If you are not already using influencers the likelihood is that you are missing out on an important aspect of marketing your brand. If you are already working with an influencer, do you have an influencer marketing agreement in place? Read on to find out why our digital and commercial solicitors say you need an influencer marketing agreement.
Jump to:
- Why do brands need influencer marketing agreements?
- What is the UK legal and regulatory framework for influencer marketing?
- Why is the influencer regulatory framework important for brands?
- What are the key regulatory points for brands using influencers to market their brand?
- What should be included in an influencer marketing agreement?
- Influencer advertising – the key tips for brands
Why do brands need influencer marketing agreements?
When things go right with influencers, they are actively promoting your brand, products and services – potentially to millions of followers – and it is likely that your influencer is someone who is followed and listened to by their many admirers. However, regardless of how respected, honest and trustworthy your influencers may be (or appear to be), your business still needs to use an influencer marketing agreement to:
- Protect your brand. Use of an influencer leverages the influencer’s personal brand to promote your brand. However, if the influencer acts in a way that does not reflect well on your brand, your brand image can suffer. A legally binding agreement can give your business some contractual control over the influencer’s actions, help to drive a positive association between their brand and yours, and provide you with remedies if things go wrong.
- Set expectations. Any transaction that involves the handing over of money, compliance with deadlines and the promotion of your brand should be governed by a legally binding commercial contract to ensure both parties to the agreement understand what they are committing to, the payment terms and their rights and duties. That way, you minimise the risk of things going wrong, whilst providing you with remedies (including an exit mechanism) if they do.
- Meet advertising standards and protect consumers. If the influencer fails to comply with the legal and regulatory framework for influencers, this could adversely affect your brand and company image. In some cases, it could even result in your business being liable for the actions of the influencer.
What is the UK legal and regulatory framework for influencer marketing?
Influencer marketing in the UK is regulated by:
- The Competition and Markets Authority (CMA)
- The Advertising Standard’s Authority (ASA)
- The Committee of Advertising Practice (CAP)
The Advertising Standards Authority is the UK’s independent advertising regulator, and its role is to ensure that adverts comply with the relevant Advertising Codes.
The Committee of Advertising Practice is the sister organisation of the Advertising Standards Authority. CAP is responsible for writing the Advertising Codes.
The relevant regulations and codes are:
- The Consumer Protection from Unfair Trading Regulations 2008 (CPR)
- The UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code)
In addition to the above, the Financial Conduct Authority (FCA) provides guidance and sets expectations for firms and influencers about financial promotions on social media.
This guidance is reinforced through:
- The Consumer Duty that mandates financial firms must ensure their products and services deliver good outcomes and fair value for consumers.
- The Financial Services and Markets Act 2023 (FSMA 2023) and the Financial Promotions Gateway through which authorised persons must pass before they can approve the financial promotions of unauthorised persons. This aims to ensure that financial promotions are properly vetted and approved by authorised firms, enhancing consumer protection by preventing misleading or harmful financial advertising.
Why is the influencer regulatory framework important for brands?
Some businesses assume that, if an influencer is in breach of the legal and regulatory framework for social media marketing, it is a matter for the influencer and that their own business will not itself suffer complaint or enforcement action. That isn’t the case, as the companies who work with influencers are equally responsible for ensuring that brand partnerships are disclosed in the influencer’s posts.
The ASA has said that influencers and the advertisers paying for the social media posts should be targeted to ensure greater compliance with the UK legal and regulatory framework for influencer marketing. That is because of the frequency of breaches in consumer and advertising laws in non-broadcast and direct and promotional marketing.
As online shopping continues to grow in popularity and fashion influencers gain more sway over consumer purchasing decisions, it comes as no surprise that regulators have observed an increase in breaches of consumer protection and advertising regulations. Not surprisingly, during the height of the pandemic in 2020, there was a 55% increase in complaints about influencers from the preceding year. The focus of the complaints was primarily on Instagram posts, but the rules apply equally to all forms of social media posts.
In September 2020, the ASA conducted a three-week monitoring exercise to review the Instagram accounts of several UK-based influencers to consider if their social media content identified the content as advertising material or not. The ASA exercise concluded that there was poor compliance with the rules on making it transparent when influencers are being paid by brands to promote a product or service. In a March 2021 report on ‘Influencer Ad Disclosure on Social Media’, the ASA found that:
- Influencers were using historical posts to show that they were connected to a product, rather than making it clear in each post that the content was advertising for a brand. Each post should make it clear on a standalone basis if it contains advertising.
- If a post refers to an advertisement, then the advert label has to be clearly visible. For example, the post font and information about the advertiser should not be in the same or similar colour to make the advert wording difficult to read.
- The use of # and the brand name isn’t sufficient to advise social media users that content is paid for advertising.
The ASA has warned that continued poor practices will lead to sanctions. The ASA has emphasised that sanctions apply to influencers and the businesses who pay for influencer services, as the brand is deemed to be just as responsible as the influencer for failing to properly disclose advertising content. The ASA report into its research is a stark warning to businesses using the services of influencers that they won't escape regulatory attention if those influencers fail to comply with the regulations.
A major reason why the influencer regulatory framework is important for brands is because the regulators publish their rulings and findings on influencers and brands. That can result in reputational damage to the business. An example is the non-compliant online advertisers page featured on the ASA/ CAP website.
What are the key regulatory points for brands using influencers to market their brand?
The key points of The Consumer Protection from Unfair Trading Regulations 2008 are that it prevents:
- The use of paid-for promotional material without the advertiser making it clear that the material is an advert.
- The use of false claims or the creation of the impression that the trader isn’t acting for purposes relating to their business.
- The false representation of a business as a consumer.
The key points of the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing Code (The CAP Code) are that it requires social media marketing communications to:
- Be identifiable as advertising.
- To not mislead.
- To make it clear that the influencer is acting commercially and not as a consumer.
Key points from the rules and guidance from the Financial Conduct Authority are that each financial promotion must:
- Be either communicated by an authorised person or its content is approved by an authorised person.
- Be fair, clear, and not misleading.
- Be compliant as a standalone advert, despite limited space on some social media platforms.
- Have the right balance and contain appropriate risk warnings.
- Provide customers with sufficient information to make informed, timely, and effective decisions.
Businesses that communicate financial promotions must have appropriate monitoring and oversight in place in respect of the financial promotions it makes – including those made by its influencers.
The FCA’s rules also cover communications made outside the UK if they can have an effect within the UK (for example, they are made to UK customers with a view to such customers buying products and services).
What should be included in an influencer marketing agreement?
If your business is using the services of an influencer, it is not only vital that you protect your business and brand through an influencer marketing agreement, but that the commercial contract is comprehensive and covers:
- The services to be provided by the influencer – the contract needs to clearly define the deliverables. It pays to be as specific as possible as to what is expected of the influencer; from the type of social media platform or platforms to be used, to the frequency of posts and their timing. That way there is less risk of misunderstandings occurring over what is expected of the influencer, and the potential for commercial disputes later on is reduced. Remember that, when it comes to influencers, it pays to have a bespoke agreement as most influencers have different ways of promoting themselves and the brands they advertise to their followers. That individuality should be accommodated to get the best out of the influencer’s relationship with their followers, whilst also setting out the framework of the services to be provided by the chosen influencer.
- The control over influencer content - whilst the whole point of using an influencer is that they can influence their followers through the tone and content of their social media posts, in ways that standard advertising can't replicate, your business will want to protect its brand by being able to exercise some control over the influencer’s output. Even if you think it is unrealistic to pre-approve all influencer content, your business may want to include provisions about brand guidelines and control over influencer content. For example, you may have key wording or colours that you want associated with your brand or a clause enabling you to require the taking down and deletion of content that doesn’t meet the brand image or doesn’t comply with regulations. You can't assume that an influencer will want to delete content as sometimes controversial content increases following for the influencer but may not be on-message for your brand.
- Can the influencer promote competitor products and services - the value of the influencer to your business may be significantly reduced if the influencer is promoting competitor products and services at the same time as promoting your brand. Care needs to be taken in defining competitor brands in the influencer marketing agreement, and in setting out the competitor products and services that the influencer can't endorse during the term of the influencer marketing agreement or for a specified period after it ends.
- Ownership of intellectual property – some aspects of the social media posts may be subject to copyright and/or trade mark protection. The business should have an IP strategy, and the contract should make it clear as to who owns the IP, who is licensed to use it, how they are permitted to use it and for how long. Unless the intellectual property is owned by the business, or the business has an irrevocable licence to use it, the value of the influencer may be far more limited than envisaged.
- Access to the influencer’s data - the key to the success of any marketing campaign is to assess its results. Some campaigns can create instant success and others are a slow burn. That is why it is important that the influencer marketing agreement provides for the brand to have access to the influencer’s data and analytics to see what has worked and what hasn’t.
- The brand reputation - if your influencer makes inappropriate comments in posts or their conduct carries negative connotations, then the brand’s reputation could suffer by association (for example, if the influencer posts racist remarks, is shown to have photoshopped images whilst promoting dieting products or is convicted of an offence). Whilst no business can completely control an individual’s actions, the influencer marketing agreement should spell out the brand values and require the influencer to comply with those brand values. It can also provide a means of exit if the influencer does anything that you reasonably consider damaging to your business or brand.
- Advertising and regulatory compliance – both the influencer and the business will suffer if advertising codes are not complied with, or regulatory guidance is not adhered to. It is therefore essential that an influencer agreement places an obligation on the influencer to comply with the relevant regulations from and guidance in force. An incentive to comply with this clause could be the termination of the influencer marketing agreement by the business should the influencer fail to comply with the regulations and be in breach of the clause. Failure to adhere to the applicable regulations for financial promotions can lead to significant consequences for influencers and can severely tarnish the reputation of the brands with which they are associated.
- Payment for services – when it comes to payment clauses in influencer marketing agreements, the payment provisions can be complicated and be dependent on several factors. For example, some influencers receive items or access to services from the brands they promote instead of a financial payment. Others receive a set fee or payment based on either the number of social media posts or other factors, such as whether the business requires the influencer to undertake non-social media activities to promote the brand or if the business requires the influencer to incur overheads, such as travel as part of brand promotion.
- Confidentiality – there may be aspects of your relationship with the influencer that you want to keep confidential, such as the terms of their contract or sensitive information about your business. If so, the influencer marketing agreement should include a confidentiality clause and specify the consequences for breaching the confidentiality clause or there should be a separate confidentiality agreement.
- Termination of contract - when negotiating any commercial contract, it is important to consider the circumstances in which you would want to be able to terminate the contract. With influencer marketing agreements, termination clauses are particularly important because of the potential for the influencer to attract adverse media attention and the brand therefore no longer wanting to be associated with them. When drafting termination clauses in influencer marketing agreements, care has to be taken in relation to IP ownership and licensing issues. Read our article on terminating commercial contracts for more information.
Influencer advertising – the key tips for brands
You should consider whether your influencer marketing agreement will require your pre-approval of any post or social media interactionthat your influencer publishes in relation to your brand or business. Whilst including such a requirement will reduce the risk that your brand will suffer reputational damage by the actions or thoughtlessness of the influencer, most marketing directors would say that this approach is too risk-adverse because fast-paced social media isn’t designed for only posting material after campaign approval has been secured. If an influencer waited for that to happen the whole apparent spontaneity of some posts would be lost. So, some influencer marketing agreements attempt to define what types of social media activity relating to their brand require pre-approval and what don’t, such as a like or share. In the case of financial promotions, however, influencer agreements should always stipulate that content must be approved by an authorised person first.
The key tip for brands engaging in influencer marketing is to ensure the influencer knows the advertising rules and regulations, understands the influencer marketing agreement and the consequences of breaching it, and has the support in place to ensure the advertising rules are followed.
The CMA has issued guidance aimed at influencers on compliance with consumer law and issued a guide jointly with the ASA, called An Influencer’s Guide to making clear that ads are ads. These guides highlight the responsibilities of influencers and brands and the protection provided to consumers.
At the heart of the influencer and advertising regulations is the requirement for both influencers and brands to be transparent about whether the influencer’s social media content is sponsored or not. This means that:
- Influencer posts and social media content that is advertising must be obvious and apparent advertising - if you have to take a second look at a post then the content probably doesn’t meet the regulatory need for transparency over whether something is an advert or not. Whilst it may appear clever to hide the reference to advertising, it isn’t for the follower to work out if the post is an advert or not. Advertising should be self-evidently advertising.
- Homepage content - whilst it is tempting to say that the regulations are met by the influencer saying on their website or Facebook page that they are sponsored by your brand and are being paid, this isn’t sufficient for regulatory purposes.
- Advert labels – an influencer can think that they are being subtle by saying that an article has been gifted or donated by a brand or that they are being supported or sponsored by the brand, but again that isn’t sufficient for regulatory purposes. Whilst hashtags can be used, the post must refer to ad, advert, advertising or advertisement, or similarly clear and transparent wording.
- Production – the advert on the influencer’s social media must not only be clearly labelled as an advert, it must also be honest. Whilst the influencer may genuinely think that the product is the best on the market, the influencer and brand mustn’t fall into the trap of over promotion or over promising, either in words or through the use of filters or photoshopping or other post-production promotion methods. Any type of production that is misleading could fall foul of the regulators. For example, the ASA has held that use of Instagram filters could be misleading to consumers when promoting tanning products. It is all a question of what the influencer is marketing. For example, use of photoshopping may be acceptable for a bikini shot but not if the influencer is using the bikini shot to promote a dieting or skin product as opposed to a holiday destination. To try and help both influencers and brands, CAP has issued guidance Beauty and Cosmetics: The use of production techniques.
- A systematic approach – influencers aren’t always as careful as your brand would like them to be and, no matter how much your influencer plans to comply with their influencer marketing agreement, mistakes happen. That’s why brands must take a systematic approach and have a system in place to track all their influencers (and preferably the influencers used by competitors as well) to check what is working through data analysis and in relation to compliance with regulations. With proper systems in place, your brand may be able to spot a problem before a regulatory referral is made.
- Be warned - the regulators have made it clear that compliance with the regulations is poor and that they are redoubling their efforts to monitor compliance with the regulations and take enforcement action.
At Harper James, we have sector expertise in retail and luxury brands and balance specialist legal know-how with commercial acumen. We take the time to understand your business and brand and its products and consumers. That’s what sets us apart when we are advising on your influencer marketing agreement.
Our solicitors advise several innovative and growing retailers, including fashion brands, luxury brands, jewellers, beauty brands and perfumers, and many other designers and sellers of consumer goods with all their commercial law needs; from intellectual property and trademark advice, employment law issues to running prize competitions or managing supply chain contracts.
