Agency contract checklist: the terms a CMO should read twice

What should an agency contract checklist cover?

An agency contract checklist should cover eight clause groups: the ones that move money or shift control after signature. They are scope, fees, agent versus principal buying, rebates, audit rights, ownership of data and work, technology and artificial intelligence (AI) use, and exit. In our reading, the rest of the document matters less once the agency is live.

The figures behind the checklist

The eight clause groups

How to use it

Take the draft contract and mark each of the eight groups as present, partial or absent. Then compare each one against the template's wording. Any group marked partial or absent goes to counsel before signature. The same list works during selection, covered in our agency selection playbook.

The agency contract checklist you can copy

We think that split is the useful part. Legal terms rarely change. Scope and metrics change every year, so they belong where they can be reissued without reopening the master agreement.

A worked example on the rebates row

Run the question column in the pitch, before the contract stage. Our agency RFP template has space for the answers, so you can compare what each agency said with what its draft contract says. Have counsel review the liability and termination rows.

How to write scope, change control and fees so they hold

Scope holds when every piece of work traces back to a signed document, and the master agreement says which document wins. A filed agreement shows one way to set this up.

How the filed agreement built scope

Pricing exhibits and fee disclosures

Who owns the creative work and the data?

Ownership clauses tend to read cleanly and fail at the edges: what counts as a deliverable, when title passes, and what the agency keeps. Earlier sections covered the work-for-hire assignment and the schedule for final files and campaign data. This section covers the rest.

We think that combination lets one disputed invoice hold up both the work and the rights to it. We would ask for title to pass deliverable by deliverable as each is paid, with undisputed amounts paid and disputed ones set aside.

The agency's own tools and templates can stay theirs. Ask for a license to anything embedded in your deliverables so you can keep using them after the relationship ends.

The AI clause needs a definition

Have counsel write the definition into your contract. A working version names three categories: generative tools that produce copy, images, video or voice; automated bidding and optimization; and any model trained on your data. Then require a register of tools in use, a bar on your data training models used for other clients, and a statement that AI-assisted output counts as a deliverable assigned to you.

What are agency rebates and principal media?

What the study found

Principal media

A worked example

As an example, not a benchmark: on $90 million of annual media spend, a supplier service fee equal to 12 percent of that spend would come to $10.8 million. In our reading, that is the scale at which a quiet line item becomes a board question.

Three steps for the redline:

1. Require every non-transparent service to go through the approvals process in writing, signed by someone in your compliance chain.
2. Ask for channel-level reporting of each approved service, each quarter.
3. Add a clause that any supplier payment tied to your volume is disclosed and credited back to you.

What audit rights should an advertiser have?

In our working definitions, a compliance audit checks whether the agency did what the contract says: billing, rebates, approvals. A performance audit checks whether the media it bought delivered what was promised.

The terms to ask for

A worked example

Here is an example, not a benchmark. Your auditor samples 90 media invoices and finds that 12 have no matching vendor record, so 78 reconcile. The contract should say what happens next: the agency produces the missing records within a fixed window, say 30 days in this example, and unresolved amounts are credited back. Without that clause, a finding has no remedy.

Questions to put to the agency before signing

1. Will you accept separate written definitions of compliance and performance audits?
2. Will you accept no limit on the number of audits, including combined audits?
3. Will you accept any auditor we appoint?
4. Which records will you produce for rebates, unbilled media, early payment discounts and staffing, and from which systems?
5. Do your vendor contracts let you pass those records to our auditor?

If the agency hesitates on the fifth question, we would expect gaps in the records available for the first four.

Key people, termination notice, transition and liability

Earlier sections dealt with what the agency does and what it costs. This one covers who does the work, how you measure it and how you leave.

Name the people, then control the swaps

Put service levels and metrics in exhibits

Notice and transition: a worked example

Caps and indemnities: questions for counsel

A worked example and the steps to run the review

Here is the checklist applied to one contract. The figures are an illustrative example, not a benchmark. Take a $12 million media and fee contract with one media agency.

The example, scored row by row

The change-order clause sets an hourly rate but no cap. Over the year the team raises 30 change orders at 12 hours each, which is 360 hours. Those 360 hours at $90 an hour come to $32,400.

That is why we score the contract before the invoices.

The review sequence

1. Pull the paper. Collect the master services agreement and every statement of work signed under it, with amendments. A clause fixed in the master agreement can be undone in a statement of work.
2. Mark each row. For every checklist row, record one of three states: agreed, missing, or contradicted elsewhere. Note the clause number next to each mark.
3. Send the agency questions in writing. One question per open row, with the clause number. Ask for written answers by a set date, so the reply becomes part of the file.
4. Take open items to counsel. Give your lawyers the marked checklist and the agency's answers, not the whole contract with no guide.
5. Report the result. Send the chief financial officer and the board a one-page summary: rows agreed, rows still open, and the annual cost the example method puts on each open row. Our CMO board deck template has a slot for it, and our CEO and CFO alignment guide covers how to frame the conversation.

The reference draft

What this page does not cover

This page does not cover how to select or pitch an agency, and it does not rate or recommend any agency, auditor or template. It does not address the law of any particular jurisdiction. It is not legal or financial advice: your own counsel should draft and review the final contract terms.

Related on CMO Tribune: Marketing agency RFP template: sections, pricing table and scoring weights that make answers comparable; How to choose a marketing agency, with a five-stage method and a scoring sheet you fill in yourself; Marketing board deck template: eight slides and the numbers a board expects.