Sizeable undertakings carry risks. This is especially the case when it comes to input from more than one party. In these cases, you need a guarantee of commitment to the task and performance at an agreed level. This, in essence, is what a contract is all about.
As important as having a contract, is having the right contract that covers everything. If it doesn’t deliver what you require underwriting your partner’s dedication to the project, you might as well have saved everyone the bother of signing it.
Today we’ll examine the five essential requirements for a good marketing agency contract. First, we’ll examine why they’re essential in marketing agency work.
Why do marketing agencies need contracts?
There are three reasons why marketing contracts are so crucial, regardless of what area of marketing services is under discussion:
- They stop an agency’s client from attempting to vary from the agreed-upon tenets. People can try to fudge recollections to their advantage, so having an objective record that they demonstrably signed up for can be invaluable in keeping more wayward clients in check. The consequent benefits of not having to argue over what was agreed upon are hugely significant.
- They reassure clients of the agency’s consistency of position and approach. From this perspective, they can become something of a sales aid – the customer is being given assurance that what’s being promised at the initial meetings is actually what’s going to be supplied. This is where the agency must explain that the contract is a helpful tool for everyone concerned.
- They function as memory aid. With the best will in the world, individuals and businesses can struggle to call to mind the precise conditions that applied to the agreement, especially when those agreements may differ from client to client (as is the case with 83% of agencies). It’s enormously helpful to have the salient directives of the agreement to hand, and contracts can fill this need.
Let’s turn now to the five key elements of a marketing agency contract.
1. Introduce everyone
The contract must have a section devoted to who enters the arrangement. This has to be their legally correct identity, together with their address and sometimes preferred means of communication.
It may seem a bit redundant to mention this – after all, it’s a fairly basic point. However, it’s probably the most important part of the contract. Many are the instances where the wrong details rendered a contract either void or, at the very least, useless.
Once the correct names have been included, the terms “client” and “contractor” can be substituted to simplify matters, as long as this substitution is made explicit in the wording of the contract.
You might also want to include a few words about your business and what you’re in the business of delivering in general. No matter what area of marketing ops you’re into, it never hurts to emphasize.
2. The aims and means
This is where the nitty gritty starts. There has to be a clear record of what the agreement is designed to achieve. This can start as a general wish to see, for instance, increased traffic to the client’s website. There then needs to follow a list of how this will be achieved.
As part of this, there needs to be a solid representation of who is going to do what in the course of delivering the goods.
This section needs to include:
1. The scope of what’s covered
This is a complete run-down of what the agency will bring to the table. There needs to be an idea of marketing strategies (including the materials these will necessitate), creative concepts, and what third-party services will be required. It may include what you’re proposing in the way of website analysis, competitor analysis, etc.
It should also have what you need to see from the client and how many revisions of the brief will be permitted.
Don’t be afraid of including too much detail. The more determining information you can include in this section of the contract, the less wriggle room for an uncooperative customer further down the line.
Do be wary of jargon – marketing has its fair share, and these terms are open to debate, especially when they concern people unaware of the industry-speak.
Start and end dates are good here if the contract covers a fixed-term relationship. It needs to be clearly stated that the end date determines the cessation of arrangements, not the state of the project. In other words, if the project’s unfinished, it’s still goodbye.
Alternatively, if your agency is being taken on in a retained fashion, with the arrangement to obtain until the project is completed, this needs to be specified, together with a clear and agreed idea of what constitutes project completion.
Of course, the client often needs the project finished by a particular date – so you have no option to leave the project unfinished, even if the end date is upon you. For this kind of commitment, it’s usually acceptable to charge a higher rate.
Include also any information pertaining to renewals. Are they possible? In which case, what does the client need to do?
It’s definitely worth making a note of what’s not covered. For instance, if you’re engaged to do some website work but you’re not undertaking to conduct any SEO or PPC analysis, then it will be sensible to mention this here. Moreover, include how much this extra service will be, together with information regarding the notice period that applies before implementation.
It can be a good idea to go back to the initial proposal that was made to the client to list out what’s being delivered.
Pro tip: the best way of getting a clear proposal together is to use proposal writing software.
3. Nuts and bolts
This is the contract’s information that effectively holds the contract together. There’s a vast range of possible inclusions here, but some key ones are as follows.
1. Payment schedule
The client needs to pay specific amounts by certain dates.
Late payments are a scourge of all industries, not just marketing. You can give yourself the best chance of getting those vital payments when you need them and overseeing a healthy revenue operation by being clear about when you expect them.
The payment schedule might be based on monthly payments or on the achievement of reaching different stages. If the latter, those milestones need to be mapped out.
On top of this, you can use this section of the contract to illustrate what happens in a late payment scenario. What extra charges might be levied? What restrictions on service might result? Paint the unhappy picture here and leave the client no doubt about how serious a missed payment will be for them and the agreement as a whole.
While on payments, don’t forget an elementary but crucial ingredient – what currency is preferred? It’s an interconnected world, which can lead to all manner of confusion.
2. Reports and feedback
The client will want to be updated on the progress of the project. Include how often reports will be issued and what areas will be covered. Also, include what the client needs to do in order to get hold of bespoke data and whether any charge will be made for this.
3. Contractor availability
Include the opening hours of your business. If the client wants communication on a Sunday evening when your company isn’t normally in operation, this might prove a problem unless the client is advised that this isn’t tenable right from the start and represented as such in the contract.
Alternatively, the contract may make it clear that you have, in return for an additional financial commitment from the client, agreed to provide out-of-hours service. Again, be precise. If this only continues until 9 pm, ensure that’s what the contract says. Or if the only contact you’ll be making available is via email, specify it.
4. Disputes and Terminations
Agreements, like life, don’t always go according to plan. Even the best laid-out contract can result in arrangements falling into disarray. This might be because of a change of personnel or a deterioration in circumstances that makes the agreed level of commitment unsustainable.
Sometimes these variations can be resolved with an amended contract. Sometimes, however, things don’t go so amicably. For these times, there has to be a route laid out whereby disagreements can be tackled.
This might include provision being made for direct liaison between heads of businesses and/or there being tabled a set of meetings in the presence of a mediator.
The next steps thereafter usually include legal action, and, while it’s in everyone’s interest to avoid these costly and time-consuming affairs, it should be indicated in the contract that your company reserves the right to go down this route should other means be exhausted.
Should it all end up a bit dystopian, you’ll need to be prepared to press the terminate button. If it looks like termination is the only way forward, there should be an unambiguous account of what to do to achieve it and when it can be invoked by either party. Again, not an option to be favored, but we all have to hope for the best and prepare for the worst.
5. Legal elements
There are three significant legal areas you must include.
A contract will include confidential information for both parties, so all signatories must commit to keeping that information secure. Any information that either party wishes to remain confidential should be laid out. This might include agency rates, for instance, or the client’s business goals or trade secrets.
When the work’s completed, who will own what? There has to be clarity over this as copyright disputes keep the courts pretty busy. In fact, there are approximately 12,000 intellectual property rights cases filed in the US every year.
Also, include any third-party ownership of the product or process.
This is where you build into the contract some protection clause should there be an unforeseen development that impacts negatively and for which your company might be held accountable.
Let’s say you’ve completed a social media project for your client, but due to a global development way out of your control, there are aspects of your work that are now counter-productive.
You can protect yourself against such happenings with the use of an indemnity clause. Be sure to get your legal back-up to look it over to ensure that it gives the protection you want. A great way forward is to use a contract template, such as this PandaDoc indemnity agreement sample.
So, that’s pretty much everything covered. Correction – that’s the key areas covered. Every marketing contract will have its own area of interest, and it’s down to you to make sure that the activity being entered into is covered adequately by the contract being applied.
However, by adhering to these five essentials, you’ll be in a good starting place.