Navigating Your Online Advertising Agreement

Navigating Your Online Advertising Agreement

by Edward A. Haman, Esq., February 2019

When you advertise your business, services, or products online, you are required by the website host to enter into an online advertising agreement. Such an advertising agreement form is usually a rather lengthy contract, mostly designed to protect the host's website, and you need to be sure you understand it.

Laptop on black desk with words "online advertising" on screen with illustrations of businessman surrounded by his ideas below

Online Advertising in General

An online advertising agreement is a contract between a business wishing to advertise a product or service, and a provider of internet advertising. The provider can be various types of websites, such as Yahoo, Google, social media channels, news websites, or other companies' websites. This type of agreement also may be called a digital advertising agreement or advertising consent agreement.

The agreement includes provisions as to the amount to be paid and the services to be provided, which protect both the purchaser and the provider. But many of the other provisions are designed to protect the provider, by limiting the provider's liability and placing certain restrictions on the purchaser.

Content of Online Advertising Agreements

In addition to the standard provisions common to any business contract, a typical online advertising agreement has the following types of provisions:

  • Definitions. This section includes various terms unique to the internet and internet advertising, such as "banner ads" and "click-throughs." If you aren't familiar with these terms, be sure you read and understand the definitions.
  • Services to be provided. This outlines how the ads will be displayed, how they will be linked to the purchaser's website, and any agreements regarding the positioning of ads. If agreed upon, there also could be an exclusivity provision that prohibits the provider from accepting ads from certain designated competitors of the purchaser.
  • Fees. The purchaser typically is required to pay certain fees to the provider. One fee is based upon how many people click on the ad; this is the "click-through." Another fee is a commission based on any purchases a customer makes after clicking through to the purchaser's site. This provision may also allow a third-party online tracking company to monitor these transactions, which may require the installation of software on the purchaser's web servers.
  • Advertisement submissions. This states how the purchaser will submit the ads for inclusion on the website. The provider will typically have specific submission requirements that are set forth in detail in an online document that is separate from the advertising agreement. These requirements relate to the proper format the ad needs to have in order to function on the website.
  • Advertising content. This states any limitations on the content of the ads, such as prohibiting ads that violate federal or state law, or that violate the provider's stated policies regarding things such as abusive, defamatory, obscene, violent, or immoral content.
  • Liability limitation. This section usually includes several provisions limiting the liability of the provider, such as for service interruption of either the host or purchaser website. It also may require the provider to be held harmless for claims by customers of the purchaser based on things like breach of contract to provide products or services, product liability, etc.
  • Confidentiality and proprietary rights. These are provisions that mutually prohibit the parties from compromising the other's confidential information, trademarks, copyrights, or other proprietary information.
  • Metrics. The provider may be required to periodically report to the purchaser how many visitors accessed the host website in a given period, such as monthly. If the purchaser signed the agreement based upon a certain guaranteed number of visitors, the agreement may allow the purchaser to cancel the agreement if the number of visitors falls below a certain number.

The online advertising agreement also contains other provisions that are commonly included in any type of business contract, such as choice of law, a requirement for arbitration, a prohibition against assignment of the contract, and no modification except in writing.

There is no such thing as a simple advertising agreement, and internet advertising practices and rules can change. The preparation or review of an online advertising agreement may be done with the assistance of an attorney to be sure that both the purchaser and the provider are properly protected.