Influencer marketing – contractual considerations for influencer agreements
In our increasingly digital world, the use of influencer marketing has risen rapidly as a fundamental channel for retailers to communicate, connect with and advertise… Read more
In our increasingly digital world, the use of influencer marketing has risen rapidly as a fundamental channel for retailers to communicate, connect with and advertise to their consumers. The growth in reliance on digital channels runs in tandem with consumers increasingly using social media platforms for making purchases, product research and gaining inspiration to shape their spending habits. As a new era of such “social shopping” commences, so comes more regulatory interest. Both the CMA and the ASA have recently increased scrutiny on the misuse of influencer marketing in misleading consumers. Consequently, it is fundamental now, more than ever, for retailers to think about how best to govern relationships with their influencers. We have already covered how retailers can protect their brand image and other IP considerations for social media use. This second part of our two-part series has summarised some of the factors retailers should consider when drafting or negotiating contracts with social media influencers. A simple and clear agreement can have a large impact in making a brand look “accessible” and “comfortable” to potential business partners.
When drafting influencer agreements retailers may also want to think about considerations for celebrity endorsement agreements, covered in our recent article.
The CMA’s recent social media endorsement study guidance (the “CMA Guidance”) confirms that if a retailer, pays, gifts or loans products to an influencer and has had input in the influencer content created in relation to such product(s) or even approval rights to what is in the content before its publication, the content is categorised as an “advert” and it must be made clear on publication that such a post is “promoted content”. The CMA Guidance also specifically includes in this category the use in influencer content of discount codes, competitions, giveaways or references to promoting won products.
Retailers should consider placing contractual obligations on influencers to clearly disclose such relationship with them in any influencer content posted. Whilst there is no specific legal guidance on appropriate disclosures to use, the CMA Guidance takes the view that “Advertisement Feature” or “Advertisement Promotion” are useful descriptions and/or hashtags in influencer content. The CMA’s Guidance also notes that other disclosures such as #Ad, #Advert, and using the ‘Paid Partnership’ tool on Instagram in addition to these hashtags, also relays the retailer/influencer relationship to consumers simply and effectively.
Retailers may also consider it appropriate to specifically state in their contracts with influencers which behaviours/actions are not suitable. For example the CMA Guidance states that #spon and/or #sponsored are riskier approaches to disclosing brand relationships to consumers and do not necessarily go far enough to disclose the relationship between an influencer and a retailer. In addition, all such disclosures should be clear and prominent enough for consumers to see when they are viewing influencer posts. This means that the disclosure should not be hidden in hyperlinks or at the bottom of textboxes.
It may be prudent for retailers in the UK to also include a more general obligation for influencers to comply with the CAP Code and to avoid breaching any other relevant advertising laws and regulations, given that influencer content falls within the very wide scope of the investigatory powers of the ASA and the CAP code. Retailers should consider potentially drafting this as a warranty (a contractual promise, breach of which gives the other party the right to claim for damages for breach of contract) to strengthen the remedy available to them if this obligation is ever breached by influencers.
International retailers should bear in mind that advertising rules vary across the world, wherever content is accessible. Therefore retailers should consider inserting a contractual obligation that the influencer is compliant with the appropriate advertising disclosures in the relevant jurisdiction of where the content is produced.
Exclusivity clauses are a fine balancing act between commercial pressure and competition law considerations. Whilst it is appropriate to consider if a chosen influencer is engaged or affiliated with similar brands and/or posting about similar products to that of the retailer, it is fundamental to be aware of the potential anti-competitive nature of aggressive non-compete clauses. Consider requesting full, upfront (and continuous) disclosure of an influencer’s current and future commitments with competitor brands. This enables retailers to assess on a continuous basis, whether influencers are an appropriate match for their own brand.
Taking this one step further, it might be appropriate to place an obligation on the influencer to confirm that carrying out its responsibilities with competitor brands does not (and will not) cause it to be in breach of its agreement with the retailer. Again, it may be appropriate to consider obtaining a warranty from the influencer if retailers are particularly concerned with an influencer’s relationship with other brands and therefore a strengthened commitment from the influencer is necessary.
It is also possible to restrict the influencer’s engagement with competing brands and/or for other similar products or services during a certain period of time, although it would be crucial to obtain advice from a competition law expert on a suitable length of time to ensure such a non-compete clause complies with competition law.
Right to take down content
Reputational management is still one of the key considerations for retailers producing advertorial content and this is no different on social media channels. Given the fast-paced nature of the digital world, retailers may want to set out a rapid route to handle or remedy any influencer content posted that does not compliment the brand image or worse, tarnishes a retailer’s hard-earned reputation.
Dependent on the retailer’s bargaining strength, it may be suitable to set out an exhaustive or non-exhaustive list of the type of content considered inappropriate to be posted and include a general, all-encompassing obligation that the influencer must not do anything to bring the retailer’s brand into disrepute. If retailers are looking for more control in this area, it is possible to ensure that what constitutes “inappropriate” content remains a decision in the sole discretion of the retailer. If your standards of appropriateness are breached, one contractual remedy for the retailer might be that the influencer must remove the social media post within a certain period of time (hours) of a formal request received from the retailer to do so. Alternatively, or in addition, retailers may consider whether to create a knock-on effect of such a breach, on fees paid or payable under the contract.
Whilst it is likely that you will look to include terms to govern the confidentiality of your arrangements with the influencer, where the campaign is under embargo, or you are launching a brand new product or service, you will also want to ensure confidential information provided by you during the course of the engagement is kept under wraps until a certain date (e.g. campaign launch date).
As with any other commercial agreement, retailers should provide clarity on the deliverables expected from the influencer. Some key questions that should be provided for in the influencer contract are as follows:
- What collateral is the influencer creating?
- Which platform(s) should these be uploaded on?
If these are, for example, Instagram posts:
- how many posts are required from the influencer?
- Is there a particular time at which the posts should be published (e.g. should the post coincide with a launch date for a particular product?)
- Are there certain hashtags that the influencer should use when posting content? This may tie together with the regulatory considerations discussed above or may be specific to certain approved hashtags used for a product campaign to maximise the retailer’s exposure.
- If there is a long list of services and/or deliverables expected from the influencer, it may be worth setting out the details in a schedule to the agreement to provide more clarity.
Intellectual property and ownership of content
One of the key considerations for retailers is ownership of the content produced.
As discussed in our previous blog, typically, the content will be posted on the influencer’s own social media account therefore the default position is that the influencer owns the intellectual property rights in the content produced. Retailers may consider drafting the contract in one of two ways to ensure a right to use the content for its own purposes:
- the influencer transfers ownership of their intellectual property rights in the content produced to the retailer; or
- the influencer provides the retailer with certain licensing rights to use the content produced for its own purposes.
Furthermore, where the retailer is only licensed the right to use the intellectual property in the content, retailers should consider the wider purposes for which they may want to use the content produced and ensure the contract provides for this. For example, a licence may not cover the ability for a retailer to use the content for an international brand campaign or even allow for the content to be re-posted via the retailer’s own social media page if the contract states the licence to use the content is only for the retailer’s “internal business purposes”.
Retailers should bear these points in mind when drafting and entering into influencer agreements to ensure any key risks are adequately covered. Ensuring both parties are clear about their contractual rights and obligations can make a big difference in creating an enjoyable working relationship with influencers and a successful influencer marketing campaign.
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Roshiny Panchalingam is a commercial technology associate
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