The term Media Placement Services was coined by Templeton to describe the placement of advertising media on an Internet website. That is, if a visitor comes to the website from Search Engine Results (like Google or Yahoo) and then finds no advertisements on the right hand side (or at least none that we would recognize), and that same visitor proceeds to navigate away from the site as quickly as possible, then those ads do not “go where” the customer wants them to go. Instead, they are “trapped” on the landing page and are thus only available for a very short amount of time. In effect, it is like an “empty billboard” – only the sign advertising is there!
The problem with this scenario is obvious: no advertiser makes any money! However, when the advertisers realize that they may have to use this service in order to get some exposure on the Internet, they will often be willing to pay for this benefit. But what does it cost? And what should an advertiser look for when he or she is deciding whether to use a third party to place their ads on a website?
There are three things that the average person should be aware of. First, it is absolutely forbidden for a third party to disclose confidential information about an individual or company in any way. This includes providing data such as IP addresses, names, email addresses or any other confidential information. Second, even if a company is willing to provide such data to a third party, they must make sure that the source of that data remains confidential. Any attempt to obtain confidential information through this type of service is a felony in many jurisdictions.
Finally, it must be understood that there is a significant difference between using a third party to place advertising on a website and allowing others to “place” advertising on your website without breaking any sort of law. Advertising that simply conveys a message to the public is not considered to “place” any sort of advertising whatsoever. On the other hand, if you are placing ads on your website in order to infringe upon the rights of another or if you are looking to take advantage of another for any other reason, you may very well be crossing the line.
Now that we’ve established what we believe to be the parameters surrounding “commercial activity,” it’s time to discuss the different types of services that are available and how each one applies in this instance. First, it must be made clear that a placement firm shall not engage in any sort of misleading or deceptive “practice.” Every advertisement must accurately convey all of the relevant and necessary information to the customer in order to lawfully benefit from advertising. So long as a firm is not guilty of these activities, then no one should hesitate to work with them.
Next, there are two basic types of relationships that advertisers have with placements firms: a per-affiliate relationship and a revenue-based relationship. Under the revenue-based arrangement hereunder, the advertiser will reimburse the media placement firm for its services. So long as the agreement between the placements firm and the advertiser is one that provides for a level of compensation commensurate with the value of the media placement (as measured by revenue earned), then this portion of the revenue-based agreement will serve all parties well. In the event of a per-affiliate arrangement, the advertiser agrees to reimburse only the amount of revenue earned by the placement through its media agency on the date that such revenue becomes a taxable income to the advertiser. There are even times when an advertiser agrees to reimburse the placements firm for its portion of the advertising costs (this portion being referred to as a “service contract”).
There are several conditions set forth hereunder that must be satisfied by both parties. In the first condition, the advertising costs must be paid for at or before the effective date. In the second condition, the advertising costs must be paid for at or before the effective date but in no event later than thirty days after the effective date. The party making the payment is also required to comply with all other terms and conditions set forth in this agreement.
It is to be noted that the term “effective date” is interpreted to mean the earlier of the date on which a firm has first become fully liable for payments (including the immediate payment of expenses) or the date on which all the contingent expenses have been paid. This period commences on the date on which the contract between the media placement firm and the advertiser was executed. On the other hand, if the ad agreement is for a limited period commencing on or before the date of acceptance, it is called a “limited advertising period.” In that case, the period commencing on the effective date and lasting not longer than six months commences on the effective date and lasts for not more than three years.
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