Updated: Oct 26, 2022
Influencer marketing has exploded the last few years. So too have the plethora of articles and videos about how to start and succeed as an social media influencer. Influencer marketing is a business and like any business, has its legalities. These are not discussed nearly as much as other topics. However, legal issues are just as important with influencer marketing as they are with everything else.
In this article, I hope to help shed light on one of the more important legal aspects of influencer marketing: the influencer contract. Find out what is it, why its important and the key terms that should grab your attention.
Here are the top six legal issues to be concerned with in an influencer agreement.
1. Scope of Work
The first priority will always be the scope of work. For the benefit of both sides, the contract should detail the work to be performed and its purpose. Is the influencer being hired for content creation? Collaboration? Brand ambassadorship? Attendance at an event and visibility? Participation in a larger advertising campaign? Companies should specify how their brand will be seen by the influencer’s audience. This can include granular details such as if the content needs to be uploaded with a specific hashtag or mention. This clear work description avoids scope creep for the influencer and ensures all parties are on the same page.
Influencer agreements these days are primarily about content creation. The contract should specify what the content is – whether it's a video, article, Tweet, blog post, live stream, photo shoot, etc. Often, it's several of these things. The contract should also specify when and where these discrete projects should be completed, uploaded, and/or shared, and whether the company has any control over the final product (e.g., rights over editing, approval, unposting). Brands may want to pre-approve content before its posted for the length of the contract or for a period of time until both parties are comfortable.
2. Copyright/Intellectual Property Rights
The contract should specify who owns what – the company owns the product or service, but who owns the content? Sometimes the influencer owns the content, and the company gets the rights to use it for a certain period of time. More often the company owns the content (as a “work for hire”), and the influencer gets the rights to use it as part of their portfolio. It will depend on the parties themselves and the nature of the project.
3. Employee or Independent Contractor
Misclassification of workers opens a huge liability door to companies. They can be on the hook for unpaid overtime, payroll taxes and penalties. There has been quite a bit of litigation during the last few years over whether a worker is classified as an “employee” vs. an “independent contractor.” Influencers should expect to be classified as independent contractors. From the influencer’s perspective this means you’ll pay more taxes on your wages because the brand is not sharing the tax burden as they do when they pay someone as an “employee.”
Influencers can provide a wide variety of services, some of which could run afoul of classification laws resulting in wage payment and labor law penalties in many states. While there's no bright line test, generally the more control exerted over the influencer, the higher the risk that paying them as an independent contractor might get a brand in trouble with the IRS or Department of Labor. For example, providing equipment, renting props, and securing a location for the influencer's video shoot, dictating what a Twitter post says verbatim, or retaining approval rights and/or editing the social media content before it goes live are all different ways that control can be exerted.
4. Access to Influencer Digital Accounts and Data
Brands that use influencers will also want to pay attention to key performance indicators (KPIs) – e.g., conversion rates, reach and awareness, referral traffic, audience growth, engagement, etc. Some brands want the influencer’s social media login information so that they can see what notifications are being generated by the content. Other access requirements include Google Analytics, social media analytics, screenshots, and anything else that can help measure campaign success. This makes sense, right? Brands are only going to pay you if you’re effective. Companies may want to consider contractual terms that grant them access to the influencer data so that these KPIs can be reviewed. It also might be wise to include the parties' obligations with respect to influencer marketing platforms (e.g., CreatorIQ, Mavrck, GRIN, Popular Pays, etc.). Influencers should work to segregate anything they want to be confidential and person from sites or computers to which Brands will have access. That often means using one set of devices for your influencer work and other devices for personal matters. If you care about your privacy, you should work to keep your personal stuff personal and your influencer stuff strictly business.
5. FTC Guidelines
The Federal Trade Commission (FTC) has a number of rules governing advertising messages to consumers. The FTC is concerned about endorsements that are made on behalf of a sponsoring advertiser. For example, an endorsement would be covered by the FTC rules if an advertiser – or someone working for an advertiser – pays you or gives you something of value to mention a product. If you receive free products or other perks with the expectation that you’ll promote or discuss the advertiser’s products in your blog, you’re covered. Influencers who are part of network marketing programs, where they sign up to receive free product samples in exchange for writing about them, also are covered.
What NOT To Do:
1st don’t forget to mention business relationships.
2nd but don’t obscure that disclosure.
3rd, don’t assume that people know about your relationships. (people you know who work for companies whose products you’re promoting)
What TO Do:
Make sure that you disclose everything
Only endorse things that you have worked with yourself
Engage exclusively with products and services that you can honestly recommend.
Check out the FTC Guidelines for Influencers
Influencers who do not pay special attention to the compensation terms may end up with buyers remorse for a bad contract. Timing and frequency of payments are key terms. When will the brand be paying or sending products to the influencer. Some brands choose to work with different currencies. Make sure that compensation will be paid in dollars, euros or whatever you can fairly evaluate from a value standpoint.
Get Legal Advice
Whether you’re just starting your influencer business or you’re a veteran, its wise to work with an attorney about all of the legalities for your business. Make sure you legal team reviews your contracts and helps you negotiate with brands. Setting expectations at the outset of the brand relationship is vitally important to success.