Social Media Influencer Agreements
Influencer advertising has become one of the most popular and cost-effective methods of attracting consumers for brands, public relations, and marketing agencies. It is an exciting evolution in the marketing world, but regulation is starting to impact what was once the wild west. Regulators are not only scrutinizing the influencers for compliance with legal requirements but the entire influencer network, including PR agencies, marketers, brands and publishers.
Compliance with Influencer Marketing and Advertising Regulations
In both the U.S. and Canada there is an increasing effort by the respective governments to extend the scope of advertising laws in an effort to reign in paid influencer promotions that aren’t disclosed to the public. There have been several instances, especially in the U.S., where fines have been levied against influencers who have not abided by new advertising disclosure regulations. The most frequent violations include a lack of adequate disclosure concerning the commercial relationship between the influencer and the brand/client, which can make it seem as though an influencer supports a brand so much that it is promoting the brand products for free (which is usually not the case).
The most effective way to manage an influencer relationship is with a contract. The agreement should take into account key business terms based on the structure of the campaign, which usually relates to compensation, campaign duration, and performance obligations. Similarly, legal terms should be drafted to reflect risk and cost – not only how the representations and warranties are drafted, but whether there ought to be morality provisions, termination considerations, and how those matters ought to be addressed.
There are frequent legal developments, and it’s helpful to understand the regulatory structure behind influencer promotion in order to minimize your risk in marketing (as a brand or as an influencer). Due to regulatory requirements (Competition Bureau in Canada, and the FTC in the U.S.), all parties involved in a social media influencer campaign should keep the following nine best-practices policies in mind, and make sure an influencer contract is structured accordingly:
1) Adequately Describe the Content
According to recent regulatory updates, some specific hashtags, without additional context, may not provide enough transparency to let consumers know that the promotion is a paid endorsement. Some of these non-transparent hashtags include “#ambassador,” “#partner” and “#thanks.” However, hashtags “#ad,” “#paid,” and “#sponsored” are probably sufficient. Additionally, organic disclosures that openly express the nature of the promoted material are also acceptable.
2) Make Disclosures Readily Visible
Ensure certain disclosures are not hidden, such as being buried at the bottom of a hyperlink or textbox, or after a “break” in the copy, which some platforms institute. For example, disclosures on Instagram are required to be included within the first three lines of the post, before the “more” button. Alternatively, disclosures in Instagram or Snapchat Stories may be superimposed on the post, provided the disclosure of compensation is clear and obvious. Facebook, Instagram or YouTube built-in disclosures are not always sufficient for providing full transparency, and you should not rely solely on these integrated platform-disclosure tools.
3) Create Written Legal Policy for Endorsers
Influencer agreements must address unique issues, including regulatory compliance, third-party intellectual property rights and associated production as well as ownership rights. You should have an attorney, experienced in media and marketing law, draft a written policy stating your endorsers must disclose their professional relationship with you. Be sure the policy clearly compels your endorsers to disclose their relationship when talking about a product or service. The policy should also require the influencer to offer their honest opinion of the products, services and marketers while only making truthful statements that can be substantiated.
4) Know Who the Responsible Party Is
As influencer contracts are often negotiated with influencer networks on the influencer’s behalf, and not the individual influencer directly, it can be tricky to know who is actually responsible for upholding the terms of the agreement. Networks will frequently attempt to avoid taking any direct responsibility for influencer content. Additionally, influencers are becoming likened to celebrities, often acting as their own production company, so negotiating an agreement can require as much detail as a talent or production agreement with a traditional celebrity.
5) Social Media Policy
Public-relation agencies that enter into agreements on the marketer’s behalf must be certain they provide influencers with comprehensive guidelines for establishing the main communication requirements for the content. When working up a social-media policy, supply precise details about the content that the influencer is permitted to create. This should include the length, format and in what manner the influencer is expected, and allowed, to promote your product or service.
Detailed guidelines concerning exclusivity should be set forth whenever content is being produced exclusively for one marketer. As an example, will you prohibit the influencer from promoting multiple brands in one video or to represent competitors? These guidelines also need to be crystal clear regarding both the type and time limitations of any such restrictions.
7) Approvals and Revisions
First, find out if the client or marketer wants to own the content and never assume the influencers will agree to a work for hire agreement. For one-off social-media posts, a broad-usage license is rapidly becoming industry standard and may be adequate. However, ownership of content may be more important for production campaigns of wider scope and duration.
8) Compliance with Applicable Laws
Your contract should spell out that influencers are required to comply with all applicable laws. This should include regulations and guidelines as well as providing content that won’t infringe on any third-party rights, violate privacy rights or defame anyone. A well-drafted agreement will include terms with well-defined consequences for breach of these requirements.
9) Include Morality Clauses
While high-profile influencers can have major bargaining power — and will often oppose contracts with strong morals clauses — these and related provisions in influencer agreements have become increasingly important. Agencies and marketers must be able to monitor an influencer’s behavior and have adequate leverage to respond decisively if the influencer’s behavior is found to be inconsistent with the agreement. This issue is expanding the fields of prohibited behavior to be quite broad. Previously, industry standards only allowed a marketer to terminate a relationship if the influencer acted offensively during the term of the contract, but it is now common to include (non-public or unreported) behavior that pre-dates the agreement, so that brands are able to terminate on discovery of immoral activity of which no one was previously aware.
The Influencer Agreement – Why is it Important?
Nobody ever intentionally enters into any new relationship thinking it will head south; however, professionals have learned that guardrails help keep the relationship on the road. A written agreement spells out what the expectations of the relationship are, providing a safety net for all parties. Here is a list of important considerations when drawing up an influencer agreement:
a) Names, Dates and Description
Set forth the full legal names of the influencer, agency, marketer and clients that will be working together on the project, and their contact information. Include the effective date of the agreement and a short description of the project.
As influence is accretive, influencer promotion is more effective over the long term. Clearly spell out how long you intend the influencer relationship to last, meaning whether it will be a one-off campaign, a limited campaign of specified duration or if it is intended to be an ongoing campaign.
Influencer compensation, like the influencer industry generally, is evolving and has been a moving target at the best of times. Compensation often depends in part on what you are trying to achieve. Typically, as a general rule, influencers should be compensated monetarily for whatever time they put into creating content, and for their endorsement. Some brands will typically include performance-related pay clauses into their agreements. Whether it is a flat fee or performance incentive to engage followers, decide what type of compensation you are willing to offer and include it in your contract.
d) Compensation Structure
You should consider limiting your exposure to financial risk by establishing incremental payments. As an example, instead of making a one-time upfront, lump-sum cash payment, offer half of the agreed-upon fee when the agreement is signed, another 25-percent once the agreed-upon content is created and published with the remaining 25 percent payable once the agreed-upon metrics have been met.
e) Payment Terms
Manage expectations by stipulating your terms of payment. For example, you can agree to pay the creator within thirty calendar or business days of receipt of the creator’s invoice, subject to any spread-out compensation structure.
f) Strategizing Session/Meaningful Consultation
Influencers have become “influential” because they know how to consistently create content that followers like. While brands should trust the influencer’s ability to generate interest, you and the influencer should hold a creative-strategizing session where you can describe the messages you want to be sent and how the results will be measured. Be sure any and all such requirements are put into the agreement.
g) Approval Process
Ensure there is a written prior-to-publication approval procedure in place. Follow the 4S’s of “search,” “surface,” “screen” and “select” throughout the influencer-selection procedure. During this process, you should thoroughly evaluate influencers to see if they have the same tone of voice and brand values as you. They must also be able to reach your target audience and adhere to disclosure regulations. Be sure to address any approval expectations with the influencer before the expectations are put down in writing.
Include a schedule of services that spells out content by type, length, and frequency. Whether a blog, vlog, Tweet or an Instagram post, list exactly what content will be created as well as a posting timeline and penalties for failing to meet deadlines.
i) Content Promotion
Include clear and precise expectations, if any, for the influencer to promote your content on specific social media platforms. Be clear about what channels the influencer is expected to promote the content on, how often and the time and days the promotions should take place.
j) Content and Derivative Ownership
Include a section or clause that gives you the right to be able to modify, adapt, translate and repost any sponsored content. This should also allow you to use the influencer’s name, photo, and logo in connection with the content to engage followers. Decide if you want the influencer to be able to review and request edits to derivative content you’ve created based on their work. Also, decide on the length of time you will hold onto this right.
k) Content Inclusions
Be certain that any inclusions, such as #hashtags, promo codes, coupons and tracking links, are clearly spelled out and are typo-free in the influencer contract.
l) Disclosure Guidelines
Clearly write out any disclosure regulations in whatever jurisdiction the content is to be published. While putting this information in writing will not necessarily negate any consequences if the content runs afoul of regulators, it will help to remind all parties of the requirements and demonstrates good faith.
m) Restrictive Covenants
Include a clause that forbids the influencer from mentioning any competing brands, unless expressly authorized by you, in writing. Explicitly define, by name, who you mean by “competitor,” whenever possible. Additionally, have the influencer confirm, in writing, that they have no existing agreements with any of the competitors on your list. State the period of time the influencer is prohibited from entering into a contract with any of your competitors after the influencer contract has expired. Again, make certain you expressly define the competitors.
n) Sunset Clause
Define how long the sponsored content must remain on the influencer’s social media channels. This is critical, as some “Bang-Another-iNfluencer-Job-Out,” or BANJO, influencers will remove sponsored content from their timelines within a matter of days after posting. While this is also done so influencers don’t put off their followers with a lot of sponsored content, it is done primarily to make the influencer available for deals with competitors.
Always include a cancellation clause that can be activated due to the influencer’s poor or non-performance or breaking brand rules or regulatory guidelines. Be sure to be very specific about what is, and what is not, acceptable.
p) Morality Clause
While you cannot immunize yourself from your influencer making poor decisions, you can greatly reduce the risk. Mortality clauses should include the following broad reasons for terminating the agreement:
- Failure of the influencer to act with due regard for public morals.
- Any action by the influencer that results in the influencer being put into public contempt, disrepute, ridicule or scorn.
- Any action by the influencer that shocks, insults or offends community standards or damages the client’s or brand’s reputation.
q) Post-Production Prohibitions
Set forth conditions to ensure advertorial or sponsored content doesn’t exaggerate the benefits of your product or service, or the advertising watchdogs may consider the claims are designed to mislead consumers.
While this is not an exhaustive list of all the dos and don’ts of creating influencer contracts, a well-planned and crafted agreement will hopefully help you from ever having to refer to it after you hire an influencer. Additionally, a well-crafted agreement will demonstrate your commitment to professionalism.
Finally, Ad Standards Canada publishes the Influencer Marketing Disclosure Guidelines, and the Canadian Competition Bureau publishes Deceptive Marketing Practices Digest, both which will be particularly helpful to Canadians, but also provide useful considerations for non-Canadians. Likewise in the U.S., the FTC publishes an Endorsement Guide – What People Are Asking.
This blog post is not intended as, and is not, legal advice or opinion.