influencer - Influencer Agreement in Commercial and Business Law

Influencer Agreement: 5 Legal Aspects that should you avoid

Imagin a famous brand named ABC makes beauty products and wants to advertise its product via social media. Z is a social media influencer who has 15 million followers on Instagram. ABC approached Z to make content in the form of a video for ABC in which Z will promote the product of ABC through an Instagram post.

A paid money to Z to travel to Hawaii and make a video beside the beach. B makes the content video but not beside the beach as asked by ABC. Now A can claim that the content has not been made as agreed upon by both of them.

An Influencer Agreement between them helps the Court to determine the liability of both the parties in the agreement made by them.

If details of the location of the content are mentioned specifically in the agreement, then A can claim compensation from Z as Z took the ticket expenses from ABC. A good Influencer Agreement would help the brand in such a situation and in absence of detailed provision, the company would suffer losses. 

Mr. X, an advertiser, made a contract with Miss Y who is an influencer on social media. Mr. X asked him to make a video using his brand’s facial product and publish it on YouTube. They made an agreement for it but there was no exclusivity clause added in the agreement.

Now Miss Y published the content on YouTube. Next week Mr. X found out that Miss. Y has also published a video in which she is promoting a facial product of another company Z. Because Miss;

Y is using both the brands for facials, the audience lost trust in both the products as asking the audience to buy both the brands at different times indicates that she herself is not using any of them.

This affected the brand value of Mr. X. Mr. X went to Court to sue Miss Y as she harmed the brand value by advertising other brands as well at the same time.

In the absence of an exclusivity clause, Miss Y cannot be made liable for advertising other brands as she is an independent contractor who can work for anyone she wants.

If an exclusivity clause was included while making the influencer agreement, Miss Y would be made liable for working with the competitor brand at the same time.

In the modern era of technology, the Internet has become a crucial part of our life. There are 4.66 billion active internet users around the world and social media plays a major role in the day-to-day uses of the internet.

Statistics show that 13 new users join social media every single second. A whole new industry has grown out of these growing social media users i.e. social media influencers. We see people advertising different products of various brands on YouTube, Facebook, Instagram, etc. who are called social media influencers.

They get such opportunities from the companies who want to advertise their product or service. They enter into a contract when both parties reach an agreement. An agreement is signed between them which is known as an Influencer Agreement.

Various issues can arise in the future out of such agreement and thus it is important to cover all the necessary details to avoid any such legal issues in the future.

A good agreement made with all necessary detailed clauses helps the company as well as the influencer to run a smooth business.

This article will discuss various legal aspects that should be taken care of while making an Influencer Agreement to avoid future problems to the advertiser and the influencer.

Who is an Influencer?

An influencer is a person with knowledge or expertise on a specific topic and has built a reputation for the same in public. People who use social media as a platform to advertise products and services and have the power to influence other people to use that product or service are known as Social Media Influencers.

They have a close connection with their audience and they have a great impact on the decision-making of the people. It helps in building brand awareness and brand value among the audience.

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Influencer Marketing and Need of Influencer Agreement

There is an advertising department in companies that takes care of the advertisement and building brand value.

Nowadays, social media Influencers have become their prime target as they are considered to be the most approachable for the followers. Influence Marketing helps in building and boosting customer loyalty. 

Advertisers and influencers need security while entering into a contract with each other. Influencer wants to be assured that he/she will get the payment after completion of the work and the advertiser also needs security about the completion of the service.

Thus an Influencer Agreement is important so that it can cover all the necessary information about the service and payment.

Several other legal aspects require attention as they may result in problems during service or after service which will ultimately hamper the smooth running of the business of both parties. 

  1. Scope of Work
    The agreement must specify the work that has to be done by the influencer in detail. The content of the work consists of names of both the parties, the date from which it will be effective, etc.
    The time duration must be mentioned as to when the influencer has to deliver the content and whether it is a short period agreement or a long period.
    If the delivery has to be regular, each deadline shall be mentioned to avoid any future headache regarding deadlines. It shall mention all the channels where it has to be published.
Influencer Agreement
Sample of an Influencer Agreement ex.1
  1. Content Rights under Intellectual Property Right
    The content created by the influencers is covered under the intellectual property which makes it important to ascertain the right over the content under the Agreement. The nature of the clause depends upon the nature of the project and the parties involved in the agreement.
    There can be two conditions i.e. first, influencer owing the right over the content and giving that right to the company to use the content for a specific period, and second, the company owing to the right and giving the influencer right to use it only as a part of their portfolio.
    If the influencer retains their right over the content, the advertiser company cannot use the influencer’s post without securing right over content. 

The most common question asked regarding the Intellectual Property Rights of the content created is whether the company can reuse the content created by the influencer with their ideas and thoughts in the marketing initiative of the company.

The answer to this is yes you can reuse only if the influencer has assigned or granted a license to his/her Intellectual property.

Even after such assignment, the influencer retains the moral right to the content such as display of his/her name on the content, entitlement to make modifications in the content, and disclosure of the content for the first time.

If the company wants to take those moral rights away from the influencer, then a separate clause must be added for the same stating that the influencer waives his/her moral right over the content created by the influencer for marketing. 

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Sample of an Influencer Agreement ex.2
  1. Confidentiality and Exclusivity
    There are several business details, marketing plans, and proprietary are shared by the company with the influencers and it shall be mentioned in the agreement that they are bound not to disclose any of such information to any third party.
    The purpose of this clause is to ensure that company details are not used by other competitors. For example Dove disclosed to the influencer about their marketing plan for next year and in the absence of a confidentiality clause, the influencer discloses such crucial information to the other competitor company L’Oréal. It would incur a loss to company Dove. 

Some advertisers associated with large-scale companies also want to ensure that the influencers do not work with other competitors or other brands because it results in loss of trust from the audience;
For example, if a woman is marketing for shampoo of two different brands i.e. Dove and L’Oréal on YouTube, the audience will lose trust because they won’t believe the influencer as they will know that the influencer is not using both the brands but advertising it for money.
Trust of the audience is the major factor responsible for the growth of Influencer marketing. Thus it would diminish the brand value of the company as well. Although such an exclusivity clause can be added for a reasonable period only and not indefinitely. 

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Sample of an Influencer Agreement ex.3
  1. False and Misleading Content
    Federal Trade Commission has released guidelines related to the content published in the advertisement by influencers which is different for all countries. These guidelines make sure that the influencers comply with the laws applicable in their countries and don’t get away with legal enforcement on the ground that the content belongs to the advertiser and they are the third party to the company.
    As per the guideline, if there exists any connection between influencer and advertiser, it must be disclosed in the advertisement clearly and simply without any evil intention of hiding such information by putting it in the hidden columns of “About us”.
    Any misleading content created and advertised by an influencer affects the brand value in a wrong way which is very difficult to mitigate.
    Thus the company decides the obligation of the influencer to comply with the brand standard and the company will have the right to review the content and then give approval to the content for publication on the desired platform. 
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Sample of an Influencer Agreement ex.4
  1. Terms of Payment
    The terms of payment shall be specified in the agreement as there are several methods of making payment such as free product, flat fee, cost per view/per action, commission, etc. Terms of payment shall also be discussed as there are several terms such as in advance, deposit, bonus, upon delivery, etc. Nowadays there are a variety of methods available for making the payment such as Paytm, PayPal, Bank Transfer, Cash, etc.
    The agreement shall also mention a proper detail of durations on which the payment will be made to the influencer. E.g. 50% of the payment will be made on hiring, the rest 30% of the payment on the preview of the content, and the remaining 20% after the content is published successfully. It might differ as per the parties to contract and structure of the company. 
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Sample of an Influencer Agreement ex.5

Conclusion

Influencer Agreement is important for both advertisers and influencers because it gives a sense of security to both parties. When they agree on specified terms and conditions, it is a sustainable contract as there exist very less chances of a legal dispute arising at a later stage of the process.
Any legal dispute arising at a later stage leads to a future headache for the company and influencer. Do not forget that like most disputes, you can settle these kinds of disputes via Arbitration clause or agreement too.

It is advisable for both the parties to understand the importance of a good Influencer Agreement and appoint good legal counsel who can help them to arrive at mutual terms and avoid problems and losses in the future.

The legal aspects which have been mentioned in the article are an example of some essential and standard clauses which should be included in the influencer agreement. It also helps in building long-term relationships between advertisers and influencers.

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