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Tech & Sourcing @ Morgan Lewis

TECHNOLOGY, OUTSOURCING, AND COMMERCIAL TRANSACTIONS
NEWS FOR LAWYERS AND SOURCING PROFESSIONALS

Thinking about monetizing your website with targeted ads? If so, you should have a basic understanding of the potential issues and associated risks when making online advertisement media buys. Although the Interactive Advertising Bureau’s Standard Terms and Conditions for Internet Advertising for Media Buys One Year or Less (the IAB Terms) are considered “industry standard” by advertising and media companies, and are used either entirely or as the basis for ad-buying agreements, the following points should be taken into consideration by website operators in order to avoid or minimize unexpected results.

Industry Standard

Sometimes “industry standard” can be a good thing. The IAB Terms are generally industry standard and are designed to balance the risk of each party. This can cut down on negotiation time, and give the parties comfort that the agreement is in line with recognized industry norms.

Potential Issues and Associated Risks

Notwithstanding the general acceptability of “industry standard” terms, the following potential issues should be noted if you host a website on which ads will be placed, since they may have unexpected results.

  1. Notice Before Changing Site. The website owner must provide 10 days’ advance notice to the agent of any changes to the site that would impact the viewership of the ad or would modify the size or placement of the ad.
  2. Non-US Traffic. Advertisers and agents are not required to pay for traffic originating outside of the United States.
  3. Invoicing. The website owner is required to submit invoices for payment within 30 days following completion of the order. Failure to provide an invoice within 90 days from delivery may relieve the advertiser of its obligation to pay the agent, which, in turn, affects the website owner’s right to payment.
  4. Cancellation by Advertiser. The advertiser may cancel an order by providing the website owner with seven days’ written notice.
  5. Under Delivery. If the website owner doesn’t meet the required number of impressions by a certain percentage, the agency can adjust the fees paid or otherwise require the website owner to achieve the percentage on the remaining impressions. The website owner is also responsible for monitoring the number of impressions.
  6. Broad Liability and Indemnification for IO Violations. The website owner has broad liability (including broad indemnification obligations) for modifying any ads or failing to perform in accordance with an order. The indemnification obligations for third-party claims contain no limitations on damage types. Therefore, the website owner could be liable for consequential, special, indirect, and similar damages.
  7. No Liability Cap. There is no liability cap in the standard IAB Terms. Therefore, all parties are subjected to unlimited liability in the event of a breach.