Influencer marketing is a powerful weapon for brands. Influencers engage with target audiences through authentic storytelling, improve brand sentiment, and so drive a successful return on investment. However, with regulatory authorities increasingly scrutinising campaigns, mitigating against potential legal, commercial and reputational damage should be considered when embarking on working with influencers on digital marketing campaigns. Gowling WLG's five-part series of Influencer 101 articles will equip you with the tools that your brand needs to ensure it's in the strongest position when approaching influencer partnerships.
Meet Gowlessence, the latest beauty brand to pop up on your social media feed. Gowlessence produces cleansers, creams and serums that its customers swear make them look good on the outside, while also making them feel good on the inside. Gowlessence's demographic is millennials that justify their indulgence on "self-care" by investing in Gowlessence's promise of organic, cruelty-free products and lifestyle.
In order to capitalise on the beauty industry's penchant for digital marketing, Gowlessence want to launch an influencer marketing campaign. Gowlessence has allocated a generous budget for this, in the hope that collaborating with influencers that already have loyal audiences will bring more eyeballs - and subsequently, sales - to the brand.
Gowlessence is confident that it's finalised the influencers that it wants to use to promote the new Self-Care Serum. However, right before it sends the agreements to the influencers, its competitor - LawWow - has a PR disaster which makes Gowlessence rethink the contracts. LawWow had collaborated with @LawYeah, an influencer with nearly half a million followers. @LawYeah was paid a generous fee to post two posts on her feed and two stories on Instagram, promoting LawWow's lipstick in its latest shade: Lawyered. LawWow, having redirected its legal budget towards its social media marketing campaign, forewent ensuring there was a long-form contract between the parties. As such, there were no provisions reallocating risk away from LawWow and eliciting further information from @LawYeah.
Warranties and Representations
A warranty is a contractual promise that a certain fact is/will be true - the breach of which may give rise to a claim for damages. Although such promised statements don't really go to the heart of the contract, warranties protect against loss if the statements turn out not to be true. Representations are statements of fact made by one party, which induce the other to enter into a contract. If the representation is untrue, the innocent party can rescind the contract or claim damages in tort. These damages are assessed on a tortious basis, which is different from the basis of calculation for damages for breach of contract.
In the days after @LawYeah's initial Lawyered post and story, the tabloids reported that @LawYeah had previously been involved in criminal proceedings when she'd physically assaulted her lawyer. This was a particularly unfortunate incident to surface, given the name of the lipstick shade being promoted. While this could've been spun as a humourous campaign, where @LawYeah was laughing at herself, LawWow didn't receive the joke very well. LawWow's founder is an outspoken anti-violence advocate, who doesn't want her brand to be associated with any hint of scandal. This debacle is a headache for LawWow, as it ends up having to devote resources to responding to complaints from its followers for working with @LawYeah, rather than spending such time and effort on promoting the new product.
Further, LawWow received a particularly angry message from a photographer claiming that he was never remunerated for the shoot where he'd taken and edited the image subsequently posted by @LawYeah for the campaign. @LawYeah hadn't ensured that the rights in the image had been correctly assigned from the photographer to @LawYeah, so she actually wasn't entitled to commercially exploit it.
Finally, @LawYeah, resident in the United Arab Emirates, posted the content without having the required "influencer licence" - exposing her to a potential fine from the relevant regulator.
While it's too late for LawWow to go back and include the necessary warranties and representations in its agreement with @LawYeah, LawWow's experience serves as a warning to Gowlessence. Gowlessence immediately considers which warranties and representations are relevant for its influencer agreement; so that it can have a claim for damages should any such provisions be breached.
Using LawWow's catastrophic collaboration with @LawYeah as an example of who not to work with, Gowlessence wants to protect itself against any influencer past or future behaviour. It therefore includes a warranty and representation that the influencers have not and shall not do anything that does or could bring Gowlessence, the Self-Care Serum or the campaign itself into disrepute. Gowlessence broadens this to cover any criminal convictions. This is intended to make sure that Gowlessence knows of any criminal background the influencer may have. By doing its best to get this information, Gowlessence hopes to avoid a situation where the influencer's past attracts negative press for the Self-Care Serum campaign.
Third party rights
Gowlessence also includes warranties and representations about the actual content that the influencers produce under the agreement. To avoid any third party claims potentially derailing the Self-Care Serum campaign and creating bad press for Gowlessence, the influencer agreement requires its influencers to warrant and represent that the content will not infringe on the copyright or any other rights of any third party. This enables Gowlessence to shield itself from having to defend an unknown number of third party claims. These contractual provisions also serve as a reminder to the influencers that they must receive all relevant assignments if anyone else is involved in the production of the content.
Last year, the United Arab Emirates' National Media Council (NMC) implemented the "influencer licence". This applies to all content creators using social media to promote brands/products/services. As one of Gowlessence's prospective influencers is Dubai-based, Gowlessence includes the warranty and representation that the influencer has/shall obtain, by the date of publication of the content, any relevant permits and consents to legally allow the influencer to post the content. Although the fallout from a licence-related fine would be purely reputational for Gowlessence, as the fine would be imposed on the influencer - this is conditional on the brand evidencing that it was led to believe that the influencer did indeed have a licence. Risking working with an influencer without the relevant licence comes down to the question of whether Gowlessence wants to be associated with an influencer who gets in trouble, and so is on the NMC's "radar", and the related scrutiny which Gowlessence will come under if a fine is made public. Gowlessence does not want to take this risk.
Finally, Gowlessence includes warranties and representations that the influencers have provided accurate performance analytics. Although Gowlessence has done its due diligence, and thoroughly assessed all of its influencers' previous activity to assure confidence that they'll provide a "brand lift", Gowlessence wants legal recourse in case the numbers provided by the influencers aren't truthful. It's too easy for influencers to purchase followers, likes and comments on their social media accounts, and so Gowlessence wants to be sure that the Self-Care Serum campaign is going to be seen by actual people - not bots.
Gowlessence is fortunate that LawWow's continued bad luck has meant Gowlessence has become extra-prudent and cautious about its Self-Care Serum social media campaign. While it's impossible to predict every reputational and financial hazard for Gowlessence to avoid, the inclusion of warranties and representations in the influencer agreement means that Gowlessence is able to reallocate the risks associated with working with influencers.