EP 101: Influencer Marketing Law with Sharon Toerek | Legal

In the first episode of our new “Duo Podcast” series, Stacy sits down with Sharon Tourek of Legal and Creative. Sharon is an intellectual property and marketing law attorney, and in this episode discusses the legal Dos and Don’ts of Influencer Marketing.

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About Legal And Creative:

Legal + Creative is a site devoted to helping professionals in the marketing, advertising and communications industries protect and monetize their creative assets. Find content here about the legal issues marketers face every day, like intellectual property rights, social media and content marketing compliance, and agency-client and agency-freelance relationships. Legal and Creative is published by attorney Sharon Tourek.

Ways to contact Sharon:

Twitter: @SharonToerek
Website: legalandcreative.com
LinkedIn: @sharontoerek/
Phone: 800.572.1155
Email: [email protected]

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Stacy:                           00:00

  • Yeah, I think my top speaking has improved. I’ve caught myself doing, on the solo podcasts, some interesting things where I inhale interestingly. I’m like, “Do I do this in real life?”

Speaker 1:                    00:14

  • Welcome to Marketing Mistakes and How to Avoid Them. Here’s your host, Stacy Jones.

Stacy:                           00:19

  • I want to give a very warm welcome today to Sharon Toerek, who’s joining us from Toerek Law. I initially met Sharon when she was speaking to a group of agency owners on how to best safeguard their agencies, and have continued to benefit from listening and getting to spend time learning from her at other conferences.

Stacy:                           00:34

  • Sharon is an intellectual property and marketing law attorney based in Cleveland, Ohio, and her specialty is helping creative professionals protect, enforce, and monetize their creative assets. She has particular concentrations of clients in advertising, marketing, and creative service industries, and counsels them on legal issues including copyright and content protection, licensing of creative content, trademark and brand protection matters, marketing agency service contract issues, freelance for contract issues, social media issues, advertising compliance, and direct marketing regulations. She’s a former President of the American Ad Federation in Cleveland and serves on the American Association of Advertising Agencies, the four A’s, legal consultant panel. In the advertising and communications industry, she writes and lectures frequently on the topics of intellectual property protection, marketing agency relationships, and legal implications of social media. She’s also passionate about the growth and success of small businesses and serves as an immediate past chairman of the Council of Smaller Enterprises, a business resource and advisory organization for small businesses with over 14,000 members companies in Northeast Ohio, and also serves as the Board Director of the Greater Cleveland Partnership, and is part of the National Small Business Association.

Stacy:                           01:47

  • When she’s not keeping the world safe for intellectual property and marketing, she enjoys reading, movies, big screen not Netflix she said, spending time in the Cuyahoga Valley National Park, and her college sweetheart and husband Ed. I wanted Sharon to join our Marketing Mistakes and How to Avoid Them podcast today to specifically talk to you about what you need to know legally about influence or marketing because there’s a lot more involved than just choosing that perfect influencer and figuring out what they’re going to do for you. And there are a lot of mistakes you can make that Sharon can help protect you from. Sharon, welcome.

Sharon:                        02:19

  • Thanks, Stacy, for having me. I’m happy to be here.

Stacy:                           02:22

  • Very happy to have you here. Now I’d love to start off and just give a little insight into some of the things that you’ve done with influencer marketing, how you’ve helped agencies and their clients within this space, and what you might like about actually working in this field.

Sharon:                        02:40

  • Well, you know, agencies always keep me on my toes. Marketing in general is something I really enjoy just from a cultural perspective. I think what I like best about what I do and what I like best about working with marketing agencies is it’s just this great blend of interesting legal issues, of course, but also this intersection of popular culture and art, and I really, I think that what I love best about what I do is helping agencies monetize their intellectual property, whether it’s creative assets, whether it’s technology. It’s a joy to see them take their talent and help their customers and clients get great business results, and I enjoy helping them protect themselves along the way.

Sharon:                        03:29

  • And what I love about influencer marketing is that there is such a great opportunity to make such a dramatic improvement in compliance and results with just a few small tweaks, and I know we’ll probably talk about some of those today. But really, the margin for error is high and the risks seem to be very high but I hope that what your listeners will come away with is that with just a few adjustments in the way you handle your campaigns, how it’s easy to fall in line compliance-wise, and have a successful campaign without the stress or the worry. And so that’s what I love about working with marketers, agencies in particular, and in influencer marketing.

Stacy:                           04:15

  • Wow, that’s fantastic. I happen to love it too, so that’s good.

Sharon:                        04:18

  • Yeah, I know you do. I’m in good company.

Stacy:                           04:22

  • So, if an agency or brand’s figured out who they actually want to work with, and it took them hours to likely narrow that down and figure out all the asks of the partnership, and now they need to actually contract the partnership. Can you discuss why it’s important for a brand or an agency to have a contract with an influencer? I bet there are a lot of people who wonder if you’re just sending out product without a fee being paid, or maybe even just a small fee, if you really need a contract as well.

Sharon:                        04:50

  • Right, well I think that’s certainly a fair question, and I also think it’s a good opportunity to really talk about what the term contract actually means or needs to mean. I think that, as you pointed out, there are campaigns of different types and sizes, right. In some cases, I’m sure your clients are pairing up with celebrity influencers, which is a much higher strata, and a much riskier area in terms of compliance and cost, down to working with really micro-influencers. Why is that relevant? I think it’s relevant because possibly you don’t necessarily need the same document with every single kind of influencer that you’re gonna work with. And so I think agencies should, first of all, understand that, that you need to take a step back and look at what is the goal we’re trying to accomplish and what is the risk we’re actually assuming based on the way we’re planning to set the campaign up? And then you go to the issue of documentation and figure out what kind of a contract or letter agreement or written policy you might need with the influencer that you’re gonna be engaging.

Sharon:                        05:59

  • It’s a good reason why looking at your tool set in general, your legal tool set for influencer marketing and on a regular basis, is important. And it’s also a reason why being flexible is important because not one agreement size is gonna fit all situations.

Stacy:                           06:15

  • Do you think there is a dollar range that you need to start thinking more seriously about having a locked in contract? Or is it really just up to the brand?

Sharon:                        06:25

  • I think it’s really up to the brand. And again, I think it depends upon how you’re planning to compensate the influencer. I would say, my rule of thumb rather than looking at an amount specifically is if you’re exchanging cash with an influencer, even if it’s a non-celebrity influencer, I think it’s very important that you reduce those relationships into contractual agreements. If you are working with an influencer who maybe has a smaller tribe, a smaller following, and your relationship consists more of brand ambassadorship, where you’re sending them products to review or sample, or you’re inviting them to special events, or maybe you’re sending them an unboxing opportunity, things like that, I think it’s practical to document those relationships. But maybe those contracts don’t need to be quite as robust and as comprehensive as those that you might need for a larger campaign.

Stacy:                           07:31

  • Okay.

Sharon:                        07:31

  • The area to draw a line at is cash changing hands. If cash is changing hands, most likely you’re gonna need an influencer agreement, and if it’s cash changing hands with a celebrity endorser, then that’s obviously a higher strata even of potential compliance questions you want to think about.

Stacy:                           07:50

  • Okay, also their whole legal teams are going to be getting involved in those cases as well.

Sharon:                        07:54

  • Absolutely, and I prefer to look at the contract not only as being protective of anybody who’s listening runs an agency that works in the influencer space, but also the brands that those agencies represent, so as much as it’s a tool for protection, I think it’s an opportunity to educate as well, because I can tell you from my experience that most of the mistakes that get made, and I’m sure you’ve seen this too, Stacy, in your work, are simply the result of a lack of knowledge or education about what the FTC is requiring in terms of disclosure and transparency. They may be making mistakes left and right simply from lack of knowledge or understanding, especially the more inexperienced influencers who have just been focused on building up their follower base and not necessarily on monetizing that opportunity in some way. They’re not trying to cause you and your brands trouble. They just don’t know they’re doing it incorrectly in some cases.

Stacy:                           09:05

  • Yeah, and what we also see on the brand side is that a lot of times brands will want to do a contract, and we want them to do contracts, we always do contracts no matter the size. But they won’t think ahead of the game of what all the asks are to include in the contract. And so the contract will be negotiated, it will even be signed and then the brand will be coming back and saying, “Oh what? It would be really cool if so and so would just do this.” And that doesn’t necessarily work very well in the world of celebrity. It’s okay in the world of micro-influencer to ask for a little bit more, and as they’re growing into a little bit of a larger, into a macro-influencer, but those celebrities, once you have something contracted, it is a deal point. It is deal terms and anything at that point is gonna just cost more money.

Sharon:                        09:56

  • Right. Well, and that’s a good point to illustrate the fact that while it’s important from a legal point of view, and obviously this is the world I live in everyday, to have good agreements that are reflective of everybody’s goals and commitments, this is as much a business equation as it is a legal equation. And yeah, the more leverage your influencer has, and the more they have the opportunity to move the needle for you, good or bad, the more likely it is that you’re gonna have to spend more money to get back to the drawing board with them in terms of additional asks and things like that.

Sharon:                        10:42

  • There are certainly ways to make the contract flexible enough so that it can be amended, but that’s strictly as you point out, not your biggest hurdle. Your biggest hurdle is getting them to agree to look at what they’ve committed to and expand on it.

Stacy:                           10:56

  • Yeah exactly. So when we talk about contracts, who’s contract should actually be used? Should it be the brand’s or agency’s, or should it be the influencer’s, if they even have one?

Sharon:                        11:08

  • Right. Well, obviously I am a fierce advocate for agencies ’cause that’s who I tend to, that’s where I spend my time representing clients. But I would say that this is an area where really the brand and the agency are typically, their interests are completely aligned because a mistake made by an influencer is going to hurt the brand and it’s gonna hurt the agency in a couple of ways as far as the agency is concerned. It’s gonna potentially damage the business relationship between the agency and the brand, because if it’s an error the agency’s made in a lack of compliance or training or whatever are selecting the influencer, the brand’s going to be looking at them as responsible for that. But ultimately, if an influencer makes a mistake, it’s gonna reflect on the brand as well. So in a typical contract situation between an agency and their brand client, you’ve got people on both sides of the table, and their interests may not be completely aligned until the contract’s signed. But in the case of influencer marketing, the brand and the agency are in alignment from the beginning of the negotiations. So I guess that’s a long-winded way of saying that my tendency is that either the agency on behalf of the brand or the brand itself ultimately win in terms of which contract form gets used.

Sharon:                        12:34

  • Again, it’s gonna be a matter of leverage. If you’re a smaller upstart brand looking to build capital out there on social channels, and you have an opportunity to work with an influencer, macro or celebrity, they’re gonna have more leverage than the brand does in that situation, and you may not, and they probably have professional representation, as well, if they’re a celebrity endorser. So, you may be in the position of having to work off their version of the agreements. My preference is for the brand or the agency to use their forms, but as a practical matter, you have to look at which party starting out in the relationship has the most leverage and work off those documents and negotiate the best deal you can from there.

Stacy:                           13:17

  • And with that said, so if the influencer has their own contract, and definitely when you start getting someone who’s represented, that can come into play, I would say, and we act off of this as well for our agency, that we have a contract that we refer to that we use as a best guidelines so that we can go back and forth and check to make sure that the things that we know are important to our client are actually in the influencer’s contract too.

Sharon:                        13:44

  • Absolutely. That’s absolutely best practice. I tell every agency that doesn’t have its own set of legal tools for these types of relationships that even if you are ultimately gonna sign the influencer’s version of an agreement, you need a benchmark as you just pointed out. You need something that’s gonna serve as your own checklist or punch list of deal points. And the best resource for that is having your own standard agreement. It’s necessary, I think, if you’re gonna do business in this area frequently, and this is gonna be one of your go-to solutions in terms of campaign recommendations to a client. You need to, first of all, go through that exercise of having an agreement so that you understand how the deals are structured, and secondly, you need to have one there as sort of your checklist so that you understand if something’s missing, if something else needs to be included, what the agency or the brand’s perspective on an issue might be, which might differ from the influencer’s perspective.

Sharon:                        14:50

  • And I love to use the agreement as an education tool for influencers too. Our standard practice is to, even though they’re not all, they can never be all inclusive, but we like to have a roundup of what the FTC, in plain English, what the FTC’s current requirements are in terms of disclosure, transparency, in some cases you can even blow that a little bit farther and suggest hashtags that might be compliant and appropriate given the kind of promotion that you’re working on. Use that really as an education guide for the influencer because again, as we talked about earlier, a lot of times these influencers just don’t know they’re doing something that they shouldn’t be doing or that they’re forgetting to do something that they need to be doing. This is really [crosstalk 00:15:39] and travel tourism, tourism marketing by the way, influencer marketing. You might have a travel blogger that gets free accommodations and doesn’t even think to disclose that they were there at the invitation of a resort brand. And I’ve even seen celebrities do it. For some reason, there’s something about travel tourism, I guess maybe everybody’s brains check out ’cause they’re on vacation.

Sharon:                        16:06

  • I’ve seen countless examples of social campaigns involving travel brands where I know darn well that that person putting that content out didn’t pay a dime for that room or that restaurant tab. And yet there’s no disclosures. So I think it’s just a lack of education rather than an intent.

Stacy:                           16:26

  • Sure, I think we see that with, when you mentioned restaurants, we see that a lot across the food industry, as well.

Sharon:                        16:31

  • Yes, yeah that makes a lot of sense. I think in general, influencers tend to not think as hard about experiences or events, in terms of disclosure as they do, they’re better about disclosure when they get stuff. You send me a pair of socks and I’m gonna talk about the socks, then I pretty much know that I need to say, “Thanks for sending me this socks.” You know? But if it’s an experience that’s where I think we see a lot looser treatment of the rules, as far as I can tell.

Stacy:                           17:06

  • No, I 100% agree with you. So, what are some of the top points that you absolutely want to make sure are included in a contract?

Sharon:                        17:16

  • Well, as you might imagine, you want to talk about what conduct you’re actually expecting from the influencer in terms of which channels, platforms, the frequency. You want to be giving them as much guidelines around the content that’s gonna be included, so that’s a more intuitive thing I think to include in the agreement. On the legal side of things, you want to be very clear with them about requiring them to familiarize themselves with the FTC and if it’s a nutraceutical or especially a medical product, the FDA’s rules around-

Sharon:                        18:00

  • … especially a medical product. The FDA’ rules around testimonials and disclosures and not only that are going to comply but that they’re aware of what they are and you could be helpful to them in an appendix or whatever, but you want them to be committing to education on their end. You want them to be running copy by you if that’s appropriate. You want to be very clear about what the approval process is going to be for the content that’s going to go out on the platforms.

Sharon:                        18:35

  • A natural pushback on this point is you want it to feel organic, you want it to feel spontaneous. You don’t want your macro influencer to have to text you from the restaurant with the content of their tweet before they shove it out there on social media. You have to plan in advance for the types of things that are okay and are generally off limits. Then you want to address the liability for lack of disclosure and you want to influence your, keep careful records and archives of the content that you’re putting out there. Those I think are some of the high points.

Stacy:                          19:13

  • Agreed, and I think even now, with Instagram stories and Facebook Live, that brings in a whole other world of trying to make sure that you have that transparency going on and you certainly can’t say, “Stop! Stop recording! You need to re-record this,” because the moment’s gone, right?

Sharon:                      19:29

  • Yeah, absolutely. Well, and then the problem with the viral aspects of the platforms like Stories is lot of times brands haven’t even seen the stuff that’s gone … it’s gone already. This is a good practice lesson for brands and the agencies who are running their influencer campaigns, you need somebody at the helm all the time monitoring this stuff, and that is … it’s something to build into your agreements that the influencer understands that they need to be available for a quick reaction and fast corruption if they screw up, and they get that call from the brand or the agency that says, “You need to take this down because you did it incorrectly,” or “It’s not in alignment with our brand standards.” That’s another point to address in the agreement, that that can happen and if it does, that the influencer needs to be ready to comply.

Sharon:                        20:28

  • Then you need somebody … this is really more your area than mine, Stacy, but you need someone at the brand side and the agency side monitoring all this content and you can’t skip a day, depending on what your campaign schedule is, because … Snapchat’s even more of a nightmare. I mean, that stuff’s gone and it’s almost … if you miss it, you miss it. There is a thumbprint there, you can obviously get at it through back channels, but at that point, the moment and perhaps the damage are already gone and done.

Stacy:                           21:03

  • Yeah, and it’s two-fold. Not only is the damage done … we like telling our team that if you don’t record it, it almost didn’t happen. Now it did because there’s damage, but you can’t ever look at it. You have no way on lot of these platforms to go back in time and see something unless you’re able to somehow screengrab it, capture it, and that’s something with part working with your influencers, you could actually ask them to give you video files and different things that they’re capturing so that you at least have a little bit more content too.

Sharon:                        21:32

  • Yeah, that’s a great point, and something that is also fair game for addressing in the agreement is what their documentation obligations should be. You know, were they obligated to record and document and how do they get that information over to you? Is it just when you ask for it, are they reporting to you on a regular basis … and then in general, there’s just this trust between … particularly agencies and brands. I haven’t seen it arise quite to the same level between influencers and either agencies or brands, but there’s this whole issue of numbers and transparency. Is your reach really what you say it is, and are you really meeting as many eyeballs as we need you to be meeting? If those metrics are important to the brand, then that’s something to address in the agreement or the statement of work that goes with the agreement as well.

Stacy:                           22:26

  • Hopefully that’s been addressed before you even actually sign on the influencers or [inaudible 00:22:30], you’ve done your homework, you’ve used the search tools, you’ve figured out who has dead accounts, fake followers, kind of narrow that [crosstalk 00:22:38]

Sharon:                        22:39

  • Yeah, that’s why working with a team you have is so critical, because that’s the kind of stuff that no matter how tightly and excellently drafted an agreement you have with the influencer is, it’s not really remediable, at least not easily so, by any legal mechanism.

Stacy:                           22:58

  • 100% agree.

Sharon:                        22:59

  • Yeah.

Stacy:                           23:01

  • We’ve touched on this a little bit, but what can really go wrong from a legal standpoint with an influencer partnership? We’re going to talk more about FTC in a minute, but what are the fall-outs? Where can it all go just to die?

Sharon:                        23:17

  • Yeah. Well, so from … you know, I guess examples of disasters that are not only … they’re brand disasters and legal disasters in some way, shape or form, are the totally tone-deaf content that can go out there that happens typically very spur of the moment and gets viral very quickly. I think my favorite example of that is the key employee of the agency in Detroit with the big three auto accounts as [inaudible 00:23:56] for one of the big three automakers, talking on social media about how horrible drivers in Detroit are. I mean, using profane language, tweeting about bad rep. This is during a time when the auto industry was just sort of rebounding back in Detroit and Detroit was just kind of getting its swagger back. That relationship, as you can imagine, didn’t last very much longer after that content went out.

Sharon:                        24:26

  • The tone-deafness is usually leading to just bad choices. Invoking the brand, because he actually … I think he tweeted out some of this stuff on the auto brand’s official Twitter account, which is a lesson in making sure you are very tight with the reins in terms of who’s got control of the handles of all these social platforms. Don’t let your intern loose with your client’s official accounts because they usually have them on the same mobile device and I’m sure that’s how this happened. You know, he thought he was tweeting on his own account which is stupid enough, but he went on one of the accounts, one of the big three automakers and tweeted stuff out about how stupid Detroit drivers were and all other kinds of invectives.

Sharon:                        25:14

  • That’s the kind of stuff that can go wrong and that you have to sweep up from. Then there are other things like being loose enough with your claims and your language so that the stuff can rise to the level of being construed as a false claim.

Sharon:                        25:36

  • The FTC is equally as concerned about you not disclosing your relationship with the brand if you’re an influencer, as they are about you saying something or failing to say something about a product or a service that misleads the public. So whenever you’re using really superlative language or saying grandiose things or failing to say something that limits the ability of a service or good to actually do what people buy it for, those are the types of things that can really make trouble for influencer campaigns.

Stacy:                           26:18

  • Fair enough. What we’re always concerned about is what can you contractually put in that will safeguard the brand from the influencer not using any sort of defamatory language around the brand deal, for a period of time. You can’t say, you know, into perpetuity. It’s not forevermore, but how can you safeguard yourself with like a time stamp of okay, we’re going to do this deal and is the next three months, six months, twelve months? How long can it actually be that’s realistic that you can try to make sure that for whatever reason, there’s no definition. Or can you not-

Sharon:                        26:57

  • Well, I think … yeah, I mean I think that’s there’s two questions and that they’re related, your specific one related to being disparaging or defamatory. I think you can put a pretty long time stamp on conduct or content that’s going to be disparaging or defamatory especially, I think any definition should last forever. But disparagement, you know, there’s … maybe you have a relationship end up badly with the brand you were representing and at some point, you’re going to want the flexibility to say that. I think that the bandwidth on those types of commitment should be fairly lengthy post-relationship. I wouldn’t even blink at a year or two on stuff like that.

Sharon:                        27:45

  • That’s different from tying the influencer’s hands in terms of their ability to go and represent a different brand as an ambassador on social media, where you’re going to have much shorter ropes in terms of your ability to tie their hands to go work with a competing brand on an influencer campaign after they’ve ended their relationship with you.

Sharon:                        28:08        

  • There’s a difference between a period to endorse or favor a brand competitive with yours after the relationship’s over, and conduct that could be considered disparaging or insulting or even worse, defamatory as to the brand.

Stacy:                           28:24  

  • Fair enough. Then in this time of the Me Too movement and Time’s Up and everything else, and there’s so many brands you want to stay away from anything too political. When we’re going out, we’re looking for a influencer celebrity partner and if we know that about the brand, we’re certainly going to be safeguarding and looking for assurances that historically, that influencer hasn’t piped up and posted a lot that might be either too left, too right, or just not within the comfort zone of the brand. How can you safeguard and contract out to make sure that something doesn’t happen. You’re running your campaign, you have this influencer partnership going, and all of a sudden, they have seized the momentum of the moment and they want to pipe up and say their own beliefs. What can you do or can you not do?

Sharon:                        29:18     

  • Well, I think that what you can do is put language in your agreement and be very candid and transparent and ahead of the campaign with the influencer about the fact that ultimately, the brand is going to be in control of this decision of whether or not to sever the influencer’s representation if the influencer does or says anything that the brand feels is either .. either casts itself on a false light or brings disrepute upon the brand. You want to give the brand that flexibility to unilaterally make those decisions that are going to be, in their judgment, impactful on the brand. You want to build those safety nets, those bumpers, into the agreement.

Sharon:                        30:12        

  • The other part of it I think is just plain old due diligence on the part of the brand or the agency’s team to make sure that you have a good idea of what the history of the influencer’s politics are, if that’s going to be important, what their social activism looks like, some of those … those more qualitative aspects of the public image of influencer that could impact the brand, and make decisions that are reflective of the brand values and who you select to be an influencer in the first place.

Stacy:                           30:51  

  • Surely. You’ve mentioned the FTC quite a bit, right, and it’s certainly something that’s been of the top of my mind since I’ve gotten to deal with them up close and personal, lots of fun. But let’s talk more about it. How is it that they’re involved in influencer marketing and what exactly is it that they do?

Sharon:                        31:14      

  • Their involved in influencer marketing because it’s created another vast plane of real estate for what the FTC regards as false or misleading marketing, basically. I mean you know, used to be very quaintly referred to as false advertising or misleading advertising, but as tactics have evolved in the digital realm and now in influencer marketing, they are particularly concerned with how easy it is in a very viral and digital world to mislead vulnerable audiences, first of all. A lot of people who are consuming content on social or through channels where influencers are influential are young or vulnerable for other reasons. The FTC has a heightened awareness of protecting kids, and by that I mean really anybody under the age of 16. They have a heightened interest in protecting seniors who can be, hate to generalize, but who are targets for campaigns in industries like insurance, financial services, health care certainly, so any influencer campaign touching on those realms.

Sharon:                        32:42 

  • Then as I’m sure you know, Stacy, when it comes to nutriceuticals, health products, beauty products in particular, where the FDA has governing authority to regulate, they’re very interested in any kind of content that can imply a product does what it does and doesn’t do or is safe when it hasn’t been proven to be safe under certain circumstances.

Sharon:                        33:09     

  • What can they do? The FTC is absolutely first and foremost interested in making sure that no content gets put out there by influencer that’s false, obviously, but that secondly, can’t be misconstrued by the consuming public as something that’s more journalistic or neutral when it really isn’t. What I mean by that is they don’t want consumers to be mislead by something an influencer says because they don’t understand that the influencer was compensated to say it. Those of us in the business who are probably skeptical by nature anyway, we’d normally know when we look at social media accounts or ad copy, we know when we’re seeing puffery, we know when you can look between the lines and conclude that someone was probably compensated somehow to make a claim or say something that they said about a product or a service, but it’s not as apparent to every consumer which is which. That’s the FTC’s ultimate goal. What can they do? They can investigate, they can audit, they can force corrective action in the form of corrective advertising. Certainly, a termination of a campaign is within their province to do, and in some cases, they can seek injunctive relief if the advertiser isn’t compliant.

Sharon:                        34:43

  • Until a couple of years ago, they were primarily looking at brands on this question, but they have more recently, within the last 12 to 18 months, began to look at and contact influencers directly and now in some cases, agencies. Everybody in the food chain of influencer marketing is subject to scrutiny by the FTC in terms of making sure that their campaigns are not misleading, that they’re transparent and that all the necessary disclosures are in place.

Stacy:                           35:15      

  • If an influencer doesn’t disclose a commercial relationship, they don’t that hashtag ad, hashtag sponsor, whatever it is, whose at fault? Who is actually being held to blame? Who is responsible?

Sharon:                        35:30    

  • Well, the short answer is everybody in the chain is technically responsible. The more practical answer is that the FTC is more likely to look to the brand first in those situations, influencer second. So far. It’s going to depend, over time, in my opinion, on how blatantly a particular influencer is failing to follow the really relatively straightforward rules and if they have a pattern of-

Sharon:                        36:00 

  • … really relatively straight forward rules, and if they have a pattern of non-compliance, then the FTC’s likely going to be way more interested in, you know, paying attention to their activity, but they’re going to primarily be looking to the brand first in the real world. The technical answer is everybody could be responsible, but what the FTC is really interested in is getting the misleading advertising and influencer content corrected or taken down.

Sharon:                        36:31  

  • That’s what they want first and foremost is they want to eliminate the opportunity of consumer confusion and so their first goal, and so if you’re compliant with those requests, either because you made an innocent mistake or you are quick to react to their concerns, that’s probably going to be the end of it, and they’re not going to necessarily have a reason to want to pursue the matter any further. If you’re demonstrating a pattern of non-compliance or, you know, you like to push the envelope in terms of how you have your influencers run their campaigns, the FTC’s going to be more interested in you and your behavior, and if it’s chronic then, you know, you’re going to have an even harder time. It’s a matter of degree, in my opinion.

Stacy:                           37:19   

  • We ran into an experience working with them and it was swift and it was relatively painless, where we did end up having a very detailed conversation about one specific campaign that a brand had done on their own, but we were an agency who had worked with them, so we got looked at as well. We ended up opening up the vaults and sharing all of our influencing, influencer partnerships, basically, for them to be able to eyeball, and the big concern they had as an agency is whether or not we had paperwork in place that we were educating the influencers on what was required.

Sharon:                        37:55

  • Right.

Stacy:                           37:55 

  • So that was one of the biggest questions that they had, that they wanted to really make sure existed was that as an agency involved in influencer marketing space, working on behalf of brands, that we were guiding both the brand as well as those influencers on what they needed to do. And so I think that’s a really good takeaway for other agencies to know that you need to have that.

Sharon:                        38:20     

  • I’m glad that you brought that up for a couple of reasons, but the most important of which is that as unpleasant as that would be to go through as an agency, you know, no only because of the uncertainty of what the result’s going to be, but because it’s a business interruption, having to respond to their request for information.

Sharon:                        38:42 

  • It’s also, on the other side of the coin, a really great opportunity because it’s so easy to fix. If you have a habit and a routine as an agency working in influencer space, or brand that does a lot of influencer campaigns, you have a habit of regularly educating your influencers by making training available to them, by meeting with them one on one to explain to them what the road rules are, by giving them templates and road maps for them to understand how to compose content that is compliant.

Sharon:                        39:19      

  • That is going to go a long way towards keeping regulators just out of your hair, because what they want to know is that, you know, they understand human nature and everybody can screw up, but what they want to know is that you have some sort of process or system in place to minimize the opportunity to confuse or deceive the consumer, and so I totally agree with you that having that stuff in place is important. I’m actually pleased to hear you say that that’s where they were focused when you met with them, because that’s something that’s easy to fix with a few process tweaks. That’s the good news.

Stacy:                           39:56  

  • Agreed, 100%. It’s easy to fix, shore up and tweak, and we did have some things but we still shored it up and we ended up doing a lot more investigation into what the requirements were, because it’s shifted a lot, too. I mean, you know, 2015’s when they really started talking about influencer marketing. 2017, you start hearing them more so, and then last fall, they started taking action. It’s something that more and more people I think are going to be experiencing for themselves at brands and in agencies.

Sharon:                        40:29     

  • And I would say to take a lesson from that from an agency or brand that’s listening to this, is, you know, be open to modifying your process to make the compliant aspect of your campaigns easier to be compliant. Be open to what the FDA’s investigator’s telling you. I mean, their job is really to protect consumers, first and foremost, and we all have these fantasies about anybody in a regulatory or law enforcement capacity enjoying the process of holding feet to the fire, but what they’re really there to do is to make sure that we’re all following the rules that are designed to protect consumers, and it can be a drag to have additional reviews and stops along the way when you’re trying to get a campaign off the ground, but if you ever find yourself at a situation like that, treat it with an open mind as an education experience and if you’re not compliant currently and you have gaps in your compliance, it’s certainly going to be unearthed anyhow, so just be open to what they’re sharing with you about how you can fix it for the future.

Stacy:                           41:48

  • Absolutely, because getting that FedEx letter from them can be very super scary.

Sharon:                        41:52 

  • I’m sure. Yeah, no, I’m sure, but I mean, it also sounds like your responsiveness made the process go a lot more quickly and a lot more easily than it could have in a more antagonistic situation.

Stacy:                           42:09

  • Absolutely. And then, you know, I think the thing to keep in mind, and you touched on this, you know, influencer marketing is the wild, wild west. It is absolutely something that is all over there and the government is trying to put in regulations for protection, but they don’t even know what all those regulations necessarily should be, because things are shifting and changing and it’s hard because brands, there’s so many times that we get asked by brands, “Oh, do we really have to include #ad? Do we really have to include #sponsor? Can we bury the hashtag down below in other hashtags?” By the way, has to be in the first line, is where they want it. Absolutely above the fold on any post.

Stacy:                           42:56 

  • But the brands are so concerned about the organic feeling of their social posts. They think that if the public knows that they’re actually paying these influencers to post on their behalf, that the gig’s up. It’s ruined. And it’s not true, because when we’ve done studies and surveys with consumers as well as influencers, you know, the feedback we get is people know that things are paid for. In fact, most people, their go-to is that everything’s paid. Oftentimes, things that aren’t even paid, people’s go-to is that’s paid.

Stacy:                           43:32   

  • We hear that all the time in the world of product placement. People think that everything you see on TV shows, feature films, is paid for, when it’s not. Same thing with influencer marketing. There is still some things that are trade or some things that are just slight dollars versus heavy dollars.

Stacy:                           43:52  

  • But the consumer’s feedback, the influencer’s feedback, is as long as that partnership still is organic, as long as the two are working in accordance and it’s not something that’s disruptive or feeling at odd, consumers are okay with influencers getting paid or getting something for free. It’s not making them think less highly of the partnership. What they’re looking at engaging is is whether the person they follow is actually authentic, organic, someone who should actually be speaking and liking the brand, versus being something super left field. Brands don’t really have a choice in this, and that’s what they need to realize, is they don’t have a choice about saying whether something can be hashtagged or not hashtagged #ad anymore. It is absolutely the law.

Sharon:                        44:39 

  • Right. Well, I’m so glad that you sort of raised the distinction between … it is the law and beyond that, I sort of, this almost feels like a religious argument. I’m not going to talk about religion, by the way, don’t get upset. But what I mean by that is that this is not an example in all cases where simply focusing on the minimum requirements of the letter of the law is necessarily going to avoid the interest of the regulators. They not only want to know … they not only want those hashtags placed prominently, above the fold as you’ve indicated, but they are looking at the organic content itself and whether or not from the content itself it’s clear that the influencer is not misleading as to the relationship with the product or the service they’re discussing. And so it’s a question, and not only that, but they’re not … the FTC is not convinced that some of the automatic tools that the platforms like Instagram and Twitter and Facebook are making available to help influencers be compliant, they’re not fully satisfying the FTC in all regards. So you really have to look at the body of content you’re putting out and whether it’s apparent on the face of the content itself that the relationship’s being disclosed. So I wanted to follow your comment up with that as well.

Sharon:                        46:18        

  • I also wanted to say that you’re so correct that consumers are getting smarter and smarter and smarter and the assumption of a commercial relationship between particularly either a [inaudible 00:46:30] or a celebrity influencer and an average consumer, they’re going to automatically in many cases assume that there’s some sort of business relationship between that influencer and the brand that they’re talking about. And so you need to work with sophisticated influencers who understand how to craft content, whether it’s visual or literal content, that complies with the spirit and the letter of the regulations while also feeling true to the brand and interesting enough for consumer to actually want to look at. And it’s a cocktail, right, it’s not easy to be successful in all three fronts there, but that’s where the brand has to be really selective about the influencers it chooses to work with, or it’s got to be willing to invest a little extra time in educating those influencers about how to do it correctly and how to help them raise their skill level up so that they can craft content that is influential but not not compliant.

Stacy:                           47:40  

  • Okay. Fair enough.

Sharon:                        47:41  

  • Yeah.

Stacy:                           47:41  

  • So all this content, so we’ve gotten through the legal, the FDA, the FTC.

Sharon:                        47:47   

  • Right.

Stacy:                           47:47  

  • The big bad wolves that are out there for you.

Sharon:                        47:49 

  • All the alphabet, yeah.

Stacy:                           47:50 

  • Right. So comes down to content rights. Right? Who owns the rights to the content created by the influencer?

Sharon:                        48:00    

  • So it depends on, I’ll start my answer with a typical lawyer answer, which is, it depends. In many cases it’s going to depend on what the contract itself says, and so if it’s important to you as … hold on. You can edit the sneeze.

Stacy:                           48:17 

  • We’ll cut that out, no problem.

Sharon:                        48:18  

  • Delete them.

Stacy:                           48:18  

  • Edit, edit, edit.

Sharon:                        48:21   

  • Let me start again.

Sharon:                        48:23    

  • So that’s a great question and I’m going to start with a typical lawyer answer, which is that it depends what the agreement says. Absent the agreement saying anything about content ownership, then the presumption under copyright law is that the influencer owns whatever content they create. So if it’s important to you as a brand that you be able to repurpose that content, republish it, re-appropriate it in some other way, shape, or form, then you want your influencer agreement to address that. So I’m glad you brought that up, because that’s another thing to make sure that the contract speaks to.

Sharon:                        49:03  

  • Absent, and aside from that, using brands themselves in the content that the influencer puts out doesn’t effect the brand’s rights to the brand itself, the trademarks, the logo marks, whatever. You might want to address that by some license language in your agreement, saying that the influencer has the ability to use by license the trademarks of the brands they’re representing in their content as well.

Sharon:                        49:32  

  • So absent anything in writing, the influencer owns the content. If you want as a brand to own the content, then put it in the agreement that you do.

Stacy:                           49:41   

  • Okay.

Sharon:                        49:42  

  • Yeah.

Stacy:                           49:43

  • And then any other takeaways that you can tell our listeners today about what they need to keep in mind for influencer marketing in general?

Sharon:                        49:53 

  • Ultimately I would just leave them with the reminder that influencer marketing ultimately is treated by regulators and the law just like plain old false advertising is. The basics, the same principles that apply to an ad that we would have seen 15 years ago in a magazine or in a banner on a website apply to influencer marketing. It’s just that there are all these additional opportunities out there to create impressions that can be confusing to consumers. So if you keep that in mind and you look at everything you’re doing and putting out there through that lens, then I think the rest of these requirements and compliance issues that you need to deal with become easier to understand. So I think I would just leave it on that note, that it’s ultimately about making sure you’re putting content out there that consumers are not going to be confused by and that helps your brands get good business results in the process.

Stacy:                           51:01

  • Wow. I want to thank you so much for coming on and chatting today, because I learned lots.

Sharon:                        51:07       

  • Yeah, it’s my pleasure. Me too.

Stacy:                           51:10    

  • Our listeners are going to learn lots and I would love to talk to you again in the future about some other subjects that I know you could bring great value to, so I’ll be in touch with you about that.

Sharon:                        51:20 

  • Thank you.

Stacy:                           51:21 

  • But really thank you so much for your time today and I really, really gratefully appreciate it.

Sharon:                        51:27  

  • Yeah, it’s been my pleasure, Stacy. Any time, and I appreciate the approach and the interest level that Hollywood Branded has in helping its clients and other influencers out there do this correctly, because it helps all of us when our standards gets raised like that, so thanks for having me on. I’d be glad to come back any time.

Stacy:                           51:50   

  • Perfect. Well, thank you.

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Stacy does a really great job making this a highly actionable podcast for business owners. With a focus on marketing, she covers a wide range of related topics as well and is always very specific with her questions so that the listener gets pointed advice instead of vague concepts to take away. It’s also really helpful to the hear the why behind any marketing tactic so that we can decide if something sounds like a good fit for where we are at in this moment.

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