10 Critical Components of Influencer Engagement Contracts through the eyes of the Influencer and the Brand
In the dynamic world of digital marketing, influencers have emerged as pivotal figures. From YouTubers to Instagrammers to TikTok stars, they are at the forefront of brand campaigns, bringing a unique blend of relatability and authenticity. Yet, behind this is a crucial but less visible element: the intricacies of brand deal contracts.
For many influencers, especially those new to the limelight, navigating these contracts can be daunting. The legalities and fine print of engagement contracts are often unfamiliar territory.
For the Brands, the engagement of an influencer may be uncharted territory for the marketing department and they may be fraught with trepidation at the perceived pitfalls of promotion through social media.
From his own journey as a former influencer and now with JMW, Mark Knight has experienced the industry from both sides. He says, “ I've encountered well-drafted contracts that led to complicated relationships and seemingly simple agreements that worked seamlessly.”
In an ideal world the parties will not need to consult the contract after it has been signed. However, if issues do arise a well drafted and negotiated contract can pave the way for a successful and mutually beneficial collaboration.
Let's break down ten critical components of influencer engagement contracts.
1. Entire Agreement
When signing a brand deal, agreements often evolve through conversations, emails, and direct messages before they ever reach a formal contract stage. This process highlights the necessity of an 'Entire Agreement' clause in your contract, which is crucial to prevent misunderstandings and disputes. It makes clear that what's in the written contract is what matters – if something was discussed but didn't make it into the final contract, it's not considered part of your agreement.
This means, in my experience, for influencers it's vital to review the contract and confirm that every aspect of the agreement, especially those agreed upon informally previously, are captured in writing. An Entire Agreement clause essentially states that the written contract embodies all the terms of your agreement with the brand, and nothing outside the document holds weight.
This clause offers clarity and protection by ensuring that all obligations of both parties are consolidated in one document, preventing conflicts over differing recollections of discussed elements not included in the final written contract.
If your contract includes an Entire Agreement clause, make sure everything you want is in the final document.
If verbal assurances have been made prior to entering into the contract that have not found their way into the agreement and subsequently prove to be false there may be recourse under the tort of misrepresentation. Such actions are however difficult to establish especially if the representations were verbal and are denied so always try and get everything in the contract.
2. Exclusivity
Brands invest heavily in influencers to create a distinct and loyal image for their products. This is where the concept of exclusivity comes into play. When brands partner with influencers, they may often seek a commitment that the influencer will not promote competing products. Exclusivity is crucial for brands to ensure that the influencer's association with their product remains unique and undiluted by competitors' influences.
The Exclusivity clause in the contract is what formalises this business need. This clause specifies the extent to which the influencer is allowed to engage with or promote competing brands. The scope of these clauses can vary. Some may narrowly restrict the influencer from collaborating with direct competitors in their niche, while others cast a wider net. The duration of exclusivity can also vary, sometimes extending well beyond the contract – potentially affecting future opportunities.
It is important to understand and negotiate the terms of exclusivity. Consider how it aligns with your business plan and personal brand ethos. A well-negotiated exclusivity clause should support the ongoing partnership with the brand, while also allowing for the influencer’s growth and flexibility.
3. Definitions
Often the parties will skirt over the definition section of an agreement and focus on the deliverables and the commercial terms. The definition section can often in fact be the most important part. For example, following on from point 2 above you can expect to see a definition of the “Brand Sector” in which the influencer is granting exclusivity.
For the brand it is crucial that this is carefully defined to capture their product range widely enough to circumvent the influencer granting similar rights to competitors. For the influencer they want to make sure they have the capacity to engage in several different partnerships and so the Brand Sector should be no wider than necessary.
4. Spoiler Rights
Sometimes a brand will seek to secure rights that are more extensive than the rights they actually need. The reason is twofold. Firstly, because they may need such rights in the future and by securing them in the contract, they do not have to open a new negotiation and possibly have to pay more. Secondly by widening the scope of the rights they may prevent competitor brands from partnering with the influencer even in a different brand sector.
For example, a Brand may wish to engage an influencer to promote a new Gin and so they would obviously seek exclusivity in the Gin market. They may however include in the definition of Brand Sector “Alcoholic Beverages” which of course could preclude the influencer partnering with say a champagne brand.
The reason for this from the Brand’s perspective is the Champagne brand may also have products in the Gin market and so the Brand does not want the effectiveness of their campaign being diluted. Also, the Gin brand may one day want to also branch out into other products. For the influencer, whilst they do not want to spread themselves too thinly and can sometime stake on too many partnerships, they would wish to preserve their earning potential and so would not wish to grant any rights I excess of those essential to the brand.
5. Substitute Rights
Sometimes the circumstances may change for the influencer during the course of the agreement that may cause them to no longer be able to provide the deliverables under the agreement. They may for example be engaged on a TV program that is sponsored by a particular brand that competes with the brand they are engaged with. This is particularly an issue for sports people where they change teams that have different sponsors.
The influencer will want a mechanism that enables them to either terminate the contract or possibly suspend it without being held in breach. They may also want the ability to provide substitute rights which can be regarded as being of equal value or alternatively the ability to negotiate a rebate without being sued.
Equally the brand will wish to have the flexibility to terminate or renegotiate if the influencer’s circumstances change.
6. Reputation
A fundamental clause in any influencer agreement is the rights for either party if the other party does something that brings them into disrepute, adversely affects their reputation, or fundamentally alters their perception.
These clauses need to be very carefully worded. For example it may be a commercial partner of a Brand rather than the brand itself that takes issue with the influencer. Equally the brand may partner with another party that the influencer takes exception to.
7. Payment
While discussing payment terms might sometimes feel uncomfortable, clear payment terms are crucial to ensure fair compensation. A decent Payment Clause spells out not just how much the influencer will earn, but also when and how they will; receive these earnings.
Is it a one-off payment, separate signing-bonus, or staggered payments? Is it a fixed fee or is the value tied to performance metrics? Will this be to a bank account and if so, how? Mark recalls being paid over six months late for one brand deal. He ended up being mailed a foreign cheque that took another six to eight weeks to clear. This situation is less than ideal.
Importantly for UK influencers is the question of what currency they will be paid in. Most international brands may well pay in dollars or euros by default instead of pounds. The issue is that of currency conversion fees – high street banks, PayPal, and other transfer platforms can charge a relatively hefty percentage to convert the payment into pounds, cutting down on margins.
However, a silver lining exists in that influencers are insulated against domestic currency fluctuations. Post-Brexit Mark recalls he started requesting the majority of his brand deals be in dollars or euros to a foreign currency account. As the value of the pound fell his earnings were protected. This is an especially important consideration if the influencer is engaging in a long-term brand deal where payment is towards the end. What £10,000 is at the start may only be £9,000 in a year’s time.
Mark strongly advises that the influencer does not shy away from negotiating payment terms that suit their financial needs and accurately represent their worth.
Remember, the influencer is not being paid just for the effort put in on this specific campaign – but their platform and reach that they have spent much longer developing.
One recurring issue for an influencer is in valuing their deliverables.
Of course the starting point is they are as valuable as someone is willing to pay but equally the influencer does not want to discover they have struck a bad deal when a competing brand subsequently comes calling. This is where an experienced agent and/or accountant can be valuable with knowledge of the market.
8. Creative Control
Creative control is a linchpin in the influencer industry. It determines how much freedom the influencer has over the content they produce for a brand. This aspect is crucial because it directly impacts their authenticity – a key factor in why brands partner with influencers in the first place.
The Creative Control clause in the contract should clearly define the extent of the influencer’s input in content creation. Does the brand require approval for every post? Are there specific guidelines or themes to adhere to? Understanding these elements is essential to ensure that while the influencer meets the brand's needs, their creative integrity and personal brand identity are not compromised.
Negotiating this clause requires a delicate balance. On one hand, brands have a vision and message they want to convey through your platform. On the other hand, the influencer’s followers value their unique voice and perspective. The goal is to find a middle ground where creative expression aligns with the brand’s marketing objectives. Well-targeted campaigns will see brands want to partner with the influencer because of their unique style – not solely because of the follower count.
Timing is also important as the brand may wish to capitalise on the occurrence of a particular event such as the influencer receiving an award by producing content swiftly. That is also likely to be a time when the influencer is most in demand. It is important therefore an approval mechanism is carefully drafted that caters for these needs but maintains quality control.
Mark recalls it is not always plain sailing. He remembers producing a video for a brand deal through an agency where the initial requirement was just to keep it in his usual style, with approval before posting.
When I delivered this, the brand rejected it for not meeting their vision. After receiving limited feedback through my agent, I revised the video. This ended up repeating twice more. It eventually dawned on me that the client had a specific format and style in mind. I told my agent to get a detailed description from the brand and what came back revealed they did in fact have a relatively specific style in mind with several mutually incompatible elements.
Including these details upfront would have saved everyone a lot of time and effort.
It is also important to be aware that the amount of creative control that the brand has over the final product influences whether it could be considered “Advertorial” as opposed to “Sponsorship” by the Advertising Standards Agency. Although this is a complicated distinction and compliance with the “CAP Code” merits its own article.
The parties should consider this clause carefully, as it can significantly influence the ability to produce content that resonates with the audience and stays true to the party’s brand characteristics. Effective negotiation of creative control can lead to content that is both authentic to the influencer’s style and effective in achieving the brand's goals.
9. Control of IP (Intellectual Property)
Intellectual Property (IP) rights are at the heart of the influencer-brand relationship. This clause determines who owns the content that is generated under the deliverables : Is it the influencer, or the brand they are collaborating with? The implications of this clause are far-reaching, influencing not just the current campaign but potentially future use of the content.
Typically, brands might seek to retain ownership of the content the influencer creates for them, allowing them the freedom to use it in future marketing. As an influencer, it's crucial to understand what this means for their creative portfolio. Will they be able to repurpose or showcase this content in their portfolio? Are there restrictions on how this content will be used in the future?
This can be particularly important in relation to ‘run off rights’ where the brand continue to leave the posts on their social media or distribute product the influencer has promoted (or even featured on the packaging) after the agreement has ended. The brand understandably would wish to address the practicalities of the agreement ending whilst the influencer would not want these rights to adversely affect new partnerships with new brands.
I have seen and been asked to sign a standard engagement contract from a well-known brand which gave them the rights to use my own brand IP in any way they wished, which they could pass-on to others as they wished, for as long as they wished.
Needless to say, I declined to sign and pointed out the issues with this to them. They were understanding and receptive to my suggestions and rewrote the problematic sections. It turns out that they had been using this standard engagement contract for several years for dozens of engagements and had no one mention these issues until then.
This was not a case of malicious drafting but rather of drafting that was overly broad and simplistic. It is, however, a stark warning about how few influencers actually read what they are signing.
Negotiating the Control of IP clause requires a clear understanding of the party’s long-term content strategy. If retaining ownership or certain usage rights of your content is important to the party, this needs to be clearly stated in the contract. Mark says, “It’s about ensuring that your creative output today doesn’t limit your creative freedom tomorrow.”
10. Law and Jurisdiction
Finally, one element that might not be as glamorous or intuitive as the rest is that of the choice of Law and Jurisdiction. This dictates which country's law governs the contract and where any legal disputes would be resolved. It is entirely possible to have a contract be subject to the law of California, USA, but be subject to the jurisdiction of England and Wales (meaning any dispute would have to be dealt with here). This is particularly important for influencers working with international brands.
This clause can have significant implications in case of a dispute. If the contract is governed by laws outside a party’s own country, they might find themselves navigating unfamiliar legal territory and the contract may be interpreted differently than the party (or their lawyers) would be familiar with. Further, the complexity, time, and cost of dealing with legal disputes in another country can be much higher than would otherwise be the case at home.
For a UK-based party, typically, they would want legal matters to be governed by English law within the courts of England and Wales (or the devolved equivalents). However, if the other party is based in another country, they might insist on their own legal jurisdiction.
When reviewing this clause, consider the practicality of dealing with legal matters in a foreign jurisdiction. It’s wise to seek legal advice if the contract involves laws outside your familiar legal system. The final selection as with many aspects of the agreement can ultimately come down to the relative bargaining power of the parties i.e who needs who the most.
Summary
Navigating the world of influencer contracts can be as complex as it is exciting. Understanding these ten critical components – Entire Agreement, Exclusivity, Definitions, Spoiler Rights, Substitute Rights, Reputation, Payment, Creative Control, Control of IP, and Law and Jurisdiction – is essential for protecting a party’s interests and ensuring successful collaborations.
Remember, while influencer marketing offers incredible opportunities for creativity and growth, it's grounded in contractual agreements that require careful consideration. For expert guidance on these matters, JMW Solicitors LLP is here to assist. Contact us for support in reviewing contracts or ensuring your agreements protect your interests by calling 0345 872 6666 or by completing our online enquiry form.
