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Legal Issues Relating to Influencer Marketing

Masters of Advertising Law Conference attendees: Scroll down for CLE materials

Speakers from Reed Smith discussed legal issues related to influencer marketing, including AI implications, IP actions, emerging platforms, performance analytics, equality, transparency, and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) considerations.

Key Takeaways

Update on FTC Endorsement Guides
The FTC updated its Endorsement Guides in June 2023, with five critical updates:

  1. Expanded definition of an endorsement
  2. Increased guidance and requirements about what is considered clear and conspicuous
  3. Increased focus on consumer reviews, including incentivized and "fake" reviews
  4. Clarity around who may be liable under the Endorsement Guides, including liability for intermediaries
  5. Clarified increased scrutiny on advertisements directed towards children

Developing and Negotiating the Deal

  • Locking in influencer talent and the deal terms takes strategy and trust.
  • Who is presenting the deal to the talent's team? Is it the brand, broker, or agency? Will this impact the negotiation?
  • Where does the brand want to "end" and working back from there when presenting and negotiating terms?
  • Where can deal terms be flexible versus must-haves/non-negotiables? Consider usage rights and services.
  • Does the deal make sense for this level of talent?
  • How are you papering the deal terms?
  • If there is a product or service involved, has talent tried it? If not, will they receive it ahead of creating content?
  • What is the content being produced? What about the launch date?

Trending Topics: Exclusivity, Approvals, and Behavior

Exclusivity

Know the timing. Is it the full length of term or just specific times before/after the influencer talent does a posting?

Is it reasonable to restrict personal activities of the influencer? Is there a true cost to the brand/partnership?

Moral Clauses/Behavior

  • How much knowledge does the brand have about this influencer talent? How far back have you gone in their feeds and posts?
  • Discuss parameters regarding influencer statements and behavior "in line with talent's past activity"
  • Consider the talent's status. Are they an emerging influencer or an A-list celebrity?

Approvals

  • Language should reflect the actual development and review process. If talent is shooting the content themselves, the brand gets final approval. If the brand is providing content, it may make sense to accept mutual approval.
  • Set an appropriate level for the amount of footage being shared and how much you need approved by the talent for your campaign (e.g., 50 percent of brand selects).
  • Think about timing. Have you built enough time to instruct talent to make edits before the launch? For events, do you need the post to live that evening or the next day?
  • Strike a balance of being reasonable while also protecting the brand. How detailed are your creative briefs?

Determine how approvals should work when talent posts content in addition to what's required by the contract.

Common Issues For Brands Post-Negotiations

  1. Preapproving content before the talent posts it
  2. Difficulty scheduling services or aligning on dates
  3. Under-delivering on services or pushing back on required tasks
  4. Gray areas regarding exclusivity breaches
  5. Questionable behavior or content unrelated to the partnership

Issues are inevitable; the key is how brands can navigate these bumps in the road. It's important to know the influencer talent, not just their present reputation but past content and statements. Do they reflect your company values? Is the risk of working with them outweighed potentially by the buzz around them? Talent agreements should cover termination rights, but it's important to consider alternatives before terminating the partnership in its entirety.

AI and Influencer Deals

AI creates both benefits and challenges for regulators and influencers. Regulators are likely to ramp up enforcement activity in connection with the use of emerging technology like AI. AI may also be used to create deep fakes of influencers, with the imitations engaging in non-compliant activity. Use of AI also triggers privacy considerations (e.g., biometrics can trigger state law compliance issues). Virtual influencers (AI-generated influencers that exist only online) have become increasingly common due to brands' ability to maintain control over the marketing and creative process.

AI and Filters

There are rules or guidelines advising against the use of filters and similarly misleading alterations to enhance or alter the use or results of the products or services. When in doubt, disclose the use of the filter. AI is powering filters, such as the Bold Glamor filter that was internally developed by TikTok, that use machine learning technology to realistically airbrush a person's face in real time, even when the person moves. TikTok users have shown how it is possible to upload videos without disclosing the use of the filter.

Disclosing the Use of AI

The FTC's new guidelines on the use of AI by companies focus on transparency and disclosure. An influencer sharing AI-generated content as part of sponsored content should disclose both the use of AI and the fact that it is an ad. The FTC has updated its definition of "endorser" to include virtual influencers.

Pay Equity and Similar Initiatives

The influencer marketing industry is expected to grow to $21.1 billion in 2023. There are pay gaps in the creator economy with regards to race, yet DEI has become more important to consumers, even in marketing. ANA's 2023 Influencer Pay Equity and Transparency Guide can help brands develop a framework and system for influencer pay equity as part of a brand's commitment to DEI.

SAG-AFTRA Considerations

Even though your client or organization may not be a signatory to the SAG-AFTRA Commercials Contracts, you may be working with a signatory ad agency, or using union talent for video content. Therefore, union obligations may be an issue. Regardless of signatory status, most members of SAG-AFTRA will demand coverage. This is why SAG-AFTRA obligations apply to many celebrity endorsements.

When it comes to influencer-produced sponsored content, there are two different agreements:

  1. Standalone influencer agreement: The influencer must have a loan out as the signatory and must engage directly with a non-signatory advertiser. The influencer owns the content.
  2. 2021 influencer waiver: Available to advertiser and agency signatories to the Commercials Contract. There is no requirement for the influencer to have a loan out and no requirement that the influencer owns the content.

For advertiser and agency signatories, there are three possible scenarios:

  1. Hire a union influencer and produce content under the waiver.
  2. Hire a non-union influencer. Decide that what is being produced is not a "commercial" and so you treat it entirely non-union and do not produce content under the waiver.
  3. Hire a non-union influencer. Decide that you do not want to worry about the "grey area" of content versus commercial and want to take zero risk. Produce content under the waiver.

CLE Materials

Source

"Un"AI"Voidable: A Look at Influencer Marketing Beyond #Ad." Jason Gordon, partner at Reed Smith LLP; Michael Isselin, partner at Reed Smith LLP. 2023 ANA Masters of Advertising Law Conference, 11/17/23.

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