In his article Commercial Law expert, Jonathan Masucci takes a closer look at the legal protection required when an influencer (which for the purposes of this article includes celebrities and anyone in the public domain) and a brand wish to collaborate on the production and marketing of a product.
This article follows Jonathan’s recent article “Social Media Influencers: Contracts and Brand Agreements” which may also be of interest to you.
Why might I need a legal agreement?
Regardless of whether you are an influencer in the fitness industry looking to collaborate with a brand on your own blend of protein supplement or gym clothing line, a start up brand looking to gain access to a wider online customer base through influencer advertising, or are an established brand/influencer in the cosmetics or retail space looking to collaborate on a line of products, it is always advisable to consider carefully how best to protect yourself legally. Although influencer marketing, particularly on social media is still, relatively speaking, in its infancy many of the legal challenges the arrangements throw up aren’t new:
You should consider putting in place a Product Collaboration Agreement if…
- the brand wishes to engage an influencer for their design input in the creation of a product, as well as their advertising services
- the length of the relationship will be more long term (i.e. over a year) and royalties will be payable to the influencer
- the influencer should be restricted from engaging other brands on similar collaborations
- once the business relationship ends, the brand will not be able to continue selling the product
You should consider putting in place an Influencer Agreement if…
- the brand has a product already and marketing it to a target audience will be the focal point of the business relationship
- the length of the relationship and payment terms are on a per post basis or a campaign consisting of several posts
- the influencer can work with similar brands on other campaigns without restriction
- the brand will be able to engage other influencers to advertise the product
Why might influencers and brands wish to collaborate together?
As with other influencer/brand relationships, successful product collaborations can and should be beneficial to both the influencer and the brand. The brand owner will benefit from the influencer not only having the potential to engage a global internet audience that would otherwise take the brand far longer in terms of time and expense, to build up itself but also an audience that is aligned with its target demographic. Likewise, the influencer will also benefit from advertising the brand which in turn, allows them to continue to expand and develop their own online personal branding, influence and revenue; this ultimately benefits the brand which is able to reach a wider target audience via the influencer. The consumer is also offered a more personalised experience in terms of receiving content about products and brands they are interested in through the pages of the influencers they follow.
How does a Product Collaboration Agreement differ from an Influencer Agreement?
In short, both Product Collaboration Agreements and Influencer Agreements will contain some similarities. For instance, the influencer will need to provide the brand with a licence to use their image rights in connection with the product and content they create for the brand to use. The two types of agreements may also have similarities in terms of how they approach the influencer’s marketing responsibilities towards promoting the brand.
That said, due to the very nature of a product collaboration relationship, there will be some key differences that need to be factored into the drafting of a carefully prepared Product Collaboration Agreement:
Services provided
Whereas the main focus of an Influencer Agreement is likely to be on the influencer delivering an advertising campaign, with such an agreement containing provisions dealing with the delivery of the content and how the brand may make use of that content, by contrast, a Product Collaboration Agreement will be more heavily focused on both parties collaborating over the design and manufacture of the product, together with the various stages of approval before it goes to market. As a result, unlike an Influencer Agreement where the influencer is typically given an existing product to market to their target audience, a Product Collaboration Agreement will need to clearly address the time and efforts spent by both parties in creating the product, with the influencer having a much bigger say in the final product design.
Payment
Where an influencer is required to provide advertising services under an Influencer Agreement, it is common for them to be paid on a per post or per campaign basis. This is where you’ll have heard about the eye watering sums certain influencers are paid for a Tik Tok post or Instagram Reel!
The financial arrangements tend to differ where the parties wish to collaborate on a product line. Not only will the brand typically pay the influencer an advance that is recoupable from the sales of the product (for example, 40% on signing of the agreement, a further 40% once the product has been approved for manufacturing and 20% on launch of the product), the parties will also need to consider what level of royalties should be payable to the influencer for future sales of the product.
At the end of the Agreement
As with all commercial agreements, it’s important for both influencers and brands alike to consider how long the commercial relationship will last. The term of a typical Influencer Agreement engagement can be anything from a single post or campaign, to multiple posts and campaigns spread out over a number of months. Due to the nature of the influencer marketing industry, once the campaigns have been delivered and the influencer paid for providing the services, there is generally no need for the Influencer Agreement to remain in place long term. Where a brand wishes to re-engage the influencer’s services for another product promotion or campaign in the future, it’s far more convenient from a commercial point of view, for the parties to enter into a separate Influencer Agreement detailing the commercial specifics for that particular campaign.
By comparison, an influencer and a brand’s relationship in the context of product collaborations will be far more extensive. The brand will spend a significant amount of time and money in collaborating with the influencer over designs, what materials to use, manufacturing the product, forecasting etc. Once the product is approved by both parties, that’s really only the beginning and the influencer will need to play a more active role in advertising a product associated with their name and image to their target audience, whilst the brand deals with sales, supply and demand etc. Once the arrangement comes to an end, a brand will also want to ensure that it has sufficient time to sell off any surplus stock manufactured for the collaboration. By contrast, the influencer will want to ensure a brand cannot continue to indefinitely sell a product associated with their image, once the business relationship has come to an end.
As a result, it’s in both parties’ interests to ensure a suitable Product Collaboration Agreement is put in place throughout the term of the business relationship, in order to facilitate making the collaboration a success for both parties.
Specialist Legal Advice for Influencer Marketing
If you are a business seeking to engage an individual in the public domain in order to collaborate on the development of a particular product, or a social media influencer or celebrity that has been approached to work with a brand in providing your expertise in designing and advertising their products, it is important to get legal advice early on how best to proceed with the commercial relationship.
Commercial Law experts Caroline Armitage and Jonathan Masucci, can help with any questions or queries you might have.
