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18 November 2020

Influencer Agreements: Six points that a business should consider

An influencer is an individual who, through their social media power and their relationship with their followers, is able to influence consumers to purchase products or services. They are distinct from celebrities in that their influence does not arise from fame through being a film star, pop star, or sports star, but instead they appear to just be ordinary people who have managed to build a large number of supportive and trusting followers through their engagements, posts and personality on social media.

Social media users can often feel a connection with influencers that they support: they are inclined to listen to their advice and they aspire to match aspects of their lifestyles, which they feel are more achievable than those of celebrities.

Due to this commercial power that influencers have over their followers – which can often be in the millions – businesses are increasingly looking to secure the services of influencers to market and promote their products. If your business is considering using an influencer as part of its marketing strategy, there are important contractual points that should be considered. Below, we consider six of these:

1. What services are you asking for?

The contract should clearly state what you are asking the influencer to do, and on which social media platforms. If content is being shared on Instagram, should it be in the form of posts or stories? Should specific captions accompany each post? Is there a specific date and time when the content should be posted? Depending on the target audience, posting at certain times can garner significantly more exposure than other times, so this should be researched and included in the influencer’s obligations. Be as specific as possible.

2. Who owns the intellectual property?

Any given piece of content may contain a number of intellectual property elements. For example, a photograph containing an image of a trademark may be subject to both copyright and trademark protections. To further complicate matters, each element of IP within that piece of content may have a different owner. It is vitally important to ensure that all parties involved with the creation of a piece of content (such as brand owners, creative agencies, photographers, and influencers) agree on how the IP rights will be owned, licensed and used. Businesses should ensure that they either own the content posted by influencers under the agreement, or have an irrevocable license to use it in the future. Failure to do so may render the content useless for the business after it its first and ultimately only use.

3. Protect yourself from the competition

Given the relationship between influencers and their followers, it can do a lot of harm to a business if an influencer that has previously promoted one of its products, then promotes the products of a competitor. Businesses should consider whether they wish to be the only business in their industry whose products an influencer can promote – or if this is not possible, then to state a period of time that should elapse before the influencer can promote the products of a competitor. For added certainty, competitors should be listed in an annex to the agreement.

4. Protect your reputation

Even though an influencer is not an employee of the business and may only be providing their services at an arm’s length, as soon as they promote a business’s products, a connection is made between the influencer and the business in the eyes of the public. The business should consider its social and moral values and include terms in the agreement to the effect that the influencer will not engage in any activities that contradict those values. Such activities could cause reputational damage to the business due to its association with the influencer – particularly if the influencer has been working with the business for a longer period of time.

5. Make sure the influencer knows their ASA responsibilities

The influencer is being paid to promote your product or service, which means that, in effect, their posts are adverts and therefore subject to the regulations of the Advertising Standards Authority. The most important of these for the influencer to remember is that their followers must know that they are looking at a paid advert: this can be done by, for example, the influencer placing “ad” in the caption. If the influencer fails to comply with this requirement, the ASA may order the post to be taken down and/or issue a fine – this can be to the business as well as the influencer. In addition to the financial hit, negative publicity may also arise in the media. The agreement should set out the requirements that the influencer needs to comply with and how any consequences of a failure to comply will be dealt with.
For further information on the relationship between the ASA and influencer marketing, please see Caroline Swain’s article on the subject here.

6. Ensure the payment structure is commercially sensible

The more influential the influencer, the larger the fee will be, and for influencers with millions of adoring followers, the fees can be staggering. It is therefore important that payments are structured in a commercially sensible way. Will a percentage be paid in advance and a percentage be paid on completion, or will payments be made on a post-by-post or a periodic basis? Where an influencer is also a well known public figure, incentives may be added for the influencer to promote the business in their day-to-day life but outside of the agreed services in the agreement. If a creative agency is involved, how will its costs be paid – and if the influencer has to travel anywhere (for example, for photoshoots), who is responsible for these costs and do they need to be capped?

These are just some of the points that need to be considered when negotiating an influencer agreement. There are many other important considerations, such as the term and termination rights, confidentiality clauses, and measures to be taken if the influencer is under the age of 18 – which many are. It is hard, therefore, to overstate the importance of ensuring that such agreements are both legally and commercially sound, and appropriate advice should be sought accordingly.

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