This article is an edited crosspost with SME Law.
The classic advertising scheme is evolving, with classic advertising strategies ceding their place to a plethora of social media channels, including Facebook, Twitter, and Snapchat among others. This shift is witnessing the debut of a new type of marketing gurus, known as ‘social media influencers’. Talent and advertising agencies will have to adapt and start using this new breed of marketing stars in order to sustain themselves within these changing dynamisms.
The ‘right’ influencer
An influencer is an individual who has built a strong relationship with a significant number of followers online through one or more social media platforms, and whose actions and recommendations simulating the traditional word-of-mouth impact the behavior of his/her followers. On the other side of the equation stands the advertiser, who’s usually a brand or a company that engages with the influencer’s products or services. In the middle, connecting the two, stand the agencies, whether advertising, media agencies or talent agencies. A combination of the three is often employed to identify and employ the correct influencer within the framework of a marketing campaign, and to produce media content around the deployment of the influencer work. Talent agencies in particular, identify the best influencers for different niche markets and usually acquire exclusive rights to market and sell their services to companies/brands by building strategies and campaigns around them. In 2015, when Emarketer launched a survey about influencer marketing, 84 percent of surveyed marketers said they planned to launch an influencer campaign within 12 months. These figures have increased and continue to increase at a great pace during 2017.
Influencer Representation Agreement
The ‘Influencer Representation Agreement’, governs the relationship between the influencer and the agency, mostly a talent agency. Naturally, the agency appointment provision is prominent within the agreement. It is the provision through which the influencer appoints the agency to act on his/her behalf in the marketing of the influencer’s works and in obtaining campaign mandates for him/her.
This term commonly covers the parameters of the appointment, including its exclusivity and the media channels through which the agent will procure campaigns. With the appointment comes the compensation of the agent for its work. Agents commonly charge between 20 percent and 30 percent of the total fees received by the influencer for services rendered through the agency. Agencies are also commonly authorized to collect payments from advertisers for influencer services deducting their fees, and paying the remaining to the influencer.
An important provision to include in ‘Influencer Representation Agreements’ is the agency’s IP right to use the projects or the campaigns procured through it. This is commonly carried out through a license provision.
Duties of the agent
To ensure that the agency is contractually required to seek work for the influencer, it is important that the agreement carries a provision placing on the agent the obligation to undertake commercially reasonable efforts to promote the influencer’s services, and to represent him/her professionally and diligently. Prominent influencers may negotiate expanding this provision to include priorities in tendering the influencer’s services in a specific sector or to specific clients, or to oblige the agent not to represent closely competing influencers.
Duties of the influencer
The agencies payout is tied to the influencer receiving and carrying out promotional services. Thus, the agency will seek to place obligations on the influencer to act with diligence in maintaining its status and public good will, and to devote reasonable time and effort to the carryout of promotional services. Agencies also seek protection from potential infringement claims by placing an obligation on the influencer to ensure that all work he provides is original and doesn’t infringe the proprietary rights of others.
Naturally, these are the major terms an influencer or an agency is expected to see in an ‘Influencer Representation Agreement’. Taking into consideration the contingent payment structure commonly followed in this market, it is advisable that parties consult attorneys familiar with these types of agreements. Thus, they will ensure that they are contracted in accordance with a clear and protective agreement that can provide strong grounds for redress in cases of violation or breach.