Shielding Your Brand in The Wild World of Influencer Marketing

Overview

The evolution of brand marketing in recent years has witnessed a significant transformation, shifting away from traditional advertising techniques due to the rise of influencer marketing. Brands recognise the powerful impact that individuals with significant online presences have on consumers and, naturally, choose to integrate influencers into their marketing strategies more frequently.

Influencer marketing provides brands with opportunities to tailor their advertising approach and engage with diverse audiences through the power of social media platforms, such as Instagram, YouTube, or TikTok, and generate significant returns as a result. According to the UK’s Department for Digital, Culture, Media and Sport report on influencer culture, the global sector is expected to grow from $6.0 billion in 2020 to $24.1 billion by 2025, at a compound annual growth rate of 32%. The report can be accessed here.

However, nothing great comes without its risks. Selecting the wrong influencer, failure to adhere to advertising and consumer protection laws, or careless use of template contracts, can have a significant impact on your business, including reputational damage and legal consequences.

This article outlines some practical and contractual steps that businesses should take into consideration before engaging influencers in their advertising campaigns to mitigate the most common risks associated with influencer marketing.

Selecting Influencers

It is of utmost importance to conduct careful due diligence on potential candidates to represent your brand. This may involve an in-depth analysis of any old posts, videos, social media accounts, fake followers and bots, existing and previous brand associations, and articles written about them, to ensure that their reputation combined with what they promote and represent to their audiences will not harm your brand in the long run. For example, in 2017, a famous YouTube star, PewDiePie, was let go from his brand deal with Disney after he shared antisemitic content on his platform. While the social media sensation was not labelled as an antisemite in the past, he gained notoriety for sharing numerous controversial posts throughout his career which should have raised some red flags for Disney prior to its engagement with PewDiePie.

Compliance with Rules and Regulations

The Advertising Standards Authority (the “ASA”) and the Competition and Markets Authority (the “CMA”) are the primary regulatory bodies overseeing influencer marketing in the UK by enforcing compliance with the CAP Code and consumer protection laws.

One of the key requirements under the CAP Code is transparency, and it is imperative that brands work closely with their brand ambassadors to ensure clear disclosure of any sponsored content. Disclosure requirements are carefully monitored by the ASA and the CMA and any repeated failures by influencers to disclose paid promotions can lead to the publication of their name and social handle on the ASA website, and continuous non-compliance may result in further targeted sanctions. The list of non-compliant social influencers can be accessed here.

Disclosure of advertisements can take various forms, for example the use of hashtags such as #ad, or explicitly stating that the post is part of a paid partnership are acceptable, as long as the audience is clearly informed that the brand is giving the influencer some form of consideration for promoting their products or services.

Contractual Safeguards

A well thought out and tailored contract is a key element to protect your brand and set out the rules of your relationship with your brand ambassador. While template influencer agreements can offer a good starting point, each collaboration is unique and is influenced by many different variables, including your brand identity, the specific campaign objectives, and the influencer’s personal brand.

Below are some key contractual considerations brand owners should consider when entering into an influencer agreement:

• Scope of work: clearly define the scope of the work, format of sponsorship, and timelines you expect the brand ambassador to meet under the arrangement. Establish deadlines for content creation, posting, and any other relevant milestones they need to achieve throughout the partnership.
• Payment: the agreement should outline the compensation payable to the influencer, including how and when payments will be made, and whether it is a flat fee, commission-based, free promotional gifts, or a combination of all.
• Disclosure obligations: the contract should also explicitly state that the brand ambassador is responsible for compliance with the applicable disclosure requirements under the CAP Code. This is key to remain compliant and avoid the risk of enforcement by the ASA and CMA.
• Intellectual Property (“IP”): clearly establish IP ownership before, during, and after the partnership. Clearly defined terms should identify the brand ambassador’s rights and limitations regarding the brand’s IP assets to prevent potential disputes, and legal and financial complications that may arise from the use of ambiguous rules concerning IP ownership.
• Moral clauses: moral clauses typically set out certain unwanted behaviours to help protect your brand from potential harm associated with controversies or other actions by the influencer that are incompatible with your brand’s values. By incorporating a an explicitly worded moral clause, brands retain the ability to sever ties with brand ambassadors whose actions could lead to reputational damage to the brand.
• Monitoring: brands should ensure that their influencer agreements allow them to review and approve content before it is posted online to safeguard continued alignment with brand values, regulatory compliance and prevent reputational damage.
• Termination: the agreement should clearly define the duration of the partnership and include provisions for termination and dispute resolution to ensure that both parties have a clear understanding of the procedures available to address any unforeseen circumstances.

Conclusion:

There are many exciting opportunities brands can benefit from in the world of influencer marketing, however, as with any business endeavour, careful due diligence, regulatory compliance, and contractual safeguards are of paramount importance.

By prioritising compliance with the ASA and CMA disclosure requirements, conducting comprehensive background checks on potential brand ambassadors, and tailoring contractual arrangements, brands can forge lasting and mutually beneficial relationships with influencers while safeguarding their interests and legal integrity every step of the way.

If you would like any further information or advice, please contact Patrycja Paszewska from our Commercial team.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.