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125Chapter 9: Hiring Help for Your Marketing Program

There is no single standard contract, but all contracts should define certain
issues and agreements, including but not limited to the following points:

ߜ The products or services that the agency is to work on.

ߜ The responsibilities that the agency is to assume for the client: The
contract might list specific services to be provided, or it might cover the
issue with a broad brush by stating that the agency is to provide “serv-
ices customarily rendered by an advertising agency.” This section of the
contract also defines agreements that protect the interests of the client,
including, but not limited to, stipulations that the agency may not act as
an advertising agency for any products that compete directly with the
products of the client; the agency must maintain confidentiality on
behalf of the client; and the agency must be responsible for obtaining
rights to photographs, artwork, copyrights, and other proprietary materi-
als that it uses on the client’s behalf.

ߜ The client’s obligations to the agency: This part of the contract includes
a definition of the client’s role, including the client’s agreement to provide
information as needed to allow the agency to do its job, agreement to pay
for work in progress if a job is canceled by the client prior to completion,
and agreement that the client will be responsible for determining accu-
racy and ownership of materials that it provides to the agency for use in
client advertising. If the contract covers a time span (versus a project),
the client often agrees not to hire another agency to work on the prod-
ucts or services covered by this contract without prior notice.

ߜ Agency compensation: No one likes to talk about money, but if you dot
all the i’s in the contract, your client-agency relationship will be easier
forever after. The contract should define whether you will pay the agency
a fee, a percentage of your budget, or a combination of the two. It should
define how the agency will be reimbursed for purchases it makes on your
behalf, including whether those charges will be billed with or without
markups or commissions (see the following section for an explanation of
how commissions and markups work). It also describes the time frame
within which your payments are due to the agency, how you can qualify
for prompt payment discounts offered by media or suppliers, and how
the agency will be paid for work that exceeds the scope of the general
agreement and budget.

ߜ Project accountability: Many contracts stipulate that the agency must
submit and gain written approval of a timeline and cost estimate for
each project undertaken on the client’s behalf. The agency agrees to
adhere to approved cost estimates and timelines unless otherwise
authorized by the client. The client agrees to pay for cost overruns
incurred as a result of client-requested changes to agency work that has
been previously approved by the client.