Rise of the 'Influencer': Legal and Commercial Realities
- Nikkie Kitching
- Jul 16, 2020
- 8 min read
Let's break it down...
If you've spent a number of hours scrolling through Instagram (like myself), you've probably come across several accounts from the celebrities who have millions of followers to your friends who just uploaded the new recipe they spent time perfecting in quarantine. But then you'll have also come across people who are not famous per se but seem to have accumulated thousands of followers on their platform. Their pages may be dedicated to fitness, health, food, beauty or fashion to name a few. These people have become known as 'influencers'. A person who people follow as inspiration. Influencers, if they have amassed a significant number of followers, are known to make money off their engagement with their followers. They do this through their sponsorships with brands, giveaways and items they sell. Essentially, their aim is to 'influence'.
But why the sudden rise of influencers? Companies have started engaging less with advertisement companies and engaging more with influencers as they have the ability to promote products at a cheaper rate and reach a wider audience. This is particular with the younger generation. Rather than approaching celebrities and public figures which could cost millions, influencers can step in. Despite the rising number of influencers, the law is still not quite concrete and is still ever-changing. Contrary to popular belief, influencers do not become successful overnight. A lot of what they put on their social media is usually as a result of agreements made between themselves and businesses; to promote BOTH the influencer and the business.
Beyond the device you hold, what are the commercial and legal realities of the typical influencer and if we want to create a contract for an influencer, what should it include? And with so many social media platforms and so many influencers, where does one simply start?
What areas of law are we looking at?
As previously mentioned, the law on influencers is still evolving. In saying this, it explores a lot of legal areas from advertising law, IP and competition law. Depending on where the influencer is based, they should ensure they do not violate any governing advertising rules in their specific jurisdiction. In the UK, the main governing authorities are:
The Advertising Standards Authority (ASA)
The Committee of Advertising Practice (CAP)
The Competition and Markets Authority (CMA)
The authorities work in conjunction in ensuring that advertisements, whether this be on live TV or social media, are complying with regulations. In addition, the CAP and CMA look over any advertisements that are a cause for concern; for example if any advertisements are considered misleading, offensive or harmful to others.
For influencers who advertise brands on their platforms, their post will need to make clear that it is an ad. Influencers often do this through hashtags or following any advertising guidelines set out in their respective contracts.
What should be included in an influencer agreement? So you've chosen the right influencer to engage with and have built a professional relationship with them. Moving forward, where do we start when it comes to drafting an influencer agreement?
As more and more influencers emerge are start 'influencing' at a young age, a general tip is to make sure the contract is clear and easy to understand. The more complex it is, the more the influencer may be put off to continue the relationship with your business or brand. Secondly, before a contract is created, it is best to ask yourself the fundamental questions. You know your brand or product better than anyone else: What is the brand's function? What are it's key features? What kind of audience do you want to attract? And what is the best way the influencer can promote it? Brainstorming and mind-mapping can help you better understand the type of content people want to see on social media.
Parties and obligations
As with any well executed contract, the reader should know who is party to the contract and understand everybody's respective obligations from the outset. This should include any third party representation. For example, if the influencer is represented by an agent or manager, who perhaps has a right to part payment, they should be included in the agreement. Any obligations that are outlined should be fair and achievable. The influencer wants to be in a position where they are not only promoting a product they believe in but can also promote it in the most effective way.
Exclusivity and due diligence
If you engage with an influencer who has hundreds of thousands of followers, particularly over 500k, it is highly likely that you aren't the first business to approach them. In fact, many influencers work with multiple brands at at time. As a first step, it would be wise to speak to them to see if they have engaged with any companies who have similar brands that you promote. This will especially be helpful if your influencer has already engaged with a brand who is a competitor of yours. If this is the case and you are sure you want to engage with this particular influencer, it would be wise to add a clause into the contract which states that the influencer will not be able to engage with other competitors during the time they are engaged with you. Additionally, if your influencer is currently engaged with Brand X but they still want to work with you in the future, make a note of any relevant timescales so as to avoid any unnecessary clashes.
Content and deliverables
Essentially you want your influencer to advertise your product in the best light. As this is the case, it is best to ask how you can execute this. Do you require regular photos of the product? Perhaps a video of the influencer explaining their views on the product? And when they do post, around what time would be best to post for maximum exposure? For example, if you are a company advertising new Christmas products, it would be wise to advertise this weeks in advance so people have the time to purchase before Christmas Eve/Day. Moreover, it would also be wise to assess which social media platforms are the most effective. Depending on the audience you wish to target, would it be best to post on Instagram, Facebook, Twitter or all three?
To ensure that the right type of content for your brand is posted, it may be worth including a non-exhaustive list of what is considered appropriate or inappropriate. For example, if you are a brand owner that sells clothing with political slogans, such as t-shirts with the words "Black Lives Matter" it would be worth ensuring that the influencer does not post any caption that could be interpreted in a political or racial way. Should the influencer breach your clauses of appropriateness, another clause should stipulate the consequences of this. In instances like this, it is worth including a specific timeframe the post should be taken down and any implications of what could happen if a similar post crops up in the future.
Confidentiality
If your business or company creates or promotes a "one of a kind" product that has never been seen before, it would be wise to include a confidentiality clause within the agreement. This is especially important if your influencer has amassed a significant number of followers. The last thing you want is for them to disclose any information about your brand, especially if you know your brand or product has the potential to be very successful in the future. Credibility is important and for this reason, the clause should also take into account any implications of breaching confidentiality.
Intellectual Property
If you asked an influencer to take a picture with your product, the picture they take is their intellectual property as it is material they themselves have created. As they own this, they then have the freedom and right to do what they will with their image. This raises the question of who retains ownership of intellectual property. In IP terms, if you as the business owner want the influencer to post in a specific way, you will need to grant the influencer a license. Alternatively, if the influencer retains IP rights, you as the business owner will need to obtain a license so that you may use the content in your own way. Either way, it is imperative to include how content will be used, whether or not one party will have exclusive use of the content or if there is breathing space for negotiation.
Payment
Some influencers have made a good living from social media. For this reason, it would be wise to incorporate a payment structure within the agreement. This includes any invoices and dates when the payment will be made to the influencer. Payments will of course vary amongst influencers and would have to be calculated accordingly. Depending on the influencer, will this be a flat rate? Or per hour? Will there be possible bonuses if targets are met or exceeded? In some instances, brands may not pay but rather send their own products free of charge to the influencer for them to keep.
For influencers who are active on Instagram, they will include a feature on their post which says "in paid partnership with _(brand)_" to let their followers know that they have entered into a paid agreement. The paid partnership link that is included can prove useful as it often takes the viewer directly to the brand's website to learn more about the brand and how they can purchase certain items. For some products, the influencer and business may have created a special discount code that viewers can use on their first purchase.
Another dimension can be added to this if the influencer is overseas. If the relationship continues into success and you need to engage with them for bigger international projects, will your company pay for any travel or accommodation expenses? Is there a limit to how much you will spend on an influencer?
Timeframe and termination
It will be important to include a clear timeframe in which you will be engaging with your influencer. Will you need them on a one time basis or a longer relationship? Bearing in mind that influencers are approached by an array of brands, it would be wise for you to outline the specific timeframe you intend to engage with them. During this timeframe, influencers should abide by all the terms set out in the agreement.
In a different light, you also don't want to be associated with an influencer who happens to have a scandal. In the world of business, you will often hear of big brands cutting ties with celebrities or influencers who have had scandals or misconduct in the past. In the case of non-compliance or gross misconduct, the brand or business usually includes a clause that stipulates they can terminate the agreement with immediate effect.
Final thoughts
Whilst the above clauses do not constitute an exhaustive list, they are key considerations when it comes to drafting an influencer agreement. Essentially, the influencer wants to associate themselves with a brand which is moral, ethical and more importantly sets out clear requirements of the working relationship. If an agreement lacks in adequate drafting, it leaves both parties at risk.
Bottom line: A good agreement = good relationship.
If you are a social media influencer yourself, make sure you understand your value and that any professional relationship you enter into is giving you what you deserve and have worked for. Speaking to a lawyer who specialises in social media law is always recommended. They will be able to review any existing agreements as well as give advice on how to draft one to best protect yourself.
On a separate unrelated note, the world has been taken over by many influencers who are out for clout. This means everything from clickbait to unnecessary posts of vanity. If you, yourself, are an influencer, the best thing to do is move forward with authenticity. The last thing this world needs is someone pretending to be who they're not.
For more information on streaming services and the various legal aspects, check out the following links:
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