by CHARLENE DELOACH, CEO, Total Toy Creative
For many toy brands, influencers provide valuable customer lead generation. These social media content creators are a significant component of today’s marketing strategy, however, the system can sour if a company does not have clear contracts for its influencer network operations.
If you have, or are about to have, an influencer network, consider the legal implications of operating it. Many toy brands begin with a list of influencers who request toys for review. It may start small by fulfilling a couple of requests, but it can rapidly expand into hundreds of individual content creators with different expectations. When executing your influencer network, ensure your company has a robust legal strategy by reviewing these five LEGAL considerations.
One of the first things you will have to decide is if you want to issue a contract, an agreement, or a memorandum of understanding (MOU) with a content creator. Your legal counsel should elaborate on the pros and cons of each related to your company’s influencer network goals.
A (very) general gist to explain the three differences is that a contract contains specific terms from both parties. That means influencers also define their asks and negotiate a deal. Alternatively, an agreement only includes terms from the issuing party. So, the content creator either agrees or does not. Lastly, an MOU is a common understanding with no legal commitments or obligations. You are stating your influencer network’s overall mission and criteria. The influencer signs to show they understand how it works, and there is no obligation to perform by either side.
Another factor you’ll need to consider is how long you want your legal document to last. Are you going to execute a document for each campaign, or is the one document binding for the entire year? Depending on your answer, you’ll have to adjust the type of legal document, and you’ll have to make sure you have internal systems and processes in place to issue and monitor them. Consider using Docusign or Hello Sign to make it easier for your teams. Brands can also use Google Forms for MOUs, and influencers can check a box to indicate their approval.
When figuring out your legal strategy, you’ll need to figure out a strategy for each genre of influencer or aspect of your business. You may decide on a different type of legal document depending on if you are partnering with a mega-, macro-, mid-tier, micro-, or nano-influencer.
Generally speaking, a mega-influencer is one with more than 1 million followers, often with celebrity status. A macro-influencer has a social media platform with 100,000-1 million followers. A mid-tier influencer has a larger swath of influencers with 50,000-100,000 followers compared to micro-influencers, who engage with 10,000-50,000 followers. Lastly, nano-influencers have 1,000-10,000 followers. According to Zero Gravity Marketing, each influencer tier has pros and cons regarding marketing impact. Still, those influencer levels also have advantages and disadvantages in terms of ease of executing legal contracts.
The hardest part of operating an influencer network is accepting that you should have legal documents to support it. Influencer marketing has grown exponentially. According to a January 2022 Forbes article, only 9% of marketers used TikTok in early 2021. However, by mid-year, that number increased to 50%. Influencer marketing is a $15 billion business in 2022, with expectations of being even higher in future years. Compared to 2016, with less than $2 billion of spending on content creators, the money has significantly shifted to this marketing segment, and so should the execution of legal documents.
Each brand should have legal counsel who can draft agreements recognizing state or federal laws or laws applicable to your business operations. However, many attorneys do not understand influencer networks and how they operate. So, when engaging with your counsel, you may have to educate them on social media influencer programs to ensure you have a robust legal process in place.
Once you understand you need a legal system to accompany your influencer network, take steps to implement your legal strategy depending on the influencers you will use, your company’s bandwidth, and your expectations. Spending the time upfront on legal agreements for influencers will mean less hassle, stress, and costly legal bills later. Following these tips will provide clarity, conciseness, and clear communication with content creators, and will protect your product and your brand’s finances, reputation, and longevity.
This article was originally published in the September 2022 Fall Toy Preview edition of The Toy Book. Click here to read the full issue!