Among the many changes currently being accelerated within influencer marketing, the norms and expectations around influencer contracts stand out. It has evolved into a complex undertaking that borrows from Hollywood.
We sat down with influencer marketing attorney Amanda Schreyer for her take on influencer contracting today and how it’s evolved over the years. Here are some of the themes we took away from that conversation:
The Rise of Career Creators
In the beginning, influencers were just psyched to get hired—so there wasn’t much push-back on the terms defined by brands. Today, influencers are brands, too, with a lot more leverage.
Sometime around 2008, the entertainment industry began to see the value behind full-time creators building multi-platform brands, and influencers started getting Hollywood agents. With this evolution, influencer contracts began to mirror traditional talent deals. The result has been—and will continue to be—a “leveling out” of power between parties. In some cases, an influencer presents even more leverage than the brand when sitting down at the negotiation table.
Realities contributing to negotiation dynamics between brands and influencers:
- Influencers can be hard to replace.
Creators are no longer a dime a dozen, and the casting and recruitment process can be complex. Assessing influencer fit based on a set of specific brand criteria can take weeks. Once you find the perfect creator, the team has likely spent hours searching for them, possibly having reviewed hundreds of profiles before finally landing on the ideal candidate. This process puts creators in the position of being sought after, which gives them an advantage.
- It’s a business—not a hobby.
Sponsored content and brand partnerships are how influencers make money. If an influencer loses their desirability for these types of engagements, their livelihood is at stake. With that in mind, they want to have standards in place that ensure they have options to protect their brand and their audience. They’re scrutinizing each potential partnership and the fine print to ensure the deal makes sense for their image, brand, and business goals.
- Agents and lawyers are advocating on their behalf.
With the business stakes being higher for creators, they look to their talent managers, agents, and lawyers to help protect their image and evolve their brand. A manager will help them develop a growth plan for their business that will dictate what types of partnerships are worth taking on and minimum rates they should accept. Agents and legal teams will fight the creator’s negotiation battles for them, ensuring the fine print is in their favor (as much as the other party will allow). High-tier creators are known to walk away if they can’t get the terms they seek.
Hollywood Imports: Pay-to-play, kill fees, and why exclusivity matters.
When influencer agents got involved in contracting, “pay-to-play” was one of the first terms they incorporated into contracts. The logic for pay-to-play is as follows: “If I commit to a campaign, I am potentially giving up other business opportunities, and if you cancel, then you should compensate me for the lost business.” This contractual requirement is often used with major movie stars who can impact a film’s success or its likelihood of getting produced. The logic breaks down when it comes to influencer content created for social media— the length of a campaign is typically days or weeks, not years, and participating in one campaign usually does not preclude an influencer from participating in another very close in time.
What’s more common in influencer contracts today is a “kill fee” for termination without cause—a term that keeps the advertiser on the hook to pay the creator something if they cancel the deal for a reason other than the creator’s breach of contract. Kill fees can be a significant sticking point in many negotiations today because when influencers sign a contract requiring brand exclusivity, it prevents them from entering into deals with other competing brands—therefore, limiting other revenue opportunities. Kill fees get negotiated based on various factors, including the length of exclusivity and timeframe in which cancellation occurs, and are typically based on a percentage of the total fees that would otherwise be paid to the influencer.
The Influencer Likeness Economy
Influencers are no longer a commodity; they’re brands. Usage of their likeness (their name and face) may now be a separate revenue stream, but it’s not just about the money. When a creator makes content, there are so many ways in which their likeness can be reused, whether within the content or separate from it—controlling this output is critical for influencers wanting to control their marketability, brand value, and future business prospects.
Around 2010, advertisers began to abandon display ads and double down on influencer sponsored content. At that point, likeness rights began to solidify as the main value proposition. Today, influencer content is fueling the resurgence of display ads and being repurposed across the marketing mix resulting in higher costs for likeness rights. The stakes for protecting and controlling an influencer’s likeness is higher than ever before. Just as celebrities leverage their likeness, so now do most high-tier influencers.
The takeaway for brands: get clear on how you want to use influencer content ahead of contracting. Before entering into negotiations, you will want to answer: where will it be used, for how long, and how much paid amplification?
Emerging Trend: “Reverse Morals Clause”
It’s long been assumed and accepted that a brand should have the right to distance themselves if a creator does something morally reprehensible—because such actions could tarnish a brand that a company has put many years and a lot of money into growing. Today, influencers are seeking to safeguard their image from potentially misbehaving brands, too.
In the era of “cancel culture,” everyone wants to ensure they can protect themselves from harmful associations. After the rise of Black Lives Matter protests in June and the ensuing backlash on social media towards some publications, brands, journalists, and even influencers, we saw an uptick in conversation around reverse morals clauses and anticipate this becoming more standard in 2021.
We’re keeping our eye on the role influencers are playing in politics, activism, and social justice movements and the impact on contract negotiation, specifically when it comes to the morals clause.
Want to learn about our approach to influencer contracting? Get in touch.