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1 million followers: Understanding social media influencer agreements

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Influencer

Social media influencer marketing grew by 198% last year and is expected to skyrocket in 2018. According to a recent report, 1,504,383 Instagram posts were tagged with the term #ad in 2017. As more and more brands build their social media presence (96% of U.S. fashion brands are now on Instagram), they are relying on social media influencers to bring awareness to their various products.

What are social media influencers and what is social media influencer marketing? It’s simply a modern form of advertising called “influencer marketing,” which allows for so-called influencers – users who have a large following on social media platforms like Facebook, Instagram, YouTube, Twitter and Snapchat – to partner with brands that are in sync with their lifestyles.

Influencers can be fitness gurus, gaming addicts, beauty bloggers, fashionistas, foodies, travel experts, etc. They offer an authentic presence on social media based on their copious number of followers and level of engagement. Generally speaking, each influencer maintains an audience of at least 10,000 followers on one platform, if not more. Influencers use social media platforms to connect with their audience on a personal level. They brand themselves within a specific industry by promoting content that coincides with their values and interests. Many consumers value the opinions of influencers, which subsequently makes them more inclined to purchase a product that’s being endorsed or promoted on an influencer’s social media page.

Thousands of brands such as McDonalds, Nordstrom, Samsung, Coach and Coca-Cola are now paying influencers millions of dollars to endorse their products within a photo or video on social media. As more and more companies pour money into influencer marketing, it is important for attorneys to know the makeup and structure of standard influencer agreements. The following article highlights some of the key clauses included in every influencer agreement:

Post: One of the most import clauses in any influencer agreement pertains to the social media post itself. The agreement should always contain as many details as possible about the post. Does the influencer’s post need to be in the form of a photo or video? Does the post have to be shared on Instagram? Or Facebook? Or Twitter? How long does the post have to remain on the influencer’s social media page? 30 days? 60 days? All of the details should be hammered out in the agreement.

Compensation: Another key clause in any influencer agreement pertains to compensation. Rates can range from $100 to $1,000,000 for one social media post, depending on the influencer’s number of followers and level of engagement. According to a recent Wall Street Journal article, “while influencers with as few as 10,000 followers can score marketing partnerships, the compensation is typically free products or up to $150. Once they reach 1 million followers, the payments rise considerably, up to $15,000 per post and sometimes equity in the company.” Beyoncé is currently the most expensive influencer and charges up to 1 million dollars to share a sponsored post with her 111 million followers.

It is important note that all rates are negotiable. Whether a brand is compensating an influencer with monetary payment or with product (ex. a hotel may offer a weekend-stay at one of their resorts in exchange for an influencer social media post), the terms of that compensation should be clearly delineated in the influencer agreement. With regards to monetary payments, most brands prefer to split payments, paying influencers half up front and the remaining half once the post has been published.  Other logistics regarding compensation, such as payment method, should also be included in every influencer agreement.

Hashtags: Brands will ordinarily provide influencers with a list of hashtags they would like them to include in conjunction with their post. Brands must clearly outline these hashtags in the influencer agreement. There are also certain hashtags that influencers must post to ensure they are in compliance with the Federal Trade Commission (FTC). The FTC’s Endorsement Guide states that if there is a “material connection” between an influencer and brand, then the influencer should clearly and conspicuously disclose their relationship to brands when promoting or endorsing products through social media. To make a disclosure both “clear” and “conspicuous” influencers should use unambiguous language, such as #ad or #sponsored. Influencers should also make sure that the disclosure stands out. Attorneys working in this space should familiarize themselves with the most recent FTC requirements and ensure that their clients are in compliance with these requirements.

Metrics: Once a social media post has been published, brands will ordinarily require proof of posting, meaning an influencer may have to share applicable links or a screenshot of the post. Brands may also require performance reports containing the number of views, impressions and engagement/interactions. In rare circumstances, a brand may request access to an influencer’s social media account to verify metrics. The influencer agreement should always outline the exact type of information an influencer will be required to provide after the post is published. Make sure your client is able to easily provide such information.

Approval Rights: Brands will ordinarily request approval rights before an influencer publishes a social media post. Brands will want to retain the right to review a post and make suggestions for edits to ensure that the post is aligned with the brand’s values and vision. Oftentimes they will have the final say in terms of what an influencer publishes on their social media platform. Sample language ordinarily included in an influencer agreement: “Company shall have prior written approval rights of the Deliverables prior to any production, distribution, post, exhibition or other display or publication of the Deliverables.” Influencers must be receptive to a brand’s review, feedback, and comments prior to any publication of a post.

Exclusivity: Influencers tend to deal with multiple brands at a time. Brands will oftentimes request that influencers not showcase or post the product or service of a competitor on their social media platform during the term of their influencer agreement. A sample clause frequently found in influencer agreements: “Influencer shall not render any services or provide any testimonials or endorsements, on behalf of or in connection with any brands competitive with Company’s goods or services.” If a brand is requesting that your influencer client not work with competitors during the term of the influencer agreement, it is advisable to request that the brand be as specific as possible with regards to who qualifies and constitutes as a ‘competitor.’

A recent study estimates that total spending on Instagram influencers in 2017 amounted to $1 billion, and projects that advertisers will spend $1.60 billion on Instagram influencers in 2018 and $2.38 billion in 2019. If you have a client in the sports and entertainment industry, there is a strong likelihood that he or she has already been approached by a brand about entering into an influencer partnership. And if not, expect it soon. As Curtis Midkiff, Jr., a Senior Advisor for Social Business at Southwest Airlines said, “this is an emerging area for marketers and with that in mind, attorneys play a pivotal role in helping us navigate the rues and regulations that are being issues that impact influencers.” Influencer marketing is here to stay for the #foreseeablefuture.

Jaia Thomas Jaia Thomas is a Los Angeles-based sports and entertainment attorney. She is also an adjunct professor at UCLA, where she teaches a course titled "Copyright Law and the Entertainment Industry." She also teaches a summer seminar series at Southwestern Law School titled "How to Start and Build a Law Practice.” Jaia is a graduate of Colgate University (BA) and The George Washington University Law School (JD).