In the age of the internet, the exponential growth of social media has opened up new channels for advertising beyond anything that had previously existed. In this expansion, the age of the influencer has descended upon internet culture, and brands have wasted no time in finding a foothold in this new manner of approaching their markets. As the age of the influencer progresses, we have seen little guidance on how to navigate the legal intricacies of influencer-made advertisements. In addition to the boilerplate contractual language, these agreements require more specialized terms in order to ensure the success of both the contract and the business relationship. Done right, agreements between brands and influencers can usher in immense success for both parties and foster cooperation in future ventures for years to come. Done wrong, however, and parties risk walking away dissatisfied in the face of a crumbling picture of a lasting relationship that could have been.
Guidelines
Brands should be explicit about what they expect for their ad. They should lay out the specifics of what they expect the influencer to do when making the content. Many brands request that an influencer talk about a product for a certain portion of a sponsored video, show a product’s label, or use a product on camara. Every detail of the sponsored content should be discussed by the brand and the influencer prior to beginning a contractual relationship. The details emerging from those discussions should be memorialized in the contract itself, as well as a clause that states the brand’s right to review the content before it is posted.
IP ownership of the content
A crucial aspect of any influencer contract is specifying ownership of the resulting intellectual property (IP) produced through the performance of the contract. Although a piece of sponsored content might be considered property of the brand under the doctrine of work-for-hire, it is best practice to the parties to discuss, and potentially negotiate, such ownership terms to promote goodwill and loyalty in the business relationship. A contract should state who owns the resulting IP and in what capacity. A brand might wish to retain the rights of reproduction and distribution to control how and when the content is viewed. This way, they could continuously circulate the content without the prior consent of the influencer.
Deadlines
An influencer agreement should detail a clear timeline stating when the promotion will take place. If it is to be a sponsored social media post, should the influencer post on a specific day or within a certain amount of days after the agreement is made. A brand could also specify that the post go up at a specific time of day, for example, morning, afternoon, evening. Some influencers post content only on certain days of the week, so brands should take into consideration the routine of the influencer when discussing a deadline for the collaboration.
Payment
The price of an influencer agreement can be driven by a few factors. One is the size of the influencer’s audience. While this is certainly a consideration for a brand in deciding which particular influencer to work with, payment could be a fixed amount for every couple thousand followers that the influencer has at the time the agreement is made (for this payment method, it is important to specify the time at which the calculation is being made, i.e. “measured at the time of signing”). The nature of the promotion should also be considered for payment purposes. Payment for sponsored content should in the form of a video should be compensated at a higher rate than a photograph to reflect the time and effort put into it by the influencer.
If the payment is contingent on the amount of views or likes generated by the sponsored content, then the agreement should stipulate a date and time on which the payment will be calculated. For example, if a piece of sponsored content goes up on Instagram, it might be unfair to the influencer to only pay them for the amount likes the content receives in a 24-hr period. This is something that should be agreed upon by all parties and subsequently in the agreement.
It is common practice for brands to give influencers a discount offer for their audience. When used by members of the influencer’s audience, these discounts can sometimes give the influencer a commission on the purchased product or service. The agreement should therefore detail whether the influencer will receive a set amount of commission from every sale in which the discount code was used, what amount that is, i.e. “10% of the gross order in which the code was used” or “10% of the price of the item promoted.” Certain milestones could also be set in which the influencer receives a cash bonus for a certain number or certain dollar amount of products sold.
Non-Compete Clauses
A decision to incorporate a non-compete clause is one made by brands when they wish to be the only sponsor that an influencer works with for a particular type of good or service. For example, a brand might stipulate in a contract that they are to be the only makeup brand that the influencer publicly promotes. However, these clauses are limiting given the vast amount of sponsorship influencers undertake to increase their revenue from their online presence. Such limiting provisions should be included in contractual negotiations and take into consideration the following of the influencer, their notoriety, and the magnitude of the proposed business relationship.[1]
FTC Compliance
New FTC regulations require influencers and brands alike to disclose social media partnerships and sponsorships. Sponsored content should include phrases like “sponsored by” or “in partnership with” to notify the viewer that the content contains a paid advertisement. Sponsorship disclosures can be included as hashtags, in the title of a video, in a description, or asserted verbally by the influencer. A contract should state any specific language a brand wishes the content to display along with specifications regarding how and where it should be displayed.[2]
Most of all, a contract should promote civility within the business relationship. The most successful contracts are ones where both parties come out of the contract satisfied. This post-performance satisfaction is predominantly based on fair, well-negotiated contract terms. Contacts are the cornerstone of successful business relationships and ensure that brands and influencers, continue their symbiotic relationship for years to come.
For more information on drafting influencer agreements, please visit Revision Legal.
[1] See https://izea.com/2019/01/08/create-social-media-influencer-agreement/
[2] See https://mediakix.com/blog/influencer-marketing-contracts-clauses-example/