Ad partner contracts can be a very scary thing for publishers. Unfortunately, it’s quite common for ad partners to draft template contracts that are very aggressive in nature which end up being heavily lopsided towards the ad partner. As a publisher, you should read through every ad partner contract very carefully.
As much as you try to be thorough when reading through each ad partner contract, it’s almost impossible to be as thorough as you’d like. You either have internal or external legal help that takes too long to review the contracts or you have to do it yourself. We all know how these ad partner contracts can make you go cross-eyed by page 3, so we’re here to help. In case you don’t have the time or patience to review 100% of each ad partner contract, we have summed up some of the worst clauses to watch out for.
We have spoken to several top publishers that have worked with a large number of ad partners. Each publisher gave us their worst ad partner contract horror stories:
1. Adjust Contract Without Consent of the Publisher
This is a sneaky clause that some ad tech companies have in their contracts that allow them to get away with future hidden charges. For example, there was one recent news story about one ad tech company adjusting a charge and only having to notify publishers via email. For publishers that didn’t read the email, they would have been charged this new fee unknowingly.
Make sure to read each ad partner contract carefully to watch out for these pesky clauses. If you are thinking of working with a company that has this clause, we’d recommend for you to request to adjust that clause so that any contract adjustment requires publisher consent.
2. Ad request CPM within header bidding agreement
Since the introduction of header bidding, server costs have increased for header bid networks. As a result, they have been trying to pass down the cost to the publisher. Some have tried to just pass the cost down, and others have tried to create a new profit center out of it. Make sure to read each ad partner contract closely and watch out for any hidden server costs.
3. X-day opt-out with 100% traffic commitment or withhold all payments
Some ad tech companies have very aggressive opt-out clauses to prevent publishers from having the freedom to choose other partners or run their ad operations in-house. Some ad operation (Ad op) partners are good example of this with a lengthy 60+ day opt-out clauses. For some, if a publisher were to stop running 100% of their ad revenue through the ad partner, they can withhold 100% of the unpaid ad revenues.
If an ad tech partner rep is trying to convince you to run a test, make sure to ask how many opt-out days is minimum. For a test, 60+ days is much too long and should be negotiable. If you test out an ad op partner and they perform poorly, you don’t want to be handcuffed with a contract that forces your company to run your ad operations with them for 2+ months. This could lead to major losses of profits because you missed an important part of the contract.
4. Can withhold 100% of ad revenues from just 1 fraud ad impression
There’s no doubt that fraudulent traffic is still a horrible problem in the ad tech industry. Some publishers purposefully run fraud traffic to inflate their ad revenues but most receive organic levels of fraud traffic unknowingly. Most organic fraud traffic tends to come from paid, social, direct and some referral traffic. The only way to be sure that a publisher is not receiving fraud traffic is to partner with a fraud traffic detection and suppression company. They provide tech that blocks fraud traffic from seeing any ads, however, this type of technology is very expensive and not affordable for most publishers.
For those publishers that cannot afford fraud traffic suppression technology, they are vulnerable to getting banned by ad networks that detect fraud traffic coming from your site network. There are several ad networks that have assertive clauses if fraud traffic gets detected, the account will be banned. Banning an account could mean one of the below:
- You will stop earning future ad revenues, but unpaid ad revenues will be paid out
- You will stop earning future ad revenues, but only a portion of unpaid ad revenues will be paid out
- You will stop earning future ad revenues and all unpaid ad revenues will be revoked
- You will stop earning future ad revenues, all unpaid ad revenues will be revoked potentially including ad revenues that were already paid out
For ad partner contracts that fall under one of the below two scenarios, this creates a dangerous conflict of interest because that ad partner would heavily profit on any ban that involves them withholding unpaid and/or paid ad revenues.
If one of your ad partners has this clause, we recommend negotiating it. A fair clause would state that only ad revenue linked to ad impressions that were proven to be fraudulent, could be revoked. Otherwise, it might be too risky to work with that ad partner because organic levels of fraud traffic consistently flow through the internet and inevitably end up on your publisher network.
5. $X ad request/impression CPM
There are several ad partners that not only charge a revenue share but a server fee as well. This is an example of ad partners passing on their variable costs to the publisher rather than absorbing their costs within their revenue share. Worst of all, some hide this server fee within their contract and the sales reps seem to conveniently forget to mention it.
If one of your ad partners has this charge, we recommend negotiating to take out this ad request/impression CPM. If you already work with them, make sure to check your charge details very closely. If the ad partner did not disclose the details, make sure to ask your ad rep for the charge details. If they are charging you an ad request/impression fee, we’d recommend you negotiating to get this charge taken out.
6. Long Term Contract with No-Opt Out
Some ad op partners are known to lock-down publishers to long term contracts with very little wiggle room. Perhaps the publisher agreed to this because of discounts on the pricing or it wasn’t disclosed by the sales rep. It is a difficult situation for publishers to get stuck into a long term contract with ad op partners that manage 100% of their unsold ad inventory because if performance drops, you don’t have any other options. You could complain to the ad op partner but they have little incentive to be vigilant because they know they have you locked-down for X number of months or years.
Ad operation partners sometimes have these long term contracts so watch out! If your ad partner forces a long term contract, we’d recommend not accepting a long-term contract but a month-to-month contract instead. Any discounts are not worth the risk of performance dropping and not having the option to test other ad op partners for better performance.
7. Withhold payments if ad request RPM is below a threshold
As mentioned before, the advent of header bidding has led many header bid ad networks to create conditional charges based on total ad requests or ad request performance. The latter incentivizes publishers to keep their header bidding efficient and avoid wasted ad requests. For example, if a publisher sends 10,000 ad requests of Malaysian traffic to Defy Media and they don’t bid on Malaysian traffic, those are 10,000 wasted ad requests. They slow down the page unnecessarily and Defy Media would need to pay server fees on those wasted ad requests. Therefore, some header bid ad networks have implemented a charge to incentivize publishers to have more efficient bids.
If a publisher runs an ad request RPM of less than $0.0X, than they will charge a minimum yield fee. This minimum ad request RPM would not be relevant for publishers that tend to get a lot of tier 1 country traffic and higher RPMs. For those that do run average RPMs of less than $0.50 and low fill rates, than this charge would be relevant. The key is to utilize header wrapper technology that allows geo-targeting and frequency capping like PubGuru to minimize wasted bids.
If you are thinking of working with an ad partner that has this type of clause and tend to get low RPMs, we’d recommend negotiating a lower minimum ad request RPM. This is especially so for publishers that cannot control the geo-targeting or frequency capping for specific header bid networks.
Overall, you should be very careful with ad partner contracts. You don’t want to miss any sneaky clauses that could back your company into a corner. Watch out for the above 7 type of clauses and the many more out there that fool publishers.
Be sure to check back as we will update this article with any other nasty clauses that we hear about from publishers. Please comment below about your ad partner contract clause horror stories.