Key Considerations for Social Influencer Agreements

Advertising through social media influencers is growing in popularity; Many in the marketing industry believe it to be one of the fastest growing types of advertising. Companies and brands are tapping into the influence and reach which certain individuals' have, by collaborating with them through their social media platforms, such as Instagram and Facebook, to advertise their brands and products. It is, therefore, no surprise that the advertising regulators have started to take more and more interest in this area of advertising. In its five year strategy the Advertising Standards Agency (ASA) stated its intention to crack down on non-compliance with the rules that it enforces in social media influencers’ posts and, in January 2019, the Competition and Markets Authority (CMA) issued new guidance for social media campaigns along with an undertaking from several high profile social media influencers to change the way that they post content linked to a company or brand. This should act as a timely reminder for companies, advertisers and social media influencers alike of the need to be aware of the obligations imposed on them and ensure that they are compliant. In this post, we set out the key considerations for companies when entering into arrangements with a social media influencer.

The rise of the influencer

Regulators and consumers face an ever-changing social media landscape: new platforms emerge; novel communication mediums take hold (such as Instagram 'stories' and Snapchat). Consequently, public use of these platforms is shifting and users are increasingly following public figures that curate profiles through both social media and wider business activities. From Italian fashion influencer, Chiara Ferragni (15.8 million Instagram followers), or the YouTube sensation Zoella (12 million subscribers), their followings and reach are vast.

'Influencer marketing' has emerged from this phenomenon, with the key driver being the trust the public places in such figures. Followers are an engaged and participatory audience - a ready-made, receptive group which companies are keen to target by having influencers endorse or model their brands, products and services, whether implicitly or explicitly. Paid-for content is now visible across all platforms, from sponsored tweets, Instagram and YouTube posts, or media of all kinds disseminated on Facebook giving companies the opportunity to tap into the influence these famous individuals have on their followers.

Our key considerations for arrangements with a social media influencer

1. What services will the influencer provide? Don’t leave it to chance; ensure the agreement is clear as to what services need to be performed by the influencer. Otherwise, companies may not receive what they bargained for and that could result in costly disputes. For example, is the company expecting three posts on Instagram and/or Facebook a month for a year-long period? What product(s) will be showcased and how prominently will they feature in the post? Will the influencer be expected to attend events and, if so, how many and how long will they need to be there? Will the company want to share the influencer’s posts or want the influencer to link to the company’s website?
2. Legal compliance: We go into further detail below, but it is important that the influencer's posts do not fall foul of the CAP Code or relevant consumer laws to avoid both ASA and/or CMA sanction and negative publicity. This is a particular concern for companies, as they (or their brands) may bear the brunt of any public 'backlash'. The agreement should therefore explicitly require the individual(s) to acknowledge and comply with the CAP Code (and all other relevant legislation), while setting out methods for achieving compliance. As a minimum, written guidance should be included that is at least in line with the CMA guidance (see further below) but any guidance can go further by specifying language to be used when promoting the product.
3. Exclusivity: A promotion by an influencer of a company’s brands or products may lose its effect if the influencer goes on to promote a competitor's brand or products not long after. Although, this should be balanced against the beneficial impact of the influencer maintaining an active and high profile, posting frequently and presenting a more 'authentic' image by engaging with a range of brands and products. The agreement could explicitly prevent the influencer from providing promotional services for any other similar products and/or to specified direct competitors. Similarly, event appearances could be limited to those approved by the company. Of course any exclusivity provisions will have to be carefully considered and drafted to ensure they are compliant with relevant laws.
4. Brand reputation: By handing a degree of control to the influencer, influencer marketing carries the inherent risk that a company’s brands or products will be exposed in new and unexpected ways. For example, if the influencer were to promote other products that run contrary to the ethics of the brand, the product or brand may become tarnished by association. To mitigate this risk, both broad and narrow obligations could be imposed on the influencer. Broad obligations might require the influencer not do anything that could damage the brand or product and that all posts are 'socially responsible', with this term carefully defined. Narrow obligations might require that certain brand or product terminology is used and that posts do not involve certain other products or lifestyles (perhaps, for example, the promotion of underage drinking or the use of illicit substances). Editorial control may be useful to police these obligations. The agreement should make clear whether the company has the power to review all posts, simply offer high-level guidance and/or demand that posts are taken-down.
5. Scope and ownership of intellectual property (IP): The influencers’ posts will involve the creation and use of a great deal of IP, including the post itself, accompanying images or words and the influencers’ image and name. The agreement should deal with who owns these rights (normally the influencer) and their wider use. If the company will not own the rights, they will want to ensure that it is granted a suitably extensive licence to use the posts for its own purposes. This might involve allowing the company to re-use posts through its own social media accounts and on any platform of its choice. The agreement could give explicit permission for the use of images or names in wider marketing campaigns. Without such permissions, the company risks being severely restricted in how it can use posts and not gaining the full benefit of posts and the relationship with the influencer.
6. Term and termination: The agreement should be clear about the start and end date; will the agreement cover a one-off post or will it cover a longer-term relationship? The company will want robust termination rights for reputational damage, failure to comply with applicable legislation, breach of the terms of the agreement and so on. The company should consider what results it is looking for and what constitutes success for this partnership? Companies may want to have a termination right if the influencer does not hit these success measures. Finally, the agreement should cover what will happen to the IP and any posts on termination or expiry; for example, will there by an obligation to remove previous posts?
7. Payment Terms: What will the payment structure look like; a payment per post, a set amount per month or another structure based on success of the post? Will the company pay expenses for travel and accommodation and, if so, will it want any control or oversight over the amounts spent on this?

Making clear that adverts are adverts

Given the reach and potential power of these individuals, regulators are taking note. Influencers’ published content falls within the remit of the ASA, the Committee of Advertising Practice (CAP) and/or the CMA. Strict rules are aimed at ensuring transparent advertising practices and consumer protection. However, a recent survey of the UK public by Prizeology found that 71 per cent of those interviewed were unaware that influencers are subject to regulation and 61 per cent believed that brands are not transparent about their use of influencer marketing.

The apparent lack of public awareness worries regulators. The ASA's 2019-2023 strategy is explicit in wanting to address the problem. 'Too many involved in social influencer advertising', it says, 'don’t know or don’t care about playing by the rules, in particular by making it clear when content is advertising'. The regulators have now issued joint guidance, 'An Influencer’s Guide to making clear that ads are ads', which was followed up with further guidance issued by the CMA on 23 January 2019. These documents set out how the rules apply to influencers’ marketing activities and describe 'best practice'. For more information on the CMA’s announcement and associated guidance, see our recent post.

Non-compliance resulting in ASA action carries the risk of negative publicity, reputational damage and sanctions. There are also possible criminal penalties for breaches of applicable consumer protection laws (enforced by the CMA), making it imperative that your arrangements with social media influencers are properly managed.

How can Burges Salmon help?

For further information, please contact Helen Scott-Lawler or Tim Deacon.

This article is one in a series which address the key issues and important considerations for businesses when advertising which we are releasing following the ASA’s release of a five year strategy which set out a new focus on reinforcing regulations around online advertising.