Advertising Contracts Overview

Advertising contracts allow an organization to give advertisers rates based on the advertiser committing to purchase a certain number of advertisements within a certain time period. The advertiser’s commitment is called a “frequency commitment.” A contract may also specify one or more advertising media in which the advertiser must run the advertisement to receive credit towards fulfilling the advertiser’s frequency commitment. For example, an organization gives an advertiser the “twelve-times” rate (12x), because the advertiser agrees to run 12 advertisements within a one-year period. The 12x rate is the rate charged to the advertiser for each advertisement run that is linked to the contract. Accordingly, another advertiser who agrees to only run two advertisements over a one-year period would receive the two-times rate (2x). The “cost-per-ad” would be much higher for the 2x rate than for the 12x rate.

At the end of the contract period, if the advertiser runs the specified number of advertisements in the contract, the advertiser has met the terms of the contract. If the advertiser has not met the specified number of advertisements, the advertiser has “short-rated,” and the organization can recalculate the cost of each advertisement linked to the contract and charge the advertiser a higher rate for each of the advertisements run. While some organizations may bill the advertiser, other organization may choose to use this information during future contract negotiations. If the advertiser has run more than the agreed upon number of advertisements, the organization may choose to give the advertiser a rebate. This would be based upon recalculating the cost of each of the advertiser’s advertisements at a lower rate.

Contracts may also specify a separate rate to be used for Internet advertisements, which typically are based upon the number of months an advertiser agrees to run the Internet advertisement.

In the case of an advertiser who has a long-term relationship with the organization, the organization may agree to give pricing to the advertiser based on prices from a previous year. The schedule of pricing for advertising is called a “rate card.” The rate card defines the different Nx rates for advertisement types and sizes. For example, a full-page display advertisement may be priced at $5,000 for an advertiser getting a 1x rate and only cost $3,000 for the 12x rate using the current rate card. However, two years ago the prices were $4,500 for the 1x rate and $2,500 for the 12x rate. In the advertiser’s contract, it includes the rate the advertiser is to receive and also the rate card that is to be used.

The customers on the contract are the advertiser and the bill-to customer, who may or may not be the same customer. Optionally, and advertising agency can also be a customer on the contract. Typically, if an advertising agency is on the advertising contract, the advertising agency is also the bill-to customer on the contract.

To manage advertising contracts:

1. From Advertising Central or the Advertising menu in the left navigation, select Manage Contracts.
   The Advertising Contract Maintenance page displays, as shown below.
   
2. Select the hyperlinked Advertiser Name or Agency Name to open the Constituent Profile.
3. Select +New Contract to create a new contract.
4. Select the hyperlinked Contract ID to open the Contract Detail page.
5. Select the edit pencil to open the Edit Contract page.