Author: Boyana Boyadzhieva
In response to the rapid development and expansion of social networks, the advertising industry has been forced to develop new marketing strategies to successfully reach its target audience.
Among the most effective and lucrative marketing tools is the modern phenomenon known as influencer marketing. It is based on the collaboration of large, medium, and small enterprises (advertisers) with influencers in order to promote their products and services to the influencer’s engaged and loyal audience.
An influencer is a person that has a strong influence on social networks and manages to generate interest in a particular product or service by posting information about it on their profile, blog, or vlog.
This kind of advertising tactic is extremely successful as consumers often do not perceive the information that the influencer presents as advertising because the latter has managed to build a relationship of trust with their followers. This ensures a wide reach of the target audience, who in turn can be influenced to perform a desired action, such as engaging with the content or purchasing the advertised product or service.
I. Is regulation needed on the content published by influencers?
Despite the lack of specific regulation governing this type of legal relationship in both Bulgarian and European legislation, influencers are part of the advertising industry and as such, the content created by them is regulated by European and national consumer and competition law.
Typically, the influencer agrees to promote the advertiser’s products or services in exchange for some form of remuneration. According to the European legislator, this type of marketing practice carries risks that can negatively influence consumer behavior, especially if the content presented by the influencer is not specifically identified as advertising. The lack of transparency indicates that the product or service is sponsored may be considered an unfair practice that induces the consumer to make a transactional decision that would not otherwise have been taken.
- Under Directive 2005/29/EU on Unfair Commercial Practices and the European Commission’s Guidelines on its interpretation, if influencers frequently carry out promotional activities aimed at consumers, they are considered to be ‘traders’, regardless of the number of followers they have.
- Directive 2010/13/EU (The Audiovisual Media Services Directive) sets out a number of rules also applicable to influencers who distribute their content on video platforms such as YouTube. The rules include a definition of sponsorship and product placement, as well as the need to provide clear information on the existence of a sponsorship agreement between the advertiser and the influencer.
- Two new pieces of European legislation came into force in 2022: the Digital Markets Act and the Digital Services Act. Under the Digital Services Act, influencers, as content creators, will have to take greater responsibility for the content they publish online. While the main focus of the legislation is on online platforms, which are obliged not only to implement better transparency measures regarding the way their content algorithms work but also to monitor publications, influencers will also have to ensure that their content is appropriate and not misleading or illegal.
The recommendations on influencer marketing developed by the National Council for Self-Regulation (NCSR) in Bulgaria reinforce the efforts of the European legislator and encourage compliance with responsible marketing practices, of which influencers are already part.
According to the recommendations, any content created by an influencer that promotes a product or service is considered commercial communication if there is control by the advertiser over the content and payment of a monetary amount or provision of free or discounted goods and services.
In order to avoid penalties, commercial communications created by the influencer must be presented in a manner that would not mislead the audience as to the nature of the content. To this end, the influencer may use the “#” sign (hashtag), indicating the name of the advertiser, in addition to words describing the nature of the agreement, e.g. #advertising/ad, #sponsored, #free samples, #in partnership with. Most social networks now have tools to help advertisers and influencers to ensure compliance with these legal requirements. An example is the option to tag “branded content” through the settings of some of the major platforms.
II. What is an influencer marketing agreement?
Because an influencer marketing agreement is a non-traditional form of business agreement, documenting it, which includes outlining the terms of the entire marketing strategy between the advertiser and influencer, will help to ensure both parties are protected and will reduce risks of non-performance.
An influencer marketing agreement should be comprehensive, and well-structured and should take into account the many factors that can affect the relationship between the two parties.
It is recommended that the contract contain the following structure:
- General terms
This section of the agreement identifies the parties to the contract – on one hand the Assignor (advertiser) and on another hand the Assignee (influencer) by including their details (UIC/ UCN, full names, and address). Definitions of legal terms or terms used in the agreement itself are often added to this clause in order to reduce the risk of ambiguity and uncertainty in the contract.
2. Purpose and subject of the agreement
The subject matter of the influencer marketing agreement specifies the nature of the relationship between the Assignor and the Assignee, the purpose of the collaboration between them, the description of the advertising campaign, the purpose behind it, and what the Assignor’s expected results are.
3. Exclusivity
During the drafting of this type of agreement, it is also advisable to consider whether the promotion of competing products or services by the Assignee within a certain period of time after the publication of the content for which the contract has been concluded may significantly reduce the effectiveness of the campaign conducted by the Assignor.
If so, the Assignor may wish the Assignee to refrain from publishing information about other competing companies for a period of time after the publication of information about the Assignor’s products or services.
4. Remuneration
As already mentioned, the influencer marketing agreement is a remuneration contract, therefore this clause should describe the type and amount of remuneration payable by the Assignor to the Assignee, as well as the method and frequency of payment. Depending on the agreement between the parties, the payment may be either a lump sum or a subscription.
5. Content requirements
Perhaps one of the most important provisions in the contract is the clause that describes the type of content the Assignor expects to see on the Assignee’s social profile. This clause should be individually worded for each marketing campaign, and we recommend that the information regarding the content be provided in great detail. It may describe the following requirements:
- the number of posts the Assignee is expected to create;
- the format and length of the content (photo, video, tweet; live)
- method of promotion;
- the publishing timetable to be followed by the Assignee;
- materials to be used and, accordingly, materials to be avoided by the Assignee;
- the messages that the content will convey and whether these will need to be pre-approved by the Assignor beforehand;
- the use of any particular hashtag required by the Assignor;
- whether the activity of the Assignee’s followers needs to be tracked and analyzed accordingly;
- whether the Assignor’s approval of the final result is required before the content is published;
- whether the content is allowed to be removed after a certain period of time.
Due to the extensive nature of the content requirements, it is possible for these to be described in a separate document, which will be signed by both parties and will form an additional and integral part of the agreement. The clause in the agreement itself will only refer to the document in question.
6. Obligations and rights of the Assignor
Depending on what the two parties agree, the Assignor may have the right to make creative approvals of the content before the Assignee publishes it, to require analysis of the marketing campaign, and to provide technical equipment if such is required.
7. Obligations and rights of the Contractor
In view of European and national legislation, one of the Assignee’s main obligations in the contract will be to indicate its collaboration for the promotion of the product or service referred to in the material in a way that would not mislead the audience.
It is important to mention that the Assignee has control over their own social media accounts and may therefore wish to archive a post they have made after a certain period of time. In order to avoid disputes at a later stage, it is advisable for both parties to the agreement to agree on the possibility for the Assignee to exercise their right to archive or publish content that advertises a product or service competing with those of the Assignor after a certain period of time.
The Assignor may also provide technical equipment which the Assignee will be obliged to return after the marketing campaign has ended.
8. Independent status of the parties
This clause serves to distinguish the two parties to the agreement as independent of each other. The parties hereby warrant to each other that neither party will assume any obligation or liability on behalf of or for the account of the other party or in any way binds the other party. This is to confirm that the agreement entered into between the parties is not intended to create and shall not be construed as a joint venture, partnership, or business organization of any kind.
9. Force majeure circumstances
Force majeure clauses eliminate liability for unforeseeable and unavoidable losses if the performance of the terms of the contract is hindered, delayed, or prevented by an event beyond the parties’ foresight or control. These clauses typically cover natural disasters such as hurricanes, floods, and earthquakes, as well as human acts such as armed conflict. Such clauses provide contractual protection, the scope, and effect of which depend on the express terms of the particular contract.
10. Intellectual property rights
Extremely important in such business relationships is the clause concerning intellectual property rights in the content created by the Assignee. Here it is important to specify to whom the created advertising materials belong once the marketing campaign is over. Some of the main questions to ask when drafting the clause are whether the rights will be transferred to the Assignor or will remain with the Assignee and whether the content can be reused by the Assignor in its future advertising campaigns.
11. Confidentiality
Another very important provision is the confidentiality clause. It ensures that the parties to the contract do not disclose information of a commercially sensitive nature that has become known to them. The clause may be worded in such a way as to bind the parties mutually or unilaterally.
12. Term and termination of the agreement
Clauses relating to the term and conditions of termination are standard practice in the drafting of contracts. It should be specified:
- the term of the contract, after which the contract will be terminated;
- whether the contract may be extended by mutual agreement of the parties;
- what are the conditions for early termination of the contract in the event of default by either party,
- whether the parties have any obligations after the termination of the contract.
13. Miscellaneous
The miscellaneous provision often addresses the conditions regarding:
- the form of correspondence;
- the applicable law in the event of a dispute between the parties;
- the jurisdiction that will apply to regulate the commercial agreement;
- the validity of the entire contract if one of the provisions is declared invalid.
The above clauses give an idea of what is advisable to include in an influencer marketing agreement, however, depending on the specifics of the campaign, additional provisions may be added.
III. Conclusion:
As influencer marketing becomes more and more widespread, the need to draft agreements that regulate the commercial relationship between advertisers and influencers becomes imperative.
A well-drafted and comprehensive contract that outlines the long-term goals and expectations of both parties in advance can ensure a smooth relationship, reduced risk of future disputes, and a successful marketing campaign.
This material prepared by Boyana Boyadzhieva aims to provide more information about influencer marketing agreements. It does not constitute a legal opinion and cannot be interpreted as individual consultation on any concrete facts or circumstances. The advice of an intellectual property specialist should be obtained for specific questions and situations. For more information on the above-mentioned issues and individual consultations, please contact KrasimiraKadieva law office at 00359 882 308 670 or make an inquiry using the contact form on this website. Boyana Boyadjieva is a legal associate at the law firm. She holds a Master’s degree in Intellectual Property Law from the Queen Mary University of London. Prior to joining the team of the law firm, Boyana interned at the European Union Intellectual Property Office (EUIPO). Her professional interests are related to intellectual property, data protection, e-commerce, and contract law, and regularly attends conferences, practical courses, seminars, and webinars in these areas of law. She is fluent in English.