Whether you hate the term “influencer” or love it, we are deep in the era of online influencers as a method of digital advertising for companies. In fact, many small business owners serve in both roles, i.e. as the sponsor (engaging influencers to feature or talk about their product) and as the influencer (accepting engagements from other companies to feature or talk about that company’s products on their own platform).
As a lawyer, I’ve negotiated well over 1500+ contracts, ranging from CDA’s and IP licensing to manufacturing and sales contracts… And for some reason, influencer contracts are by far one of my favorite types. So let’s dive in to some of the most important legal terms to include in influencer contracts and the associated legal compliance considerations.
Disclaimer: Start Up Heart Up, LLC is not a law firm or a substitute for an attorney. We cannot provide any kind of advice, opinion, or recommendation about possible legal rights, remedies, defenses, selection of forms, or strategies. This publication is designed for general information purposes and does not constitute legal advice. See your attorney about your specific situation.
What’s the Why?
For any good influencer agreement, there should be a clear mutual benefit to for both parties involved.
For the Company, one benefit is simply the resulting exposure of your Brand and Products to potentially new customers. Another benefit is what’s often called Social Proof, i.e.the “influence” of the influencer on their audience to actually trust and purchase the featured products.
For the Influencer, the most obvious benefit is payment and/or free product samples. There is typically also an increased exposure of your brand due to the company likely sharing/re-sharing and tagging your profile as well. Another benefit would be the supposed credibility associated with working with companies as a “paid” or gifted influencer.
Keep in mind, regardless of which side you are on, these relationships should be viewed as potentially long-term or ongoing. If the sponsor fits the influencer, and the influencer fits the sponsor, there could be many more collab opportunities down the road. So as you negotiate your contracts, keep in mind the important of being respectful, fair, and good to work with.
Key Terms & Conditions:
Length/ Duration of the Contract and/or the associated SOW (Statements of Work)
How long will the contract last? 1 year? Is there auto-renewal?
List & Timeline of Specific Deliverables
This section is critical for managing expectations. How many posts, what type of post, stagnant or video, etc.
When will each post be expected to release? How long must it stay visible on the influencer’s platform?
Is there a limited # of times per week the influencer should post about the product(s)?
Be extremely clear in this section!
Ownership / Permission
The content created under influencer contracts is typically copyrightable, e.g. images, videos, text, etc. Make it explicit in the contract who owns the intellectual property (“IP”) in the resulting deliverables.
If the influencer owns her deliverables, what permission does the brand have for using those deliverables?
Sometimes called “usage rights”!
How long can the brand post / repost the deliverables? (weeks, months, indefinitely?)
How many times can the brand post, etc.
Approval of Content
Often the brand will want to have some oversight over the influencer’s deliverable before it is published.
This helps the brand maintain its image, its values, and ensure the post (& its accompanying text) is appropriate and in line with the contract..
Legal Compliance Requirements
The influencer contract should address FTC requirements, specifically the “simple & clear” disclosure of the influencer’s material relationship to the brand.
Examples include using the terms “Ad” “Advertisement” “Sponsored”, etc. in every post that endorses a brand and/or its products.
This is required even if the product was free (and there was no other payment)
Payment Terms
If payment is involved, what are the logistics?
Flat Fee v. Hourly
Per post, etc.
Additional fee for transfer of IP ownership, longer usage rights, or exclusivity.
Cancelation / Termination
Every contract, including influencer contracts, should include a section on how to cancel or terminate the agreement.
This is important, because although these relationships typically start out happy, sometimes one party needs to get out of it.
Termination could be immediate upon notice, or 30 days’ notice, etc.
Also be sure to include what happens after termination, i.e. the influencer is paid for work completed, certain materials made be required to be returned, etc.
Exclusivity / Non-Compete
Some brands will attempt to require influencers to only feature their product in a certain category, for example haircare. In my opinion, this is overly restrictive, but a deal is a deal!
Influencers, be sure you read and understand whether the brand is asking for non-compete. If so, know that you may certainly charge extra!
Tips for Successful Negotiation (& Long-term Collab Relationships!)
Influencers, remember:
Non-financial value-adds are your bargaining chips!
What makes you, the person, unique?
Vanity metrics are one measure, but what is your engagement rate?
It's OK to accept free product (but limit your offer as well)!
Brands, remember:
The more you are willing to pay / offer as compensation, the more likely you will be able to have a direct say in the deliverables and timeline, and usage rights.
Offering an initial 2 week trial period is useful to help the influencer identify whether the product is a good fit (and if they can provide a positive review).
QUESTIONS?
Email hello!@startupheartup.com with your tax or other legal questions. I am constantly building out this page with resources to make the process simpler for small biz owners. Your questions are valid and valuable to the Start Up Heart Up community!