Advertising Agency Agreements: Accounts, Data and Costs

Hello, I’m Noriaki Asato, Representative Attorney at LegalAgent.

When a company changes its digital advertising agency, its campaigns may be disrupted if it cannot retain control of its advertising accounts or obtain historical campaign data. Alongside advertising performance and fee rates, the agreement should identify the accounts, creative materials and data that the advertiser will continue to use after the engagement ends.

Advertising transactions involve three groups: the advertiser, the agency and the media provider or platform. The advertiser engages the agency to manage campaigns and place ads, and the agency orders advertising space from the platform. The agency’s role commonly extends to creative production, bid adjustments and reporting. Unless the agreement clearly allocates these roles, both responsibility and rights in deliverables may remain uncertain.

Clarifying the Budget and Agency Fees

An advertising agency agreement should distinguish media spend, management fees and production costs, specifying how each amount is calculated and to whom it is paid. The terms “gross” and “net” alone may not establish whether an amount includes the agency fee, refers only to media spend, or serves as the denominator for a percentage fee. Define each term in the agreement or quotation.

If the agency advances media costs and invoices them together with its fee, specify the records that allow the advertiser to verify the actual payment to the platform. Agree whether discounts and rebates will be passed on to the advertiser, and which payments are covered. The scope of disclosure and reconciliation may differ between an actual-cost reimbursement arrangement and a service provided for an agreed total price.

The agreement or purchase order should also state the precise fee calculation, including the percentage of advertising expenditure and any combination of performance-based and fixed fees. Leaving these matters “to be agreed separately” can allow differences in understanding to surface only when an invoice arrives.

Agree in advance how unused prepaid advertising funds and ongoing campaigns will be handled at termination. Under a prepaid arrangement, unused funds may remain. Specify whether they will be refunded or offset against another invoice, together with the refund deadline. Ads may also continue running for a period after notice is given. State the number of business days within which placement must stop and who bears the intervening costs.

Account Control and the Handover of Campaign Data

For each advertising account, distinguish the party contracting with the platform, the administrator and the billing party. Calling the account one party’s property does not by itself determine platform permissions or whether it can be transferred. Google Ads’ official help explains that unlinking a manager account requires the specified administrative access.

Where the platform’s terms and functionality permit, consider using an advertiser-controlled account and granting the agency the permissions necessary for its work. Before transferring an existing account, check the platform’s procedures, the assets that can be transferred and the effect on billing settings. The agreement should address cooperation with access changes, data exports, completion deadlines and costs. For assets that cannot be transferred because of platform restrictions, agree on alternatives such as creating a new account or providing the necessary records.

Campaign data also requires attention. This includes editable creative files, targeting settings, bidding logic and historical results such as impressions, clicks, conversions and trends in cost effectiveness. For services that constitute a quasi-mandate under Japanese law, reporting duties under Articles 645 and 656 of the Civil Code may apply. Those duties do not automatically require delivery of every item of data, including the agency’s proprietary tools and know-how. Specify the items to be provided, formats such as CSV, frequency and deadlines, and distinguish them from excluded know-how. Check each platform’s retention period and export capabilities for account history.

Measuring Performance and Rights in Advertising Materials

In a performance-based agreement, the definition of a qualifying result determines the fee. Record whether the measure is clicks, conversions or sales, and the period within which an action is attributed to the campaign. The agency’s dashboard and the advertiser’s analytics tools may show different figures. Fees may also differ depending on whether attribution is based on the last click or allocated among several touchpoints. Agree on the measurement tools, measurement period and aggregation method before invoicing becomes an issue.

Because ad placement depends on platform auctions and algorithms, agreements commonly do not guarantee a particular ranking or numerical result. Where campaign management is undertaken as a quasi-mandate, the agency owes the duty of care of a prudent manager under Articles 644 and 656 of the Civil Code. A separate undertaking to complete a specific creative deliverable may constitute a contract for work. The entire engagement cannot necessarily be treated in the same way. For each service, distinguish the deliverables to be completed from duties to explain campaign strategy, report regularly and propose improvements.

For banners, videos, copy and landing pages produced by the agency, specify who owns the copyright and the permitted scope of use. If copyright remains with the agency, reuse on another platform or through another agency may exceed the licence. Set out the duration of third-party licences for stock images, fonts and music, as well as the permitted media, period and secondary uses for performers’ likenesses. We discuss ownership clauses further in Key Points for Reviewing Intellectual Property Ownership Clauses.

Legal Responsibility for Advertising Claims and the Review Process

Even where the agency reviews advertisements before submission, responsibility for compliance with Japan’s Act against Unjustifiable Premiums and Misleading Representations and the Pharmaceuticals and Medical Devices Act remains a separate issue. In Questions 2 and 3 of its representation FAQ, the Consumer Affairs Agency explains that the representation rules apply to businesses involved in determining misleading representations. This includes actively deciding the content alone or jointly, determining it based on another party’s explanation, or delegating the decision. The FAQ also explains that advertising agencies and media providers are generally outside these rules if they do not themselves supply the goods or services, even when they help produce the advertisement.

An advertiser that supplies the goods or services and participates in determining the representation may be subject to an administrative order under that Act. Delegating the review of wording to an agency does not transfer the advertiser’s administrative responsibility. The contract may impose a pre-publication review obligation on the agency, but that contractual obligation does not change the party subject to the statute. The advertiser should therefore establish its own final review process. The basic rules for promotional campaigns are discussed in Legal Checks Before Launching a Promotional Campaign.

The scope of responsibility differs under the Pharmaceuticals and Medical Devices Act. As explained by the Ministry of Health, Labour and Welfare, Article 66’s prohibition on false or exaggerated advertising applies to “any person.” An agency that does not supply the product may therefore fall within its scope. The explanation under the misleading representations legislation should not simply be carried over. Specify who provides supporting evidence, who conducts the review, who approves publication, and how suspension or correction will be communicated if an issue is identified.