Influencing Your Influencer: Getting Your Contract Right
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The use of influencers to promote products and services continues to grow as an advertising medium as brands move away from traditional mass marketing methods and attempt to enter the more targeted world of social media. As the popular social media platforms, such as Instagram, YouTube, Snapchat and Facebook, develop more sophisticated digital tools, this trend looks set to continue.
Recent legal developments in UAE and international headlines (think Logan Paul) have thrown influencer marketing into the spotlight. Until now, brands commonly entered into informal arrangements with influencers, often over email or WhatsApp messages. As both the influencer's fees and the regulation of the industry continue to increase, brands should be implementing contracts which limit both financial exposure and reputational risk.
Here we explore 10 key questions for brands to consider when engaging an influencer to promote their products or services:
1. How do you choose the right influencer?
Are you engaging a reputable influencer? Under UAE law, anyone conducting an activity which results in a profit is deemed to be operating a business (Federal Law No. (18) of 1993, the Commercial Transactions Law). Operating a business has legal consequences and liabilities, including the need to be licensed by the relevant authority. If an influencer earns money (and, potentially, in-kind services i.e. receiving free products or services rather than cash payments), they are conducting a business and must have a trade licence.
The National Media Council issued regulations in March 2018 requiring an additional licence for those who promote brands through social media platforms and other online methods. Various sanctions and penalties may be imposed on persons carrying out these activities without a licence. You should weigh up the potential risk to your brand if you engage an unlicensed influencer: what damage could you brand suffer by association with such an Influencer?
With Instagram, be sure to check whether your Influencer has real followers and not fake followers. Understanding the ratio of the number of followers to their engagement is a key indicator and can be benchmarked against Instagram average.
2. What do you want to achieve from the campaign?
Be clear about what you want to achieve from the campaign and ensure your contract accurately reflects the details of the assignment. For example, if a particular product must be used in the post (including the flavour, colour or model details), when the content must be posted, which social media platform, how long the post must remain live, and if specific wording or hashtags must (or must not) be used. Will you gift any products to the Influencer for use in the assignment? Do those products need to be used in a certain way or number of posts? Do you have a detailed brief to share with the influencer or will you give the influencer freedom to interpret some key points?
3. Is this a one-off promotion or an ongoing relationship?
The answer will probably depend on whether the Influencer is well known and what you are trying to achieve. An ongoing relationship is beneficial if the Influencer is seen to be an ambassador for your brand or product. It is more efficient and cost-effective to use a "master" contract to document the relationship with the Influencer and for each assignment to form a schedule to it each time a new assignment is agreed.
4. How will the influencer promote the brand?
There is more to influencer marketing than simply posting content on social media platforms. An influencer may write blog posts, record podcasts, speak at a conference or attend a party or event sponsored by the brand (and may post live content at it). Influencers also review products and services, offer giveaways or promotional discounts to followers and talk to media about the brand. The methods used, and their success, will depend on the influencer's following and the amount of influence they have over their followers.
5. How will you pay the influencer?
There are various ways you could pay the influencer:
- Upfront fees: you pay in advance for the influencer's posts, usually 50% up front and the remainder after the post has been made. Full upfront payment is likely to be more relevant where the Influencer is especially famous / influential and has the stronger negotiating position.
- Cost per engagement: the amount you pay the influencer depends on the success of the post i.e. the payment is linked to the level of engagement (e.g. likes or comments the post receives).
- Commission: the influencer receives a payment if a product is purchased because of the post.
- Barter: free products or gift cards.
- Per click payments: payments made when users click through to other pages using links placed by the Influencer.
- Invitations: an invite to an exclusive event is given in exchange for the influencer covering the event
6. Who will own the rights in the content posted by the influencer?
Unless you agree otherwise in your contract, the influencer will be the author of the content and the copyright owner. You won't be able to use this content for your own purposes (e.g. on your website or in advertising) without the Influencer's permission. The influencer would also have full control over what it does with that content: are there any restrictions you want to place on using that content? Are you willing to pay additional fees to be able to reproduce the posts on your website?
7. What restrictions should be placed on the influencer?
An influencer's actions, both on and offline, may impact your brand. Think about whether there is anything you want or need to prevent the influencer from doing or saying. For example, are there any competitors or other brands you would not want the influencer to be associated with? Are there any activities which would not be considered suitable or appropriate for your target audience? You may wish to extend these restrictions beyond the content posted for your product to any material published by the influencer.
8. Do you want to approve the content before it is posted?
This will depend to on the scope of the assignment and how much flexibility you are giving to the influencer. If there are strict rules around how something is to be presented or referred to in a post, you will want an approval process and the right to request changes.
9. What if things don't go to plan?
If things go wrong and you suffer damage, consider what action can you might take against the influencer. Do you have a good relationship with the influencer and it is easy to resolve any disputes or issues? If the assignment is not successful because it does not reach the level of engagement you had hoped, are you still required to pay the influencer? You should also consider the ways in which you can prevent or limit damage to your brand (e.g. by requiring the influencer to issue a correction or update on its posts to clarify any earlier position or delete all posts associated with your brand). How do you quantify substantial damage to your brand which would allow you to end your relationship with the Influencer?
10. Where is the influencer located?
The location of the influencer may impact the target audience (e.g. if they are focused on certain territories or languages). It may affect how offers or promotions are advertised or have an impact on timings e.g. the launch of new products or the release dates of films. Some countries also have specific legal requirements on promotion and advertising. For example, the Federal Trade Commission in the US requires specific disclosure of the nature of your relationship with the Influencer and that the Influencer is being paid (this is why you often see the "#ad" or "#sponsored" in posts from the US). On the legal side, their location, proof of address and passport copy of the Influencer is important when considering how you will enforce your contract if the need arises.