August 27, 2021
The Influencer Marketing Industry has witnessed expansive and disruptive growth in recent times and is expected to grow at the rate of 32 percent, compounded annually, to touch 24 billion USD by 2025. Brands instinctively are looking to make the most out of the recent boom in the growth of online communities and have their eyes set on influencers to market their products to enhance their reach and customer loyalty by cashing on the influencers’ high relatability quotient for any typical social media user. However, Influencer Marketing has a lot more to it than just posting pictures – In 2019, the Competition and Markets Authority shed light on the imperativeness of proper disclosure and protection of consumer rights as underlying principles for every branded campaign. The disclosure tightened the scrutiny on entrants and incumbents alike to adhere to the commercial and legal rules whil operating in the digital space. A few of these particularly noteworthy legal rules are highlighted below –
- Non- Disclosure Agreements (NDAs) – These agreements are specially designed by brands to legally bind consumers into non-Disclosure of information of a commercially sensitive nature. NDAs enable the brands to operate with the confidence that any sensitive information, the disclosure of which could prove detrimental for the brand, will not be disclosed by the influencer. Such types of agreements are most common in instances involving the launch of a new product by the brand and are therefore sometimes signed even before disclosing the to-be-launched product to the influencer.
- Copyrights and licenses – A Copyright is an unregistered right that comes into effect immediately upon expression of an idea in the form of photos, videos, audio, music, art/literature work, etc. Any brand’s intention to fully own the content created by an influencer has to be explicitly stated in the agreement, otherwise, the content belongs to the creator even if the brand pays for the content. Licenses, on the other hand, only grant the licensee the permission to use the content and do not imply transfer of ownership of content. The most common example would be the grant of license by the composer of audio to someone willing to use that audio in their content. Such a grant only implies that the composer permits his creation to be used as audio by the licensee but does not imply that the licensee now owns the composition.
- Advertising Disclosure and Consumer Protection Legislation – The regulatory authorities are extremely critical of brands that mislead consumers into spending their hard-earned money. This is why it is now mandated that all sponsored posts be clearly represented with tags such as “#Sponsored”, “#Ad”, “#PaidPromotion”, “#BrandedContent”, etc. The importance of clear disclosure and communication regarding the nature of posts in helping avoid legal repercussions cannot be emphasized enough. Complaints against brands in light of the violation of Consumer Protection Laws have the power to severely tarnish the reputation of influencers as well as brands.
- Services Agreement – At the beginning of any collaboration, the brand and the creator enter into an agreement that explicitly details the terms of any such partnership – the asks of the campaign, ownership of content, influencer’s adherence to consumer protection guidelines, division of responsibility, rehabilitation in case anything goes wrong, etc. Sometimes, brands even require influencers to enter into a promise to never talk negatively about the brand.
- Data Protection Regulation – Influencers must ensure that their practices are in line with the General Data Protection Regulation (GDPR) that came into effect in May 2018. The GDPR entails that the flow of data between parties must be protected in a way that no personal information is compromised and/or used without the consent of the data subject. Their information must not be used for any individual or targeted marketing campaign unless explicitly consented to by the data subject. Since information is shared frequently for the purpose of determining statistics pertaining to user engagement, it is advised that any such information be adequately anonymized to protect the identity of the data subject.
As the social media landscape continues to diversify and as influencer marketing continues to flourish as an industry, the implications for and expectation of responsibility from the influencers continues to increase. It is essential that influencers realize their obligation, both towards their audience as well as the brands for whom they act as marketers.