Agencies Add AI Clauses to Contracts, Stop Short of Full Overhaul

Marketing agencies are modifying client contracts to account for artificial intelligence tools, but they're taking a piecemeal approach rather than rewriting master service agreements from scratch.

Agencies interviewed by Digiday say they're inserting AI-specific language through addendums and clauses as situations demand—when clients request access to proprietary AI tools, ask for explicit AI disclosures, or when new AI-powered capabilities are deployed on specific projects.

The incremental update strategy

Mile Marker agency is incorporating AI terms directly into existing MSAs rather than creating separate appendices, according to president and CEO Scott Shamberg. The agency addresses metadata management, intellectual property ownership of AI-generated content, and tool transparency within current contractual frameworks.

Go Fish digital marketing agency has added clauses covering brand safety and data protection over the past six months, president David Dweck told Digiday. Crispin has similarly updated contracts incrementally, adding addendums when necessary, said chief transformation officer Freddy Dabaghi.

Clients are particularly focused on understanding data storage and usage within AI environments, especially proprietary generative AI tools that function as walled gardens. They're also requesting details about human oversight, indemnity provisions, tool disclosure, and intellectual property rights.

Why it matters

The contract lag reflects a deeper tension in agency economics. As AI tools automate more marketing work, they reduce billable hours—undermining the traditional hourly rate model agencies have used for decades. Some firms are launching proprietary AI tools and moving toward software-as-a-service revenue models, but the industry hasn't settled on standard pricing structures. Without consensus on how to charge for AI-enabled work, agencies can't establish standardized contract language. This creates legal ambiguity at precisely the moment when data governance and IP ownership questions are most critical.

The SaaS pivot agencies aren't ready for

Agencies are increasingly offering proprietary generative AI tools to attract clients and compete in what's become an AI arms race. This shift pushes them toward software-as-a-service business models with fundamentally different payment structures.

Yet most aren't ready to abandon familiar ground. "We'd rather stay with what's familiar and how advertisers are paying agencies for a century versus trying to change the game up by trying to be a SaaS company," Dweck said.

The challenge extends beyond client comfort levels. AI technology is evolving faster than contracts can adapt, both in capabilities and cost structures. "A lot of times it becomes a function of time and money," said Brian Yamada, global chief innovation officer at VML. Until the industry agrees on AI cost structures, building standard contractual agreements will remain difficult.

Keri Bruce, partner and head of the advertising group at international law firm Reed Smith, noted that transparency is paramount: "Ultimately, people want disclosure. They want to know what tools are being used."

Yamada advised building flexibility into agreements to allow for re-examination as the market continues its rapid evolution.

These details were first reported by Digiday.