Cient Alert: How Social Media Influencers Can Effectively Protect Their Name, Image and Likeness Print PDF
With the explosion of online shopping over the past several years and the staggering amount of time people now spend on social media, social media influencers have an incredible impact over consumer buying decisions.
Advertisers have increasingly recognized this impact and are engaging more influencers than ever to endorse their products and services. However, far too many influencers fail to adequately protect their rights in their influencer/endorsement contracts, causing significant damage to their earning power.
To illustrate this point, consider the following story about one of our influencer clients. The client did not believe he needed to have an experienced professional to review any influencer agreements that he viewed as “small money agreements” or that were from advertisers he “trusted.” One particular contract required the influencer to create one Instagram post and one YouTube video, for a significantly smaller fee that he generally received. Given the smaller fee, his plan was to sign the agreement without attorney review, but we ultimately convinced him to let us review it.
One of the clauses actually stated that the advertiser could use his name, image and likeness in perpetuity (yes, forever!) and in any promotional manner, even after termination of the agreement. If he signed the agreement, he was essentially giving the advertiser an unlimited right to use his brand for almost nothing. Imagine the amount of money signing that could have cost him.
Advertisers draft their agreements to protect themselves. While advertisers would prefer their influencers to sign their form agreements without any changes (since they generally heavily favor the advertisers), they expect influencers to negotiate the terms of the agreement. In fact, many advertisers will actually look more favorably on influencers that negotiate the agreement, as it demonstrates the diligence and experience of the influencer. Many advertisers assume that an influencer that does not even put in the effort to read the agreement will not put the effort into his or her obligations.
Also, remember that verbal agreements are in most cases not binding. Potential business partners can make all types of promises (“you’ll make this much money”, “the company will give you that even though it’s not in the agreement”), but it’s very difficult to enforce a term that is not in the written contract.
The following are several important terms in endorsement/influencer agreements that every influencer should carefully review before signing an agreement, as well as points to consider when negotiating these terms. It is also important to engage an experienced attorney to guide your negotiations and review of each such agreement.
An exclusivity term is one that prevents you from working with other companies. An exclusivity term that is too broad can severely restrict your ability to promote other products and capitalize on other opportunities, and can potentially cost you a lot of money.
If you cannot avoid an exclusivity provision in an agreement, you need to make sure it’s negotiated in a very narrow way, particularly with respect to the products/services/companies with which you are prohibited from working and the time period of the exclusivity provision. Advertisers like to try and make them last as long as possible, sometimes even long after you’ve completed your services.
For example (and almost any other type of product/service can be substituted for this example without changing the issue), let’s say a company wants you to endorse athletic hats. The proposed agreement includes term of three years and an exclusivity provision that prevents you from entering into any similar type of agreement for “competitive products.” What does “competitive products” mean? It could mean just about any type of clothing or even footwear. By signing the agreement with this provision, you wouldn’t be able to capitalize on so many other potential opportunities for those three years! Be very careful about blocking yourself from other money-making opportunities by agreeing to overreaching exclusivity language.
Remember to also keep track of your exclusivity obligations so that you do not make the mistake of starting to negotiate with an advertiser (or even enter into an agreement with an advertiser) that violates one of your existing exclusivity obligations to another advertiser.
You want to make sure that you are not granting more rights than you expected to. If you only intend to grant rights to your name and likeness (and not your other trademarks such as your other brands or slogans), you do not want to grant a blanket right to all of your intellectual property. Also, you want to specify how broadly your name, image and likeness can be used.
Can the advertiser use them for any of its products, or just a specific category of products (or even more narrow, one specific product)? Advertisers also generally look for the right to use your name, image and likeness in “any and all” media. If you want to limit it to online advertising, you need to specify this as well.
Endorsement deals tie the advertiser’s and your reputations together in a highly public fashion. Therefore, not only is it extremely important to pick endorsement partners that are consistent with your personality, values and beliefs, it is important to consider how long you want to be tied to this advertiser.
Long-term endorsement agreements can offer a predictable, steady source of income, but on the other hand, may make it difficult for you to pursue other financial opportunities, especially if the agreement includes an exclusivity clause. You may also want a short-term agreement if you want flexibility to break ties with certain advertisers as your career and personal beliefs evolve. Rights to terminate can also be valuable tools to help adjust the term.
Advertisers have a tendency to try and include very broad obligations to cover the services they expect you to perform. You want to make sure you specify in detail exactly what you are expected to do.
For example, for in-person obligations you will want to nail down the number of days (and even hours) you must participate in promotional activities, the number of appearances, when and where these requirements are to be performed. Not only do you want to make sure to make clear that the advertiser bears all the costs of promotional activity, you will also want to specify your expenses that the advertiser will pay for in connection with the services (for example, airfare, lodging, food, transportation—hopefully you’ll have enough leverage to get first-class or business-class airfare, a limo and a first-class hotel for you and at least one guest).
For online obligations, the types, frequency and content of the deliverables should be specified in as much detail as possible, so that both parties on are on the same page. For example, for Instagram stories: how many slides need to be created; what tags need to be included; what will be the go live date and how long will the story be visible on your page; do swipe up links need to be included; do performance analytics need to be provided; are there any specific talking points and/or tracking links (and are there any prohibited topics)?
You also need to think about how much creative approval you have. Advertisers will want the ability to have complete creative control, but you want to avoid having them portray you in a way that you don’t like. You may even want more involvement, such as having a say in developing the product or service (this could range from just picking colors or patterns or having input into the actual design of the product or service). Depending on the level of your involvement, you might consider asking for additional compensation or an ownership piece in the product or service.
It is also extremely important to have approval rights over how your name, image and likeness is used. You will want the right to preview the advertiser’s uses of your name, image and likeness and the right to reject uses you think may be harmful to your reputation or show you in an unflattering light.
Advertisers are going to want to stretch out the payment of your fees. They will want to pay in installments and tie each installment payment to the completion of one of your obligations. You should consider pushing for higher initial payments up front. In addition, you should consider asking for a percentage of each sale of the product or service you are endorsing. With enough leverage, you can negotiate guaranteed payments that are paid no matter how many products are sold.
It is also important to include a “pay or play” clause, which requires the advertiser to pay your fees even if they don’t end up using your services (as long as the failure is not your fault). This will protect you if the advertiser decides to go in a different direction.
Advertisers will almost always include a morals clause giving them the right terminate the agreement without paying you if you do something that may reflect negatively on the advertiser. Often they are as broad as giving them the right to terminate if they believe your actions will subject them to ridicule, controversy, embarrassment or scandal. While you will unlikely ever be able to delete this term entirely, you should try and narrow the provision to try and make it less subjective and include more narrow events (such as limiting it to convictions for felonies). Further, you should consider adding a morals clause that gives you the same right to terminate if the advertiser does something that could reflect negatively on you (e.g. they start selling products that you find morally wrong).
While some termination related aspects of the agreement, like morals clauses, are addressed above, it is important to specify what happens after termination. You want to make sure that the advertiser’s rights to use your name, image and likeness end upon termination (or if not right upon termination, after a short “sell off” period where the advertiser can try to sell off the products it has left as of termination).
Too many times, we’ve seen advertisers try and slip in language that their right to use your name, image and likeness will last forever, even after termination (remember the story at the beginning of this article). Further, the agreement should require the advertiser to immediately pay you all of your earned but unpaid fees as of termination.
FTC Endorsement Guides
The Federal Trade Commission (or FTC) is part of the federal government and has the power to investigate and bring enforcement actions for deceptive or unfair advertising practices. You may be asking how this would apply to you. The answer is that the FTC’s power extends to endorsements, so you need to make sure you are following the FTC’s guidelines for endorsements.
These guidelines apply not just to traditional advertising (like commercials) but to social media influencing/endorsements as well. And the guidelines require not just that the company who has engaged you follow these rules, but that you do as well. All advertisers will require you to commit to following these FTC guidelines in your agreement.
The FTC guidelines require that you disclose any material connection you have with the brand (including any personal, family or financial relationship with the brand). And, as the endorser, it’s your responsibility to make these disclosures when posting on social media. Don’t assume that your followers already know about your brand relationships. Also, note that tags, likes, pins and similar ways of showing you like a brand or product are endorsements that require the disclosures. The following are some of the guidelines regarding social media endorsements (more information can be found here).
An influencer has a lot to consider when entering into a relationship with an advertiser, and it is imperative to have an attorney review all influencer/endorsement agreements in detail at the outset. Given the nuances and complexities of the work of an influencer, your attorney should also be someone with whom you can discuss opportunities and ideas. You should be able to call your attorney up and say “I have an offer to do X, what terms/things should I be thinking about?” or “I want to do X, how do you think I should approach it?” A good attorney can also help shape and focus your business decisions in addition to protecting you from a legal perspective.
You may be saying, I’m going to be paying enough money for an attorney to review and negotiate my contracts, how much more do I have to spend to also have business-related conversations with him or her? Even though it may cost a bit more, having your attorney involved from to provide sound counsel in your business matters will many times net you more money in the end as well as peace of mind in protecting your brand and business.
The foregoing information is provided only for general reference. It does not constitute legal advice. Legal advice may be provided based only on specific facts. Please consult Parker Ibrahim & Berg before relying on any general information stated herein. We are happy to discuss any questions you may have regarding legal issues related to the topics addressed in this article.