Advertiser/Agency Contracts – Guidelines to help you develop, negotiate, draft, and finalize contractual agreements

Q We are about to enter into the contract development process with a new ad agency. Could you provide insight into industry standards for contractual agreements, particularly related to structuring negotiations? And how can we be sure we are not overlooking important contract elements?

A Developing a sound contract provides a solid foundation for a successful client/agency relationship. Each party must understand what is expected of them. The advertiser needs to know what it will receive in return for the money it spends for advertising services, and the agency needs to know how much it will earn for the services delivered.

Any contract should be viewed as a legal instrument designed to satisfy the mutual interests of both advertiser and agency. Therefore, the final contract document should be neutral in tone and clearly outline both the expectations of the advertiser and the services to be delivered by the agency. More important, a sound contract will clearly delineate the agency's proposed compensation, the services the agency is to provide, and the measurement methods by which the advertiser will determine if the services delivered meet its expectations. There's little merit in a contract that does not clearly outline how to determine whether or not each party has received value for fulfilling its part of the contract.