An Introduction to Digital Marketing Contracts
Digital marketing service contracts are the backbone of any successful digital marketing agency-client engagement. They lay out the terms of the relationship, outlining what services will be provided, how much they will cost, and when and how the payments are to be made. They also include clauses that regulate the relationship itself, including intellectual property ownership provisions and termination clauses.
The agreement protects both parties. The service provider gets paid for their work and makes sure that they have the right to own the intellectual property they create in the process. The client gets a clear road map of the services being provided and a guarantee that they will receive those services.
For clients , the contract can be an opportunity to get guarantees about performance or accountability for specific deliverables. For example, a client could request that their digital marketing services contract include a guaranteed increase in sales in a specific time frame, or a specific number of followers on social media. Clients can also use a contract to set their expectations about things like compliance, such as making sure that the contractor does not use bots or fake followers to boost their numbers.
For their part, the service provider wants to make sure that they actually get paid for the services that they provide, in the manner agreed. Funding issues are one of the most common causes of litigation for digital marketing companies, and having a clear contract helps to ensure that they are paid in full, on time and at the agreed upon rate.
Commonly Used Provisions in Digital Advertising Contracts
When establishing a digital marketing service contract, the agreement should include key elements that are vital to the clarity of expectations between the agency and client. The contract should detail the scope of work, deliverables, payment terms, timelines, confidentiality and termination clauses.
Scope of Work
Digital marketing service contracts should detail the scope of work being provided. This includes our services that we will be providing to grow your business through social media; email; and search engine marketing, among others. For example, if we are creating content for your website then we will itemize that in the scope. If we are creating blogs or videos then it will be noted within the scope of work. It is important to the client that the scope of work specific for their business.
Deliverables
When creating the deliverables list it is important to have a video or blog length or the number of social media post being created. A deliverables list is important because it creates some base measurements for the work being provided. It also sets some deadlines between the agency and client. This timeline is in place for both parties to help keep them on track with set deliverables.
Timelines
Without timelines we would know if and when work was not being done. It is important to view deadlines as everyone’s deadline. Each digital marketing campaign is different. Some campaigns move fast and some take a little longer to get started. Most digital campaigns do require each party to review materials and once they approve them then the campaign can begin.
Payment terms
Each Client should be billed bi-monthly for the services. Most payment terms are due upon receipt. This creates cash flow for the agency. As an agency, we want to get paid for the services we have provided and we don’t want to wait until the campaign is over to get paid. How are we supposed to keep a digital campaign going with no cash flow? This is why we must have a payment term in the contract. This protects both parties to create payments at the beginning and midpoint of the campaign.
Confidentiality
Within the termination section we must talk about confidential information. Both the client and the agency must agree that we won’t disclose any information about your business that is not advertised about your business. Each Party agrees to keep all terms in the contract confidential. Each party will not share any information regarding the services that are being shared between the parties.
Contract Negotiation Impediments and How To Overcome Them
When businesses seek to hire a digital marketing services provider they can fall into a number common potential traps, many which may not be obvious or which they may not anticipate.
One of the most common is misunderstanding how ownership of rights (particularly intellectual property and online assets) will be resolved after contract termination. This is especially a concern for SaaS models and software development agreements, but the issue can arise in a number of other contexts as well, depending on the services or technology involved. The risk here is simple – at the end of the relationship the service provider may hold rights (for example the platform itself) that the business will not be able to use going forward. This is particularly a concern when the platform or asset is being customized or modified for the specific business and where a continuation of that asset is critical to ongoing business continuity. To avoid this business should always consider having the contract include a comprehensive definition of what exactly belongs to whom. In particular it should be clear who owns what at the outset, and how "custom" work is treated. It should also be very clear what happens after the relationship ends, including rights to retrieve or migrate content that has been transferred to the service provider. The business should also consider whether there are additional costs associated with retrieving its data, and whether there are any potential trade-offs with other contractual provisions (such as IP transfer obligations or clients’ right to terminate the agreement for convenience).
Another potential issue is the scope of the services to be provided. Digital marketing services are almost always a very significant component of a business’s sales and marketing pipelines, and a mistake in this area can have serious consequences. Therefore there needs to be careful consideration as to what exactly the business needs in terms of services, assets, and intellectual property protection. A clear, detailed scope of services is essential, and if necessary external experts might be required to assist in specifying their needs in this regard. However, it is also important to avoid going too far in the opposite direction and specifying the scope too closely. Although the digital marketing landscape is arguably one of the most rapidly changing areas in business today, the speed of change can actually present an obstacle to the effective drafting of these agreements. The problem is that while the business will have a good sense of its current and future digital marketing needs, it is highly unlikely that a service provider will have any meaningful ability to anticipate the way that the digital marketing landscape will change in the future. Similarly, while the state of the law is already fairly well established, it is impossible to predict what other regulatory or technological requirements may be imposed upon the industry.
The net result is that a business might not want to proactively anticipate anything more than 1 or 2 years into the future, and even this might be difficult. Therefore, scalability should be a core component of these agreements, and should incorporate 20/20 hindsight when the contract is finally reviewed a couple of years down the line. The challenge is to find a balance between protecting core interests and ensuring that the contract can adapt to changing circumstances.
Consumer Protection Considerations in Marketing Contracts
The legal landscape of digital marketing contracts can be a maze of potential pitfalls, and navigating it effectively is crucial for the protection of your business. Ranging from jurisdiction and dispute resolution to intellectual property rights, these are the legal considerations you should prioritize in your contracts.
The jurisdiction in which disputes arising from the contract will be addressed is critical. Often, either the client legally domiciled or where the parties to the contract find most convenient and financial existence. The goal is to be able to predict how a court or arbitrator will address challenges to a given contract. Choosing an alternative to these familiar jurisdictions may result in uncertainty in how applicable laws will be applied.
Standard operating procedures, deliverables, scope of work and change requests all establish the foundation for paying for professional services as defined in that contract. At times, a change either by the vendor or the client, is necessary to the satisfaction of the ultimate goal of the services. These changes can affect the original terms of the contract or the performance of the contract, thus the agreement must have clear definitions and an easy way to implement changes.
The relationship is easily understood but courts may be used to define the relationship. The laws that regulate the relationship and the status of the service provider will be crucial to the parties. In some jurisdictions, unregulated industries provide minimal direction on the contractual relationship, but instead leave it to the parties to define at their will.
The focus of these contracts are intellectual property. Ownership structure is driven by each party. Ultimately, the party that brings the idea or material to the contract is the owner or licensor of the intellectual property developed during the contract term. So long as that delineation is made, however, the protection of each party’s ownership is critical to the contract’s long-term viability.
Negotiating Reasonable Terms
The negotiation process can be a powerful tool for ensuring that the contract you enter into as a digital marketing service provider is fair to both parties and meets your specific needs and goals. Here are some strategies and tips to consider throughout the negotiation process of a digital marketing services contract:
- Assess your priorities: Before entering any negotiation, it is vital to have a thorough understanding of what you hope to accomplish. Create a list of your top priorities in order of importance and rank the points that are important to you. Knowing which points are most significant to your goals will help you when it comes time to accept or reject the terms the other party proposes.
- Look for compromises: Be willing to make concessions. Negotiation is about giving something to get something. There is a good chance the other party has things he or she is not willing to give up, and if you’re not willing to budge, you are unlikely to be able to strike a deal.
- Get everything in writing: Once you have reached an agreement between you and the other party, do not fail to document it. Leave no room for misinterpretation or ambiguity. Write down everything in clear and concise language , and when in doubt, consult with your attorney. Any email correspondence you have with the client should also be saved and attached to the final contract.
- Consult your attorney: An attorney who specializes in contract law will be able to close any loopholes that might allow for misunderstandings or misinterpretations of your agreement in the future. Moreover, it is wise to seek out a lawyer who has experience specifically with digital marketing services contracts, since they will have a better understanding of the risks that come with the industry.
- Avoid wasting time: The negotiation process can take a long time, and you do not want to drag it out unnecessarily. If you feel like the other party is being unreasonable, it is okay to walk away. Even if you haven’t spent much time negotiating already, going through a lengthy back-and-forth can end up costing you time, money and productivity.
Entering into a contract with a digital marketing service provider is a lengthy process that requires ample forethought on the part of both parties. By drafting a solid contract and establishing a professional rapport with your client, you can set the foundation for a successful relationship going forward.
How To Approach Term and Auto-Renewal Statements
Renewal and termination clauses are essential to give both parties advance notice of either a renewal or a termination date. These clauses should also clearly state any obligations to renew the Digital Marketing Services, and under what terms the renewal may occur. For example, the contract should clearly state if the contracts will automatically renew or must be mutually agreed upon by both parties. If the Digital Marketing Services will require a termination of access or additional fees upon termination, discuss whether the contract will have strict deadlines for the return of your materials, such as customer lists. Also, consider clauses that provide for continued access by either party to develop material that may have become a part of their respective businesses in the period of the contract, such as prior SEO work. In most cases, such access will be limited to websites, SEO, and online presence that were developed within the term of the contract. It is also critical to include any continuing obligations both parties may have upon termination or renewal of the contract, such as non-disclosure obligations. Again, this should also be carefully tailored to the business relationship.
Implications of Changing Digital Media & Contracts for Marketers
The digital marketing industry is in a constant state of flux, presenting challenges for companies looking to adapt Service Contracts to reflect continuous advances in digital marketing technologies. In the past few years, for example, companies have moved from partnerships with digital marketing agencies for "Adword" style, pay per click search, to affiliate marketing, to social media and e-mail marketing, to data privacy compliance, and now to legal compliance for the General Data Protection Regulation ("GDPR"). With this constantly changing landscape, companies face the challenge of how to build flexibility into your Service Contracts, so that they can be updated easily to reflect the current digital marketing landscape.
There are basically two approaches companies can take when drafting a Service Contract with their digital marketing service providers: one, to define the scope of services in general terms, leaving specific terms and conditions to be discussed thereafter; or two, to be very specific about each element of the parties’ relationship.
In the first scenario, when it comes time to update the Service Contract, the parties respond to development in digital marketing services, and adapt the existing Service Contract to reflect the changes. Digital marketing companies are aware of trends, and when discussing the Service Contract, they will know which services they can provide. This approach gives digital marketing companies a chance to discuss trends and give their advice to companies, but also gives the company a chance to push back against the digital marketing service companies, so that the company is not adapting to the trends without weighing the benefits.
In the second scenario, the Service Contract may be so detailed that the company would have to begin addressing each term and condition in each change to the Service Contract . This approach is typically easier for the companies when changes are discussed and made, because it is exactly outlined in the Service Contract. However, the less flexibility that digital marketing companies have to adapt to evolving technologies is becoming increasingly burdensome on the companies. With GDPR taking place in May, companies have needed to define how they will comply with the new regulation. If the Service Contract does not include a term about data protection, the companies will need to add that as a new term and negotiate the terms from scratch. Typically, the service provider has to be attuned to the GDPR to know that they have to add the terms into the existing Service Contract, or they are re-negotiating a Service Contract with the company that has already been established.
Companies should consider how they want to approach alterations to the Service Contract, and be prepared to re-negotiate on short notice. The GDPR was adopted on April 2016, and goes into effect on May 25, 2018, with a related California Consumer Privacy Act going into effect on January 1, 2020. Companies have already been scrambling to decide how to comply with GDPR requirements, and how they are going to adapt their Service Contracts. Companies should consider having the Service Contracts already prepared, so when the GDPR goes into effect, they can make changes to reflect the GDPR accordingly.
Also, just as GDPR is going into effect, there is also the possibility that after a California ballot measure, other states may adopt GDPR style data protection laws that would similarly require companies to update their Service Contracts to comply. Having a plan in place and having your Service Contract prepared accordingly will help you better prepare to manage such changes.