How Should In-House Counsel Navigate Influencer Marketing Agreements?

Includes Six Steps to Manage Influencer Agreements

Influencer marketing is now a $21.1 billion industry, according to Influencer Marketing Hub’s 2023 Benchmark Report. Whether you’re new to the world of influencer marketing agreements or your company has been contracting with influencers to market a product or a service for years, you might be feeling overwhelmed – contracting with influencers introduces risk, and regulations surrounding influencer marketing are only likely to continue to grow more complex.

We recently offered an informative session designed to help in-house counsel and legal leaders navigate the ever-changing world of influencer agreements. This webinar was designed to teach considerations for protecting your brand and how to better foster mutually beneficial relationships with influencers that will make you a stronger partner to company leadership.

Joining us in the event hosted by legal industry veteran Zach Abramowitz were:

• Leroy Pelicci, Asst. General Counsel: IP & Influencer Marketing, L'Oreal
• Marnita Robertson, Commercial Contracts Lawyer, Axiom
• Priscilya Hawkes, Commercial Contracts Lawyer, Axiom

What did the webinar reveal? Four key topics were covered in this session: 

1. Understanding the influencer marketing landscape: The latest trends, popular platforms, and the significance of influencer partnerships for brand promotion.
2. Crucial considerations: How the updated FTC guidelines and disclosure requirements could impact the ways in which legal teams work with influencers.
3. Managing agreements: Practical advice and quick tips for better-managing influencer agreements.
4.  Risk mitigation strategies: Strategies for mitigating risks associated with influencer partnerships, including monitoring influencer activities, implementing content approval processes, and setting clear expectations. 
   

Watch the video replay or continue reading below for a summary of the discussion.

In this dynamic digital marketing era, a paradigm shift has occurred with the advent of influencer marketing. This cutting-edge promotional strategy harnesses the clout of distinguished influencers who have built a substantial social media following. These influencers carry a unique persuasive power – the capability to influence their followers' buying decisions due to their authority, knowledge, or their bond with their audience. Consequently, businesses are progressively adapting to this trend, forging affiliations with influencers to advertise their offerings.

But it's not all smooth sailing. To navigate the legal side of these collaborations, you need to know the ins and outs of influencer agreements and the potential pitfalls. It's uncharted territory for many businesses and their legal teams, but one they should consider incorporating. A whopping 92% of consumers trust recommendations from their friends, family, and influencers over traditional celebrities. 

This shift means influencer marketing delivers a jaw-dropping 11 times higher return on investment (ROI) than standard digital campaigns. With 74% of people utilizing social media for product discovery and purchasing decisions, the consumer behavior paradigm has significantly evolved, ushering in fresh opportunities for businesses and individuals. Brands are capitalizing on the persuasive power of influencers to engage their target audience, fostering a mutually beneficial relationship. However, this relationship demands meticulous management, especially concerning contracts and compliance. 

What is influencer marketing and why is it necessary for in-house legal teams to be involved?

Influencer agreements are legal contracts that outline the terms and conditions of the partnership between the brand and the influencer. These agreements cover a wide range of issues, including the scope of the influencer's promotional activities, compensation, intellectual property rights, and more. Given the potential legal and reputational risks involved, it is essential for businesses to carefully negotiate these agreements to ensure they are fair and beneficial for both parties. This requires a thorough understanding of the unique aspects of influencer marketing, as well as the ability to anticipate potential challenges and mitigate risks.

Influencer marketing is not just about promoting products; it's about creating win-win scenarios for both the influencer and the business. For the influencer, it's an opportunity to monetize their talent and following. They can continue doing what they love and get paid for it. For businesses, it's an opportunity to reach a wider audience and increase their bottom line. The flexibility of influencer marketing allows for a variety of deals and relationships, from short-term collaborations to long-term partnerships. This flexibility is particularly beneficial for businesses looking to grow and get the most bang for their marketing bucks.

Businesses must ensure that the influencers' promotional activities comply with applicable laws and regulations, such as advertising standards and disclosure requirements. Additionally, businesses must carefully manage their relationships with influencers to ensure the partnership aligns with the companies' values and image. This can be particularly challenging given the public nature of influencer marketing, where any missteps can quickly become highly visible and potentially damaging to a brand's reputation. 

What are the crucial considerations legal leaders need to consider?

1. Copyright protection

As with any new trend, there are unique and evolving challenges and considerations. Today, almost 62% of marketers work with influencers to generate content. This content is quick, cost-effective, authentic, relatable, diverse, and consistently performs better than studio-shot creative. However, the rise of artificial intelligence (AI) in content creation presents new challenges, particularly from a copyright perspective. There are questions about who owns the content created by AI and whether it qualifies for copyright protection. These issues need to be carefully considered and addressed in influencer agreements.

2. Types of influencers

The term "influencer" is often associated with A-list celebrities with millions of followers. Businesses are increasingly looking to form long-term collaborative partnerships with influencers. However, the spectrum of influencers is much broader: niche and micro-influencers, who may have a smaller but more targeted following, are becoming increasingly important in influencer marketing. Their authenticity and connection to the brand can drive significant results.

3.    Employee advocates

Influencer marketing is not limited to external individuals. Employees can also serve as influencers, promoting the brand for which they work. This approach can be particularly effective as employees have a deep understanding of the brand and can communicate its values effectively. The variety of influencer agreements, from contractors to full-time employees, requires flexibility from businesses.

4.    FTC guidelines

The Federal Trade Commission’s (FTC) guidelines and disclosure requirements are a critical aspect of influencer agreements. While it’s not necessary to be an FTC guru to draft them, it’s imperative to lean on the experts to ensure necessary clauses are included. The FTC's mission is to protect consumers from deceptive trade practices, and because of the viral nature of influencers, their promotions can have a significant impact. This means compliance with FTC guidelines is not just important, it’s mandatory. Failure to comply can result in penalties and damage to the brand's reputation.

The FTC's influencer guidelines have evolved over time. Initially, a simple hashtag indicating an ad was considered sufficient disclosure, but now it requires more explicit disclosure to ensure that consumers understand when they are viewing paid advertisements. Ensuring compliance with FTC guidelines is a shared responsibility between the brand and the influencer. The legal team can provide influencers with guidelines and checklists to help them comply with FTC requirements, which ensures influencers stick to the script and keep the brand's image sparkling clean.

Best practices for managing influencer agreements:

Managing influencer agreements can be a complex task, especially for brands that work with many influencers. 

1.    Streamline contracts and monitor influencers’ activities

Start with a standard contract that includes key terms such as usage rights and a no-take-down clause. This can reduce the need for negotiation and streamline the process. Brands should also monitor the influencers they work with to ensure compliance with FTC guidelines and the terms of the agreement. This proactive approach can help brands manage risk and protect their reputation in the influencer marketing space.

2.    Consider incorporating technology to store contracts

Brands need to ensure the contracts are comprehensive, covering all necessary details and requirements. This is where technology and tools come into play, like using a contract management system that allows brands to manage their contracts efficiently. Brands can fill out an intake form, which then generates an agreement for legal review. Once the agreement is fully executed, it’s stored in the system, which ensures that all agreements are properly managed and stored, reducing the risk of non-compliance.

3.    Find the right agency(ies)

Work with the right agencies for your business and consider that working with fewer agencies might be more beneficial. This is not only cost-effective but also ensures better compliance. By limiting the number of agencies, brands can more easily monitor that their influencers are following the same rules and regulations.

4.    Ensure a proper vetting process is in place

A thorough vetting process for influencers is vital so legal leaders know who they are doing business with and can audit their performance during the term of the engagement. The focus should be on the relationship from the start, with identifying and vetting the influencer, the contractual piece, and ensuring performance once the contract is in play.

5.    Remember influencer agreements should differ from endorsement agreements

Endorsements often involve professionals making claims about a product based on their qualifications. In contrast, influencer agreements are more about the influencer's personal opinion and demonstration of the product. Furthermore, influencers often create the content, which introduces a new set of potential legal issues

6.    Incorporate flexible talent providers

Legal leaders also need to consider the role of flexible talent providers like Axiom. These providers offer a valuable resource, particularly in managing the high volume of influencer agreements. They provide skilled and experienced attorneys who can handle these agreements, taking the load off the in-house legal team, and allowing them to focus on other important aspects of their role. This ensures your team is working on other critical matters better suited to their skills, while also reducing burnout.

In-house legal leaders can help set their businesses up for success

There’s no doubt influencer marketing is a high-powered tool in today's dynamic business environment. It offers enormous potential for brands seeking to engage their target audience in a meaningful way. However, the complexities of this landscape, including the legal aspects of partnerships and contracts, require thoughtful management and a keen understanding.

While the field continues to evolve, businesses that adapt, strategize, and carefully negotiate their influencer agreements will be well-placed to reap the benefits. This involves a comprehensive approach, from identifying suitable influencers to ensuring compliance, managing contracts efficiently, and employing resources such as Axiom.

GCs can staff their legal departments with a core team of generalists and support them with a virtual bench of flexible legal talent. By using a layer of flexible legal talent, GCs can leverage this bench of “always-on” lawyers, who combine legal experience with knowledge of in-house issues, while being far more cost-efficient and consistently available for ad-hoc needs. 

Influencer marketing, though intricate, should not be viewed as a labyrinth of challenges, but rather a platform laden with opportunities. By adopting an optimistic and technical mindset, brands can build successful relationships with influencers, create engaging content, and safeguard their reputation simultaneously. The key lies in effective planning and continual process evaluation to maximize influencer marketing benefits while minimizing associated risks. With clear, legally sound contracts and a robust verification process, brands can harness the power of influencer collaborations, boosting their marketing efforts and reaching their target audience in an authentic, impactful way.

💡 Better navigate the intricacies of influencer marketing agreements.