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Are you an Influencer: A look at the contractual practices in influencer marketing

What Is Influencer Marketing

As social media platforms expand and evolve, the advertising industry has had to change and adapt to continue to reach more consumers. The number of social media users has registered a sustained growth over the years with approximately two billion internet users currently using social networks. With social media growing in influence and advertising agencies allocating more of their media budgets to spending on social media advertising, the advertising industry is in search of effective strategies to get the most return on investment. One of these strategies in recent years has been influencer marketing, which is a form of marketing in which the focus is placed on specific individuals rather than a target market as a whole. It involves identifying the individuals that have influence over potential buyers, and orienting an advertiser’s marketing activities around these influencers.

Influencer marketing is essentially verbal advertising from a person who undertakes to conduct certain business or provide certain services in accordance with the terms of the contract. It is an endorsement which consumers are much more likely to positively perceive and react to, similarly to a message that comes from a trusted friend or persona, compared to a sponsored post that comes from a company. This marketing technique has recently taken off and become very popular in the advertising community.

The Influencer Contract

This spike in popularity of influencer marketing poses potential ethical and legal implications which this article seeks to address. Influencers need to go through a negotiation process whenever they are partnering with an advertiser. During this process, a contract is formed which ought to dictate the obligations of both parties. Some of the pertinent questions to be considered by both advertisers and influencers include:

  1. “What does the process of partnering with an influencer look like?”
  2. “What form of monetary exchange will the influencer take?”
  3. “Do you make sure the influencer discloses that they have received compensation for their posts/endorsements?

What Are the Terms of an Influencer Contract?

It is these questions that alongside form the basis of an influencer contract together with the standard general contractual clauses. In formulating these kinds of contract, some of the salient terms that should be included are:

  1. Recitals; which basically identify the parties to the contract and the duration it is intended to operate.
  2. Scope of Engagement: this is the core of any contract and it is herein that the following are considered.
  3. Authenticity: In the social interaction framework that the advertising agency seeks to engage the influencer, it is core to maintain the influencer’s personal brand.
  4. Creative Control: When deciding on who would make a good influencer for your brand, many factors must be considered, most importantly whether the influencer’s voice and image matches up with the advertiser’s brand.

By partnering with an influencer, they become an extension of the brand’s voice, which could lead to adverse consequences to the influencer’s reputation if something goes wrong with the brand. To minimize this risk, some advertising agencies set up approval processes to vet preferred influencers who will jell well with the brand.

  1. Compensation: For the advertiser, influencers are treated as creative entities whose funding ordinarily comes from the media budget. The terms of compensation for the influencer must therefore be well defined by the brand.
  2. Disclosure: the monetization of social media is a very controversial matter which raises issues around disclosure. The boundaries between an influencer’s genuine endorsement and those of paid up promotion need to be definitive. However, this will depend on a case to case basis depending on the nature of the services and the kind of business model among others.
  3. Intellectual property. Promotional advertising includes a lot of content and both parties need to be very clear on the intellectual property protections required to be obtained for such content in favor of either party.
  4. Liability. During the term of the contract with the influencer, the behavior of an influencer promoting services for the advertiser is very crucial. It is important to clarify that the influencer must not act in a manner that disparages the image of the brand.
  5. General clauses: these encompass the terms set out below
  6. Confidentiality: also non-disclosure clauses, prevent the signing party from divulging sensitive information
  7. Exclusivity: also non-compete provisions, prevent one party from soliciting offers or negotiating with a third party within a specific period
  8. Indemnity: these are undertakings that set out to protect one party from liability if a third-party or third entity is harmed in any way.
  9. Dispute resolution and;
  10. Grounds of termination.

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