Civil Law

Advertising agency agreements require careful balancing of legal risk, commercial realities, and long-term working relationships. In a recent webinar, Venable partner Barry M. Benjamin discussed how brands and agencies can structure agreements that support collaboration while addressing the unique issues that arise in creative services, media buying, influencer marketing, and promotions administration.

Whether you are negotiating an agency agreement for creative services, media buying, influencer marketing, or promotions administration, each area has particular concerns. Because difficult initial contract negotiations may poison the working relationship between the agency and the company going forward, it makes sense for both sides to conclude negotiations with a mutually acceptable agreement.

Nearly every advertising agency agreement includes several foundational terms, but these clauses operate differently, depending on the type of agency engagement. Among the key provisions in an agency agreement for creative services is defining the scope of work, because “scope creep” frequently occurs when parties assume certain services are included without documenting them clearly. Detailed statements of work, clear approval procedures, and written change-order requirements help prevent misunderstandings and unexpected costs.

Another practical takeaway involves “hidden” online terms and conditions. Agreements that incorporate external website terms by reference can create significant risk if those terms change after the effective date of an agreement. A safer approach is to attach the applicable terms or expressly identify the date of the version in effect at signing.

Ideas and how those ideas are executed–along with the attendant intellectual property–are the lifeblood of a creative ad agency, and thus crucial issues to address in creative services agreements. Intellectual property ownership has always been, and remains, among the most heavily negotiated issues in these agreements. Brands generally seek ownership of all concepts and deliverables, while agencies aim to retain rights in rejected ideas, preexisting materials, methodologies, and portfolio uses. It is highly important to distinguish between “ideas” and “executions,” particularly when an agency presents multiple campaign concepts, with the brand selecting only one.

The use of generative AI has added another layer of complexity. Brands increasingly expect agencies to manage AI-related infringement risks, while agencies argue that clients benefit from the efficiencies and cost savings generated by AI tools. Practical middle-ground approaches include:

• Requiring agencies to use reputable AI vendors with indemnity protection
• Passing through available vendor indemnities to the client
• Avoiding overly broad prohibitions on “any AI use”
• Holding agencies accountable for intentional misuse or infringing prompts

Given the prevalence of AI, imposing absolute prohibitions on the use of AI is impractical in most cases, notwithstanding the copyright ownership concerns surrounding AI-generated content.

Turning to media buying, relationships have become more opaque as programmatic advertising and principal media buying models have expanded. Under the traditional “agent model,” agencies purchase media space on behalf of the client when the ad campaign will run, with relatively transparent pricing and compensation. In contrast, principal media buying means agencies purchase media space for their own account, before the inventory is needed for any particular client campaign, and then later resell it to clients at marked-up rates.

While principal buying can provide clients with premium inventory access and potential savings, it also raises concerns about transparency, hidden markups, incentive alignment, and problematic audit rights. Brands often seek broad audit rights and disclosure obligations, while agencies resist disclosure for principal inventory arrangements and seek to retain rebates and incentives as profit.

Influencer marketing remains an area of heightened regulatory scrutiny. The FTC Endorsement Guides requiring influencers to disclose material relationships with brands remain a crucial element of all influencer agreements.

Promotions and sweepstakes campaigns present legal complexities, including official rules drafting, registration and bonding requirements, “no purchase necessary” compliance, prize fulfillment obligations, and fraud prevention measures.

The webinar concluded with several recommendations for both brands and agencies:

1. Do not simply use a template form—align the contract terms and obligations with the actual business relationship and service model
2. Focus negotiations on the highest-risk issues rather than low-impact boilerplate
3. Use master service agreements paired with detailed statements of work
4. Establish clear governance, approval, and dispute resolution procedures
5. Treat regulatory compliance, intellectual property, and transparency as core business issues—not merely legal formalities

Advertising agency agreements are no longer one-size-fits-all documents. As marketing channels, technologies, and regulatory expectations continue to evolve, well-structured contracts remain one of the most important tools for managing risk and building productive long-term partnerships.

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