Advertising agencies offer creative, advertising and media buying services under one roof. As an advertising agency, you should take the time to develop your master media planning and buying services agreement. The agreements will protect your interests and manage your client’s expectations. This article will discuss the five key clauses that advertising agencies should include in their services agreement.
Running a profitable advertising agency requires you to work with many different businesses. However, some clients may prefer you to work for them exclusively so that you are not serving direct competitors. A non-exclusivity clause will stress your ability to work with other clients.
Under this non-exclusivity clause, your potential client can agree and acknowledge that you:
- work with other clients generally;
- will work with other clients who are in the same industry; or
- may perform similar services and provide similar deliverables for other clients.
If your potential client has objections to this clause, you can either:
- provide clauses that address conflicts of interest; or
- make a promise that you won’t create campaigns for competing products or services, if you do end up working for a direct competitor.
Providing these options will reassure your clients that you are still working in their best interests, while allowing you to take on more work.
2. Scope of Work
It is crucial that you set out the scope of work covered by the services agreement. A detailed scope of work ensures the client knows what you will deliver as part of the agreement.
Your scope of work clause should include:
- detail on the number of deliverables to be achieved, such as how many billboards you will buy for the month;
- the maximum number of revisions the client can make to any deliverables produced by you; and
- details on how you would define a scope of work amendment.
Avoid agreeing to perform a set number of hours for a client. Aim for a certain target result in your client’s campaign and put a time limit on how long it will take for you will achieve that result. Otherwise, you may waste time debating with the client about how much work is being done in the allocated hours, instead of focusing on the results achieved.
Amendments to Scope of Work
Set out a clear process if the client requests a scope of work amendment. Any amendments to the scope of work will involve extra work for you, so you must ensure you stress the fees and timing of the proposed amendment. You may want to consider:
- whether the client must make the request in writing;
- how much notice do you need to consider or approve the amendment;
- what kind of additional fees will you charge for amending the scope of work; and
- whether you will approve the variation once the client has paid the additional fees.
Many contracts deal with this issue by including a simple amendment clause that states:
- the client should make the request in writing; and
- what fees are payable for the amendment.
3. Media Buying
Your services agreement should set out how you will handle media buying on behalf of the client. You should outline how you will allocate your client’s funds to the various media purchased and how you will justify the money spent.
In this clause, you should clarify:
- who will be the client’s main contact and their authority;
- disclaimers on the payment of third party costs; and
- how to resolve invoice disputes quickly.
Know who will be your client’s main contact for the services agreement. They will be the one who will approve your media buying on behalf of the client. Record their contact details, such as a phone number and email address.
Check if the client has given the main contact the authority to manage the agreement with you. Some media buying happens at short notice and you want to ensure you can get the appropriate sign-off from the company as soon as you can.
If you do not identify the main contact and a dispute arises, your client may claim that you did not have authority to purchase media. You will therefore waste time and money trying to get paid for the work you have done.
4. Disclaimers for Third Party Costs
Include a disclaimer that you will not be paying any third party costs where your client is responsible for paying these fees directly. Some services, like Google and Facebook Ads, may invoice your client directly without your knowledge. If the client does not pay those invoices, those services can stop your advertising campaigns. That outcome is problematic if the scope of work includes those advertising campaigns. Your client may have grounds to terminate the agreement or sue for damages because you:
- failed to perform the work to an acceptance standard; or
- promised to keep an advertising campaign for running for a period of time which did not happen.
The disclaimer ensures the client is responsible for the payment of third party costs. Your client will not be able to terminate the contract if you did not deliver because the client failed to pay third party costs.
5. Dispute Resolution
Your dispute resolution process should focus on resolving disputes quickly without running up legal fees. You can resolve any miscommunication on deliverables quickly and cheaply if your agreement sets out the steps to resolving the dispute. If there is a dispute, ensure that your client pays for any media purchased that is not in dispute, so you are still paid for your work.
When deciding on a dispute resolution procedure, you can consider:
- how will the client give notice of the dispute;
- if the client has to give notice in writing; and
- how you and the client will resolve the dispute.
Your services agreement should include clauses on:
- scope of work; and
- media buying.
This will allow you to build a profitable client base while minimising potential risks. If you need assistance drafting or reviewing your services agreement, get in touch with LegalVision’s contract lawyers today on 1300 544 755 or fill out the form on this page.
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