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Influencer marketing and agreements: What you need to know

Malcolm Campbell, ||
Co-authored by Michael Kinsella

Digital marketing is reaching millions and effectively targeting audiences. This has resulted in the rise of the ambiguous entity known as ‘The Influencer’ – an individual who has a large social media following. They are generally regarded as an expert or trusted authority in niche areas. Influencers can operate across major platforms including Instagram, YouTube and TikTok. They are an effective marketing tool that penetrates global audiences. However, when operating in NSW it is important to remember the legal and regulatory framework that shapes influencer marketing. In this blog post, we outline what influencer marketing is, common issues that arise when engaging their services and what to include in an influencer agreement. 

Influencer Marketing

Influencer marketing leverages a public personalities’ media following, reach and credibility to promote a brand or product. Influencers can be athletes, celebrities or private individuals with large social media followings. Some of the most famous marketing campaigns of the 21st century have been achieved by way of influencer marketing. Think Nike and Michael Jordan, Tidal and Jay Z, Coke and Taylor Swift! Influencer marketing is an effective way of segmenting one’s audience and lending credibility to a brand. Yet, the easy and inexpensive nature by which an influencer-campaign can be rolled out discounts the necessary legal considerations all businesses must understand.

Disclosure of Influencer Marketing

Whilst self-regulation is the preferred model for marketing and media communications, the Australian Association of National Advertisers (AANA) implements a cross-platform and media neutral Code of Ethics (the Code) by which national advertisements must comply. Section 2.7 of the Code is particularly relevant to influencer marketing content. It states that any advertisement or marketing material must be clearly distinguishable as such to the relevant audience. Breaches of the Code are reported to Ad Standards which investigates and may request the promotions removal.

The Code applies when the advertiser presents a reasonable degree of control over the promotion and the content itself is clearly made to promote a product or service. Whilst explicit indication of the sponsorship is best to avoid claims of misrepresentation, the Best Practices Guideline by the AANA suggests that where it is clear to the audience that a promotion is commercial in nature, no further disclosure is needed. The commercial nature of a promotion may be determined by analysing the contents or context, whether certain logos are championed or how audiences are directed to engage with the post.

Moreover, payment does not exclusively make the code apply – however, there must be some form of exchanging consideration. This may mean that a company gives a product to an influencer in exchange for a post. In this case, despite the lack of monetary exchange, the code applies equally to all parties.

The Advertising Standards Board recently considered these issues in the case of Eco Tan (0360/17). Eco Tan engaged influencer Kat Risteska to promote toiletries on Instagram. The corresponding promotion was posted, yet, it did not explicitly say it was an advertisement – the complainant said that this post was a breach of section 2.7. However, the Board found that as the post was sufficiently commercial in nature, with the product being in frame and Ms. Risteska directing her audience to the Eco Tan brand. As such, it would be unnecessary to put an explicit disclaimer. This demonstrates the ‘commercial nature’ that must be portrayed for an effective and legal influencer campaign.

Influencer Agreements

An influencer agreement is a legal document that sets out the rights, obligations and scope of work contracted between a brand and an influencer. The agreement ensures that all parties know what work is expected of them and facilitates effective dispute resolution in contractual issues. Key points for inclusion are:

  • Confidentiality and Exclusivity – Private information may be shared between parties contracting, including content interaction analytics and product designs. Therefore, a confidentiality clause would ensure that private information cannot be leveraged against other parties. Additionally, a company may require an influencer to stop all other promotions for the course of the campaign – too many competing promotions can significantly detract from the efficacy of the campaign. An exclusivity clause would prevent an influencer from promoting product rivals and maintain the validity of the campaign itself.
  • Parties – All parties should be set out with full names and addresses listed.
  • Commencement and Termination – The term of the campaign should be identified clearly; with the start and end date of the influencer’s campaign listed. This will protect all involved parties and promote clarity in the obligations of the agreement.
  • Services and Deliverables – It is important to specify what services are expected from the influencer and what is expected at the end of the campaign itself (deliverables). Such specifications could include certain types of posts or engaging with certain hashtags in order to quantifiably indicate that the service has been complete. Relevant dates and times should be communicated for when the service is expected.
  • Liability – The agreement should set out the extent to which parties are liable to each other. In this situation, it may be advantageous to include an indemnity whereby the influencer would agree to indemnify the brand for losses incurred from a breach of contract – including misleading content or copyright infringement. This encourages transparency in situations where there may be a contractual dispute.
  • Choice of Law / Jurisdiction – These clauses would come into effect in cases where the company and influencer are operating in different jurisdictions. The choice of law clause would specify which jurisdiction or laws would underpin the contract. Thus, in case of a dispute, each party knows which legal grounds to argue on. This, again, aids in the efficiency of dispute resolution.
  • Legal Obligations – Whilst this would be determined on a case-by-case basis, it is important to outline the legal obligations of both parties. Typically, for the brand, the obligation is payment upon completion of the service. However, for the influencer, obligations could include the disclosure of promotional material under the AANA.

Many of the above clauses ensure that both parties understand their obligations and encourages consistency in interpreting the agreement. It is important to consult a legal professional, as many clauses may be updated or added on a case-by-case basis.

Ultimately, influencer marketing is becoming a prominent source of audience aggregation and incurs certain legal obligations on both the promotional brand, or entity, and the influencer themselves. When engaging an influencer, it is important to highlight the sponsored nature of the post either by implication (‘commercial nature’) or explicitly stating that it is sponsored. Finally, an influencer agreement can be advantageous in cases of contractual disputes with various clauses aiding in parties understanding of the agreement, ensuring transparency and clarity in what is a relatively new form of marketing.

How we can help

If you have questions or require assistance with the preparation of an influencer agreement or advice in such disputes, please contact Coleman Greig’s Commercial Advice team.

 

This material is provided by Coleman Greig Lawyers as general information only in summary form on legal topics current at the time of first publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters.

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