Hiring an influencer can be a very effective marketing strategy depending on your business. Getting a social media celebrity involved in your company’s business development goals isn’t just for large blue-chip companies anymore. This strategy can actually deliver a return on investment for all levels of marketers. According to RhythmOne’s Influencer Marketing Benchmarks Report and Guide, marketers who implemented an influencer marketing program in the first half of 2015 received an average of $9.60 in earned media value (EMV) for every $1.00 spent–an increase from $6.85 EMV per $1.00 spent in 2014.

Working with influencers, however, can be tricky. You will certainly need a well-prepared, effective legal agreement to govern exactly what the influencers are going to be doing, how they are going to be doing it, and what your and their rights are going to be. If you are thinking about hiring an influencer, and even an influencer endorsement or influencer promotion agreement, take a look at our overview of what deal terms you should be discussing with the influencer.

What are They Going to be Doing? Be Specific.

One of the top susceptibilities in influencer marketing agreements tends to be the level of specificity that the business provides (or often does not provide) the influencer. Social media marketing requires an astonishingly-high level of education and specificity in order to reach a point of effectiveness and a successful ROI. Leaving all these important details for your influencer to figure out can be a huge mistake. You should know or have an understanding of your business’s core demographic audience, and which social media accounts are most suited toward marketing your business’s services.

The specifics are what your agreement with the social media influencers should contain. You should specify:

• what social media channels are to be used,
• how often promotions are to occur, and
• what frequencies are to be used in posting/promoting your company’s products and services.

You can even account for things such as viewer saturation, i.e., not posting within a certain amount of time after the paid posts, so as to allow maximum reach. Usually, when our law firm prepares influencer agreements for business clients, there is a separate schedule that contains all of the specific provisions and guidelines about what the social media influencer is to do and not do when carrying out his/her duties under the influencer agreement. The Internet and social media is rife with examples of sloppy influencers. There are many stories of influencers who carelessly tag or quote the wrong company name, brand, use the wrong hashtag, or incorrectly display the product they’re supposed to be promoting. It is extremely important that the agreement be specific. The compensation must be tied to adequate performance in a manner reasonably satisfactory to the company. There should be no room for error or independent thinking that is contrary to the company’s wishes in these types of agreements.

Compensation Model: Flat Fee vs. Incentives

How will you be compensating the influencer? Some influencer agreements involve a flat payment made to the influencer for specific numbers of posts, videos, tweets, or otherwise. Another type of influencer agreement seeks to incentivize the influencer. One method of incentive is giving the influencer a percentage of the net income that results from sales that mention the influencer.

Another method is tracing back to an affiliate link provided to the influencer, which takes the end-user to a space on the company’s website so that the purchase of the company’s products or services can be made to the benefit of the influencer. Obviously, incentive-based pay structures are always more desirable, because your Company is not paying for a message to be shouted in a forest of trees with no one listening. In addition, incentive-based compensation can also get away from ROI issues that result when influencers cannot always convert followers into actual sales.

Cost of Travel, Equipment, Photo, Video, Post-Production, Etc.

Who is going to be paying the influencer for the actual costs of the videos, audio, or other content he/she is going to be doing on your company’s behalf? Some influencers are Internet stars with excellent video and audio editing skills, or come with pre-existing production teams that will take care of their hair, makeup, style, pre-production, post-production, image correction, etc. Does your influencer agreement require the influencers to provide the type of first-class quality service similar to the types of videos and images they already have on their sites? The last thing that you want is your influencers to do a less-than-stellar job and to reserve their best posts for themselves and better-paying companies.

Who Has the Creative Controls?

Who has the final word on the creative direction of the influencer’s activities, and on what the final product does or does not contain? When we do influencer agreements for business clients, I generally tend to recommend that the client retain all creative controls, since the services are being compensated to the influencer. This involves creative controls on the promotion of the company’s products; when and how to post; the dates, times, frequencies, methods, as well as what actually is going to comprise the audiovisual content and other materials that the influencer is going to be publicly posting.

Who Owns the IP?

Who owns the work that the influencers are going to be doing on behalf of the company? Influencers will typically resist wanting to give up ownership over their intellectual property and work product, even if they’re being compensated by a company. The reason is simple: usually, a person who is artistic and creative does some of his/her finest works on occasion when the subject matter is introduced by a third person. Creative people tend to be excellent with respect to implementing subject matter given to them by others. Although there are creative types that are outstanding in conceptual development, implementation, and execution, there are numerous examples in which creative professionals given a focused assignment come to realize, during the course of work on the project, that the work is some of their finest they may have ever done. At that point, they can be reluctant to give up the ownership, and often believe that the work they have done can be repurposed or somehow used for their advantage and other pursuits.

The problem is that, from a company’s perspective, if the company has a very clear idea of how it wants to market its services, providing that information to the influencer is and can constitute itself valuable intellectual property. Even something as simple as post format, or a direction, tone, or overall approach of a marketing piece can be valuable, and not something the influencer has previously done. These items can be borrowed and used by the influencer for other engagements. From the Company’s perspective, it can seem unfair for an influencer to take the position that all of this intellectual property belongs to the influencer.

Generally, when we do these types of agreements,we almost always set them up so that the company retains all intellectual property that arises out of the influencer services. Alternatively, these agreements can involve the reverse, namely that the influencer retain all of its intellectual property and ownership, from a title perspective, and simply license to the company the exclusive, irrevocable, worldwide, perpetual, and royalty-free right to use all of that intellectual property as well as its derivatives. The “derivatives” part is very important – derivatives are basically all that arise out of or make use of the underlying intellectual property.

Are all Licensing Issues Squared Away?

Don’t forget that there are issues beyond IP that your influencer agreement will need to handle. The influencer’s bread-and-butter is making use of his/her name, identity, likeness, image, and other biographical details. These are called rights of publicity. Your influencer agreement will need to address rights of publicity and appropriately license those for the company’s perpetual use.

There will be some timing issues here that need special handling. Most influencer and endorsement-type agreements have a specific term limit. However, for purposes of licenses and licensing, the rights to publicity should endure beyond the expiration of the term. Otherwise, if a company has a really good marketing run with a particular influencer, once the period of the agreement is over, the company will not be able to reuse those great marketing materials in the future. The way to ensure continued use of these materials is to apply the right legal language to the licensing provisions.

Independent Contractors Provisions

The influencer agreement should contain very strong independent contractor provisions which address the following issues: (1) taxation, (2) the company’s non-withholding of payroll taxes and other deductions on the income to be paid to the influencer, and (3) a release of claims in the event the influencer later wants to try to argue that his/her work amounted to compensable wages and that he/she was not an independent contractor of the business. In this respect, we typically try to write these so that the independent contractor provisions contain a disclaimer of status as anything other than independent contractor. Such language in the provision is coupled with the duty and obligation on the part of the influencer to actively cooperate with the company to disavow the influencer status as anything other than independent contractor, in any instance where the opposite is alleged.

Are there Exclusivity Obligations?

One of the other important provisions that we typically write into influencer agreements involves exclusivity obligations. When a company does business with an influencer, the last thing the company wants is for the influencer to use the inroads, the terms, and other fluency with a particular industry to obtain more work or different work for the benefit of a competitor. In this respect, we typically write in provisions that include exclusivity obligations preventing the influencer from representing a similar type of business for a period of time, after conclusion of the agreement with the business. This will not only keep the marketing lines clean, but it will provide more credibility to the influencer’s services, by making it seem less like the influencer will literally promote any and every business that pays the influencer enough money.

Getting Legal Help for an Influencer Agreement

Getting legal help for an influencer agreement does not have to be painful. Axis represents both influencers and companies in negotiating, finalizing, and implementing influencer agreements all the time. The process starts by identifying the client’s goals, whether the goal belongs to the influencer, business, or a beneficiary such as an advertiser or management company doing a group deal with a number of influencers on behalf of a particular company.

How Much Does it Cost to get Legal Help for an Influencer Agreement?

It is often more affordable than you might think. We often do this type of work on a flat-fee basis. Whether it involves reviewing and negotiating an influencer agreement that you been presented with, or preparing a fresh influencer agreement for you to use in connection with your business, the process is often very straightforward, convenient, and intended to be as frustration-free as possible. The process will involve a detailed review of the legal issues relevant to the goals of your influencer agreement, and a custom document prepared specifically for your use.

How Long Does it Take for Review or Preparation of an Influencer Agreement?

We have reviewed and negotiated numerous influencer agreements, including those that involve large international companies, the most well-known and famous talent agencies, managers and management companies, small and medium-size businesses, advertisers, and numerous others. It typically takes only a few days (1-2 days) to review and provide you with advice and counsel relating to your influencer agreement, or preparing a brand-new one for your business’s use.

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Getting Legal Help

AXIS Legal Counsel’s Business Practice provides legal advice to numerous small businesses with a variety of legal matters, including business formations, contracts, deals, and transactions, business administration, corporate governance, operations, risk management / insurancelabor/employment matters, intellectual property, healthcare, crisis management, directors/officers, private/data security, technology, statutory/legal compliance, and business litigation. AXIS represents businesses, corporations, LLCs, LLPS, partnerships, and startups in need of a corporate lawyer, for business legal matters as well as business litigation, such as disagreements, non-solicit agreements, non-competes, trade secrets, and other disputes with businesses. We are also experienced in providing assistance to business clients concerning business contracts, corporate formation matters, contracts and transactions, business litigation, business legal advice for Corporations, LLPs, LLCs, Partnerships, Small Business, Startups, and others involving corporate law.

If you are seeking a business lawyer, or for information on retaining AXIS Legal Counsel to represent your business in connection with any legal matter, contact info@axislegalca.com or call (213) 403-0130 for a confidential consultation.

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