Advertising Agreement

Advertising is a paid communication intended to stimulate the wants of customers towards a particular product/service in order to make them purchase the same. It is a professional discipline taught as part of marketing in business schools. Advertising requires skills and qualifications in order to influence the psychology of the buyers. This has resulted in the formation of companies and freelancers specialised in advertising rather than the practice of regular companies employing in-house executives for advertising. Advertising is also a costly affair, which is explained by the professional skills required.

The medium of advertisement may be graphical, audio, multimedia or print. Televisions and cinemas use multimedia form of advertisement while radios use audio form of advertisements. Newspapers and magazines use print in the form of graphics and alphabets. Internet and billboards use graphical form as well. These subdivisions have resulted in further specialisations in the discipline of advertising and thereby arising the need for multiple types of assignments, employments and contracts.

What Is An Advertising Agreement?

An advertising agreement is a document signed by an organisation and an advertising agency/freelancer who shall run advertisement campaigns for the company on any media as decided in the agreement.

The organisation may be a company, a firm, a Limited Liability Partnership (LLP), a One Person Company (OPC) or any other entity. The advertiser may be either a natural or an artificial person like a company. The agreement provides details about the method, pricing and other terms and conditions of the advertisement campaign.

Contents Of An Advertising Agreement

An agreement can include the following details:

Title And Introduction of Parties

Details of types of entities and nature of business of both parties are required. For instance, the advertising agreement could be between a company incorporated under the Companies Act, 2013, and an advertising agency which can be a LLP.

Purpose Of The Agreement

It can be mentioned as to who approached whom for the purpose of the agreement and also acceptance of the other party to bind themselves in a contractual relationship.

Terms And Conditions Of The Agreement

Medium: The details of the medium for which advertisements should be created can be mentioned. It may be newspapers, hoardings, websites, television, radio, cinema slides/ads, journals, magazines, etc

Estimates: If the agency undertakes publication of the advertisements in the said medium themselves, they may be made to negotiate with the media houses and present estimates to the company for approval.

Preparation of the material: Details as to the responsibility of the advertiser in preparation of the material should be highlighted in detail along with the time limit required for each individual material.

Payment: The details about payment should be specified in details. It may be fixed as a lump sum or as fees after reimbursing the expenses incurred in creation and publishing of the advertisements in various media.

Territorial Extent: The geographical areas which should be covered in the advertising campaign should be specified. This can also include language details in which the advertisements should be created.

Special Requirements: At times not covered in the agreement, the advertiser may be required to take up additional campaigns for special purposes like a product launch, subject to additional payment usually in premium.

Competition: The advertiser may be made to refrain from entering into similar contracts with competitors of the company during the pendency of the agreement.

Legal Issues: The advertiser can be made responsible for conducting research into local laws where the advertisement will take place in order to prevent future issues. For example, liquor advertisements are banned in media like television. The lawfulness of a communication of advertisement is of paramount importance.

Reports: The advertiser should be made to produce reports at regular intervals as to the response of the intended buyers towards such advertisements. Such information would be available in certain medias like television, internet, etc.

Intellectual Property: The advertiser should declare that they shall not violate the intellectual property rights of any third party in the advertisement.

Indemnification: The responsibility of both parties towards indemnifying each other for any losses incurred out of any breach or other act should be specified. It may be violation of trademarks or other Intellectual Property of a third party on part of the advertiser.

Duration Of The Agreement

The validity period of the agreement should be recorded. The rights and responsibilities of the both parties towards each other shall remain intact during the said period.

Termination

The way in which termination option is available to both parties should be specified, including notice period, if any.

Responsibilities On Termination

The advertiser shall be made to return all materials lying with it and not use it for any other purpose.

Payment Cycle And Taxes

The manner in which payments shall be released to the advertiser should be made explicit along with tax liabilities of the parties.

Apart from the above details, the agreement can contain details of dispute jurisdiction, applicable laws, force majeure and more in order to avoid disputes in future.

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