influencer marketing contracts

Why your influencer marketing contracts are resulting in losses?

Did you just get into influencer marketing and you’re losing money on your influencer marketing contracts? Why you are on the losing side when your competitors are reaping benefits from it?


When you first came to know about this up and coming marketing street, you were all excited to get your hands dirty. You fought with your colleagues who were putting their weights towards traditional marketing channels. Now when you got a chance and money to spend on influencer marketing, it came back with losses and now you need to explain to your management why it failed. Well, it happened because you’re not taking into account some key factors that can make or break a deal.


A influencer marketing campaign starts with identifying the right influencers. Once you have finalized a list of creators, you need to prepare a influencer marketing contract. It is more than important for the brands to create a contract that includes every minute details. Even if you are working with an agency, you need to make sure that a contract is in place to safeguard your and agency/influencer’s interests.  Here are the five things to keep in mind while creating an influencer marketing contract that will help you minimize the risks and get better results. But before doing that, let’s see if you even need a contract in the first place.


Do you even need an influencer marketing agreement?


With the advent of social media, brands have found a new way to reach their target audience and to make them aware of their services or products. Before this, the advertisement and marketing used to happen through a dedicated channel where a lot of investment was required such as TV commercials, newspaper articles, etc. However, now brands can reach way more many people with the same budget and keep a track of their KPIs. With this, targeting the audience through influencers(or new age public celebrities) has become a tedious task which requires a lot of effort. Now to protect brand’s and influencer’s interests, a influencer marketing contract is necessary. It is simply a document that has all the details regarding the scope of work, timelines, deliverables, terms and conditions, standard procedures, campaign resources and payment terms. It just makes lives easy for the brands and influencers alike. Now you might think why do you need such a contract where you are talking to the influencer directly but it can be a life saver when a dispute arises and you have a written document to support your claims.


On the other hand, there are many brands that don’t indulge in things like these. And you also don’t need to necessarily do this. You can simply have a discussion about your campaign with the influencer or an agency and have everything mentioned and confirmed though an email. As an agency, we also work with many brands and influencers without any contract and 99% of the time there is no issue at all. But on the other hand this success rate can be achieved only through years of experience and personal relations with the influencers and brands. If you are new in this area, a contract might save you from so many worries.


Since now it is clear, let’s take a look at the things you need to do for a perfect influencer marketing contract.


Defining an influencer marketing contract- what are the key points to consider?


An influencer marketing contract is a legally binding agreement between a brand and an influencer, where the influencer agrees to promote the brand in exchange for compensation.


The compensation can take many forms, but usually includes some combination of money, free product, or other benefits. The key point to remember is that an influencer marketing contract is a way to protect both the brand and the influencer, by setting clear expectations and laying out the terms of the agreement.


There are a few key points that should be included in every influencer marketing contract:


Defining the scope of work: This is probably the most important part of the contract, because it sets out what the influencer will be expected to do. Will they be creating original content? Promoting existing content? Using specific hashtags? Make sure that you are clear about what you expect from the influencer, so that there are no misunderstandings later on.


Establishing timelines: Timelines help to keep both parties on track and ensure that the work gets done in a timely manner. Be realistic about what you can realistically expect from an influencer, and build in some flexibility to account for any unforeseen circumstances.


Define compensation: As we mentioned before, compensation can take many forms. Be clear about what you are offering, and make sure that it is commensurate with the scope of work. If you are paying in cash, establish how often payments will be made (weekly, monthly, etc.). If you are providing free product, define how much product will be given and how often.


Outline ownership of content: This is important because it establishes who owns the rights to any content that is created as part of the agreement. Will the content be owned by the brand? The influencer? Or will it be jointly owned where the brand can use it for further advertisements? Make sure that you are clear about who will have rights to use (and monetize) the content after it has been created.


Include a non-disclosure agreement: An NDA ensures that any confidential information shared between the brand and the influencer remains confidential. This is especially important if you are working with an influencer who has a large following, as there is always a risk that they could share sensitive information with their audience.


Include a non-compete clause: A non-compete clause protects your investment by preventing an influencer from working with your competitors during (and for a period after) your agreement. This helps to ensure that you get a return on your investment, and prevents an Influencer from using your relationship to benefit others.


Why your current influencer marketing contracts are resulting in losses


We all know that Influencer marketing has become one of the most popular marketing strategies in recent years. After all, what’s not to love? You get to work with people who are passionate about your brand, you get to tap into new audiences, and best of all, you get results that are trackable and measurable.


But while influencer marketing may be one of the most effective marketing strategies out there, it’s also one of the most difficult to get right. In fact, a recent study by Mediakix found that influencer marketing is loss-making for 62% of the brands.


So why are so many brands losing money on influencer marketing? The answer lies in the contracts that brands have with their influencers.


Most brands enter into influencer contracts without really knowing what they’re doing. They sign up an influencer for a campaign and then hope for the best. But if you want to run a successful influencer marketing campaign, you need to have a contract that protects your interests and ensures that you get the results you want. This works vice versa for the influencers as well.


Here are six things your influencer contract must include:


  1. A clear description of the campaign objectives.
  2. An explanation of how the campaign will be executed.
  3. A detailed plan for tracking and measuring results.
  4. Provisions for terminating the contract if the influencer doesn’t deliver on their promises.
  5. Include a disclaimer about paid endorsements. If you are paying the influencer for their endorsement, this should be made clear in the contract in order to comply with ASCIguidelines.
  6. Define what constitutes a material breach. This will help to protect you if the influencer does not fulfill their obligations under the contract.
  7. Include a makegood clause.


What is a makegood clause and why is it important in an influencer marketing contract?


As we all know a influencer marketing contract is a legally binding agreement between an influencer and a company. The contract sets forth the obligations of each party, and the terms of the agreement. A makegood clause is a provisions in an influencer marketing contract that requires the influencer to perform additional work, at no additional cost to the company, if the original deliverables are not met.


The makegood clause protects the company from losses associated with an influencer not delivering on their contractual obligations. For example, if an influencer agreed to post three times per week, but only posts twice per week, the makegood clause would require the influencer to post an additional time, at no cost to the company. Most of the brands that use makegood clause in their contracts, use it if the post doesn’t reach a specified goal such as a pre decided number of views when you are talking about YouTube videos or Instagram reels. In that case, an influencer is obliged to give you a shoutout in their next video or reel for free.


A makegood clause is important in an influencer marketing contract because it protects the company from losses associated with an influencer not delivering on their contractual obligations. Without a makegood clause, the company would be out of luck if an influencer did not meet their commitments.


If you’re considering entering into an influencer marketing contract, be sure to include a makegood clause to protect your company from losses.


How to ensure that your influencer delivers on their contractual obligations?


As we have already established, a influencer marketing contract should clearly outline the deliverables that are expected from the influencer, as well as the timeline for delivery. By ensuring that there is a contract in place, you can avoid any potential losses that may occur if the influencer does not deliver on their obligations. However, you need to understand that the deliverables and timelines should be mutually agreed before anyone signs the contract. We have seen in some cases that influencers don’t have much time to read and understand everything that is written in the contract. They aren’t lawyers afterall. So you need to make sure that you get on a quick call with the influencers and explain everything specially about the deliverables and timelines. It will save you a lot of hassle I am sure.


What are the most common disputes that arise from influencer marketing contracts and how to solve them?


The most common disputes that arise from influencer marketing contracts are related to deliverables, payment terms, and ownership of content.


Deliverables: Influencers may fail to meet the expectations set forth in their contract in terms of the quality or quantity of content they produce. For example, an influencer may only produce 2 posts instead of the 4 that was agreed upon or their might be wrong data shown in the advertisement part. Based on our agency experience, we have seen most of the issue arising when agreed script takes a lot of time in the video(it might be YouTube, Instagram reels, TikTok or anything else) and an influencer might not be happy with it and they cut short the advertisement time.


Payment terms: There may be a dispute over when payments are due or whether the influencer has been paid the agreed-upon amount. For example, an influencer may claim that they were only paid half of what they were owed or there might be delay in payments due to some issue.


Ownership of content: There may be a disagreement over who owns the rights to the content produced by the influencer. For example, an influencer may claim that they own the rights to the photos or videos they posted and should be able to use them for their own purposes.


First you need to understand a few key reasons for disputes: first, influencer marketing is still a relatively new industry and there is no standardization around contracts. This means that each brand has their own contract, which can lead to confusion and misunderstanding. Second, influencer marketing is inherently subjective – it’s difficult to quantify the value of an influencer’s reach or engagement. This can lead to disagreements over what was promised and delivered in a campaign. Finally, most influencer marketing contracts are verbal rather than written, which makes it difficult to hold either party accountable if things go wrong.


So how can you resolve disputes arising from your influencer marketing contracts? Here are a few tips:


  1. Be clear about what you expect from an influencer before you enter into a contract. The more specific you are about deliverables, deadlines, and compensation, the less room there is for misunderstanding later on.


  1. Put everything in writing. A simple email or social media message documenting the details of your agreement can go a long way towards preventing misunderstandings down the road.


  1. Have a process for dispute resolution in place before problems arise. This could involve mediation or arbitration clauses in your contract, or simply agreeing on a method of communication (e.g., email, phone call) that will be used if disagreements come up.


  1. Be flexible and open to negotiation. Influencer marketing is still an emerging industry, which means that best practices are still being figured out. If you’re willing to be flexible and work with an influencer to find a solution that works for both of you, it will go a long way towards building a long-term relationship built on trust and mutual respect.


Now that you are more aware about the things you need to take care of before preparing your influencer marketing agreement, you need to understand that a contract might or might not be legally binding. It is more of a gentleman’s agreement where you want to make sure that both the parties are on same page as it might backfire the brand or the influencer as well. Influencer marketing is all about relationships and a written document might go a long way to keep the relationship between the brand and influencer healthy. It is also one of the reasons why so many brands go with agencies as they have invested a lot in relationship building and some conflicts that we discussed today might not even arise when an agency is involved. With that being said, let us know if you have any questions regarding influencer marketing contracts. We are here to answer them all and our mission is to make influencer marketing easy and accessible to all.