if ads containing prohibited content are placed . A relevant clause will require the advertiser to agree to indemnify the ad network against claims that it has violated such laws. Such provisions are particularly important when the campaign crosses state lines or jurisdictions that have widely different advertising laws.
Many advertising networks, such as Google and others, also offer monitoring and reviews of ad content. A general contract should require that the advertiser provide all necessary information to the ad network, including a list of prohibited content. The generic advertising contract template should also include language specifying that the ad network is not liable for any issues involving the ads, such as copyright infringement or violation of laws.
Typical Pitfalls to Avoid
While having an advertising contract template can make the process of drafting new contracts infinitely easier, there are still mistakes that people can make that can make a watertight contract fail. The biggest mistake that you can make is that of not keeping the templates up to date with the current laws and trends. In the blink of an eye, something that was once perfectly acceptable can now be considered reckless, or worse, illegal. Templates should be regularly reviewed and updated to ensure compliance with the most current standards.
Another common mistake is assuming that all clients are alike. Each advertising contract template should be tailored to the specific needs of the client that it will be used for. For example, if you will be licensing out the use of the ad, then there should be language pertaining to licensing. Likewise, if the ad will only be used for certain purposes, then that should be spelled out in the contract as well.
One major red flag is vague clauses. Any time that there is a clause that is open to interpretation, it opens the door for problems down the road. Each clause should be as straight forward and clear as possible, and all parties should understand what they mean.
Using old precedents is another common mistake. When it comes to the law, precedent is everything. Making assumptions based on old precedents that have been overruled or changed can lead to negative consequences if you cannot back up your work.
Wrapping Up and Executing the Contract
Once the contract has been thoroughly reviewed and discussed, including any necessary negotiations, the next step is to sign and execute the agreement. The process of finalizing an advertising contract can vary depending on the relationship between the parties and the formality of the agreement. In most cases, the contract is sent out to both parties for signatures once a verbal agreement has been reached. However , some contracts may require further negotiation before it is accepted. It is important that the terms of the agreement are clear and specific. If all the terms of the agreement have not yet been finalized then the parties can still make edits to the contract until both parties are in agreement. Once the parties agree to the final terms the contract should be signed in front of a notary public. This not only adds that extra layer of security for the legality of the advertising contract but it can also be beneficial if the contract is ever challenged near or after the expiration of the contract. Additionally, once both parties have signed the agreement, make sure to send a copy of the agreement to the other party. This is especially important for the party paying for the advertisement, as they will want to know exactly how and when the advertisements should be paid for at their specified rate and the responsibilities that a company may have towards them.