Influencer brand deals are blowing up on Instagram and other social media sites, and there’s a lot to gain as a business from getting in on the action. It’s important, however, to do so wisely. That means knowing what to ask for and how to do the asking. Today we’ll cover just that.
Questions in this Episode:
- What are brand ambassadors?
- How are brand ambassadors paid?
- Do commissions and fees survive contract termination?
- Why is the hybrid model better?
- How are sales tracked?
Why Use Brand Ambassador Agreements?
Most brand ambassadors have blogs, websites, and their own followers. Some brand ambassadors are just beginning, while others have massive followings like Instagram’s top influencers: Cristiano Ronaldo, Kylie Jenner, and Dwayne Johnson, with more than 408 million, 314 million, and 301 million followers respectively.
Companies hire brand ambassadors to increase their audience and social media footprint quickly. And influencers want brand ambassador agreements as a way of monetizing their followers.
Social media marketing is the future of advertising. And since most businesses will be selling products and services on social media, lawyers will have to become familiar with these marketing agreements.
Defining the Purpose of the Agreement
A simple statement in Section 1 defines the purpose of this agreement as to “promote Wisdom Essentials products and brand” in accordance with the terms of the contract.
Influencers monetize their followers with various advertising and marketing contracts, not just ambassador agreements.
For example, a company might pay an influencer for a single post on Instagram or a single video on Youtube. These are usually one-off deals unless the influencer already has a long-standing contract.
But an ambassador agreement is more like an affiliate-type relationship designed with a longer-term relationship. The Purpose Statement of the agreement should reflect the business relationship the parties are forming. And although short, this purpose state does that.
The section on Responsibilities details what the ambassador should or should not do. But, because this section is missing some needed details, it favors the ambassador and not the brand or company.
The more details the company provides to the influencer, the better the company’s service is in return. For example, the company might state how many posts per day, week, or month they expect. And the agreement might say how the influencer should respond to inquiries or engage with followers. None of these types of questions are in this agreement.
The language favors the ambassador and states, “the Ambassador shall share social media posts which further highlight Wisdoms Essential products in a way authentic to Ambassador’s channel and followers.”
This is advantageous for the ambassador but not for the sponsoring brand or company. The influencer gets to use their influences with few quantifiable responsibilities or obligations.
But if your client is the brand or the company, how many posts will this phrase deliver? Which media platforms will be used to sponsor your client’s product or brand? And how often? Are there any specific priorities or premier events for the client’s benefit? How will the influencer follow up and engage with the audience? Which social media platform will be used?
This section needs details, legal help, and thoughtful contract drafting.
The One-Sided Compensation Clause
If your client owns the brand, Section 3 Compensation is fantastic for them.
The company only pays the influencer their percentage when sales are made. The influencer markets the company’s brand to a new audience. The company and brand are positively associated with the influencer to their followers and the public. And this happens before any sales, and even there are no sales.
But if your client is the Ambassador and doesn’t get paid until they make sales, this is a terrible deal.
There should be a hybrid model for mutual benefits. The company could pay the influencer a percentage for some pre-sale work, like posts, tweets, videos, appearances, and other marketing.
And the influencer could receive an additional percentage of the sales because that reflects how the influencer keeps customers coming back and engaged with the product.
Without this type of hybrid model, this clause is simply an affiliate marketing agreement.
Who’s Tracking Conversions?
Companies and their marketing departments like to track everything, especially with internet advertising, where they can keep track of traffic, responses, clicks, conversions, sales, and more.
But the Tracking and Conversion section of this agreement will likely only be used by new influencers with smaller followings.
In this agreement, the influencer must have their followers use a unique URL or coupon code for the influencer to get credit and a commission for the sale. More prominent influencers with large digital footprints call the shots and do not use this model anymore.
Internet marketing has shifted. Successful influencers may insert the brand into their marketing empire, but they rarely use unique-URL-driven ads for their clients. The only influencers that will accept unique- URL trackable ads are newer, less well-known influencers.
Delivery and Promotion
The Ambassador is responsible for “creating all related content” and encouraged to “share products through their (influencer’s) social media channels.
Here, the Ambassador does all the work, and the company does none. And social media marketing is real work that takes time and effort. A single Instagram post might include getting ready with hair and makeup, studio prep, filming, editing, scripting, and more. Editing a single video can take hours. In the old days, you just added a hyperlink in your monthly newsletter. Today’s market is competitive and more complex.
And the influencer is using their own marketing channels. All of these efforts and assets have value, but the influencer gets paid nothing until a sale.
The Terrible Termination Clause
The termination language is straightforward. Either party may terminate, for any reason, at any time.
Again, this is a tremendous one-sided deal for the company. They spend nothing and risk nothing. And they enjoy the exposure to a larger market introduced and promoted by the influencer.
The influencer takes all the risks. They put in the time, money, effort, and reputational risk should the product turn out badly.
And the company can end the relationship at any time and not pay the influencer for all the future business that comes their way because of the influencer’s previous hard work and marketing. This section is inherently unfair to the influencer.
Before entering into any agreement, clients should understand the termination clause.
Ambassador Agreement Takeaways
Brand Ambassadors Agreements are a fast-growing part of internet marketing. Even the choice of the word “ambassador” evokes a more exclusive feeling than terms like “affiliate marketer.”
And the company reaches out to influencers with the promise of them becoming long-term “brand ambassadors” and part of the company branding. The companies emit a feeling of an elite marketing opportunity. There is an application process, and companies tell them that only the best are accepted. And companies tout that this will be an exceptional long-term relationship.
The reality is that there are thousands of brand ambassadors, and the number is growing.
And while brand ambassadors and influencers impact internet marketing, ambassador agreements are often one-sided, poorly drafted, and not well thought out.
Ambassador agreements are a great way to provide business value for your client with the contract drafting process. Many current agreements use words and phrases that are confusing, in conflict or both. Have the client explain the marketing plan they are trying to implement, and you can draft an agreement that will help them achieve their goals.
For example, you can explain how their current ambassador agreement might be a dressed-up affiliate marketing agreement. And, you can show how a hybrid model may be better for the client and the influencer.
And as a lawyer, you might be representing either the influencer or the branding companies. Knowing how the brand ambassador and other internet marketing program works will serve your client well and give you an advantage over your competitors.
In this episode of Contract Teardown from Law Insider, North Carolina attorney Shelia Huggins walks through a brand ambassador agreement from CBD product manufacturer Wisdom Essentials. In the new world of online marketing, contracts are struggling to keep up with the lingo. Shelia shares how the influencer economy turns into enforceable agreements. So, let’s tear it down.
Reach out to Shelia on Facebook @sheliahugginslaw or via email at firstname.lastname@example.org
THE CONTRACT: Wisdom Essentials, LLC Ambassador Agreement
THE GUEST: Shelia Huggins is an experienced Attorney with a demonstrated history of working in the law practice industry. Skilled in Negotiation, Management, Social Media, Public Speaking, and Public Relations, she is also a strong legal professional and graduate of University of North Carolina at Chapel Hill School of Law. She can be found on Facebook or reached at SheliaH@SheliaHugginsLaw.com.
THE HOST: Mike Whelan is the author of Lawyer Forward: Finding Your Place in the Future of Law and host of the Lawyer Forward community. Learn more about his work for attorneys at www.lawyerforward.com.
If you are interested in being a guest on Contract Teardown, please email us at email@example.com.
Mike Whelan [00:00:21] Hey, everybody. Welcome back to the contract. Tear down shell from Law Insider. I’m Mike Whelan. The purpose of the show is exactly what it sounds like. We take contracts and we beat them up, we’re mean to them. We make them feel bad about themselves. Sometimes supportive at the end, but we try to limit that. I hang out with smart friends like Shelia Huggins here. Shelia, how are you today?
Shelia Huggins [00:00:40] I’m doing well, Mike. Glad to be here.
Mike Whelan [00:00:43] Yeah, it’s like a couple of days before Christmas and like, are we supposed to work this week? I don’t know. I’m very lost about it, but we are here because we are nerds and we are nerding out about this. I’m going to show you guys this document. This is the Wisdom Essentials LLC ambassador agreement. Let me scroll down this a little bit. Shelia, what is this document? Why are we looking at it? When are lawyers going to run into this kind of thing?
Shelia Huggins [00:01:07] Well, you know, it’s lawyers, it’s influencers. It’s everybody now who wants to be on social media and they’re trying to build their brand. And one of the ways that they’re doing this is to if you’re a brand, you’re putting out an ambassador agreement. And if you’re an influencer or an ambassador wannabe, then you’re looking for these kinds of agreements to enter into. This is where the world is going. And so this is where people are going.
Mike Whelan [00:01:35] Rght? There’s a lot of freelance and a lot of freelancing of influence and of marketing task. So it’s it’s an interesting agreement that’s very poignant right now, especially since we’re all online and none of us can be in the same room as each other for reasons so, so very poignant and present. But before we dig into it, tell us about you, Shelia. What’s your background? What brings you to documents like this?
Shelia Huggins [00:02:00] Thanks, Mike. I am a North Carolina, North Carolina licensed attorney. That’s my southern all running together into some sort of drawl and something else. But I am a graduate of the UNC Chapel Hill’s Law School. I have actually been licensed for almost 20 years. It is unbelievable. Next year, 2022 will be 20 years, so I think I need to celebrate that and figured out what that is yet. But I’ve also taught business and entertainment law over at North Carolina Central University. I’ve done tons of workshops. I’ve actually entered into some of these types of agreements myself. I think this is where the future is going. People need to be ready, and this type of agreement is one of those things. I think lawyers are going to have to start to become a little bit more familiar with.
Mike Whelan [00:02:43] Got it. Well, that’s awesome. We’re going to dig into it. I think there’s going to be really helpful to all your YouTube. And so if my kids, if you’re watching this, this is for you. Read the contract. Just because your dad doesn’t, you should read the contracts. So let’s start at the beginning. There’s, you know, the typical background stuff. This is between so and so and so and so. But in section one, there’s the purpose. It’s the purpose of this agreement is to promote wisdom, essentials, products and brand in accordance with the outlined details set forth below. Do you think this purpose gives us a good background? Is it sufficient or you want to see more? What do you think of this first section?
Shelia Huggins [00:03:15] Yeah, I think it’s a little light, but here’s the thing. I think sometimes people don’t really understand, you know, the whole idea of what an ambassador is, especially if there’s someone who who’s really new to to this sort of environment. And there are influencers out there, and sometimes you’ll see influencers enter into marketing agreements. Usually those are one offs unless they have sort of a long-standing contract. And ambassador agreement is a little bit more of an affiliate type relationship, but it’s usually planned for a longer term. Whereas just in an influencer, you might do a post on your Instagram or you might do one video on your YouTube. And Ambassador is really somebody who you think is going to be around for a while. So that’s why I think this is actually more important, and this sort of purpose statement should reflect that this is going to be a long standing relationship and it kind of doesn’t. So it could be tweaked a little bit.
Mike Whelan [00:04:12] Yeah, it’s interesting because like as we go through this, you’re going to see that they’re doing some of the things that for what I would call affiliates, where it’s just a link, like you’re saying. And if a sale happens great, where an ambassador is a slightly different relationship, I’m getting the sense a little bit that they’re using this for both roles. And so, you know, to your point that that drives a little bit of confusion. To sort of add flesh to that meat to that bone. In Section two, it talks about the responsibilities and that the ambassador is going to do certain things. There are several things in here, you know, for a relationship that really doesn’t have a lot of duties on an affiliate, but to your point, an ambassador might be different. What do you think about this list of responsibilities for the ambassador? Does it detail it? Well, what are you seeing in this section?
Shelia Huggins [00:04:58] Mike, I tell you it’s really making me feel like I’m that detail-oriented type A person. And that this is missing a lot. And typically because I’m always thinking the more specific you are, the more details you can provide to your ambassador, the better product or service you’re going to get. So if you’re not clearly saying, you know, this is how many posts we expect you to have. This is how we expect you to respond to inquiries or to respond to people who reply or engage with your post. So there’s none of that really here. So you see things like under, I guess this is two where it says ambassadors shall share social media posts which further highlight wisdom essential products in a way authentic to ambassador’s channel and powers. That’s great from the ambassador standpoint. That’s exactly what you want, what you want. You’re looking for broad language that lets you present your authentic self that you have already developed with your followers. But if you’re the brand, if you’re the company, how many posts is that going to get you? You know, how are they going to be following up and engaging with them? Which social media platforms or are they going to be putting this on? Is there going to be a priority? Are there going to be premier events? There is nothing like this here. And I think this is why this sort of environment has been referred to as the Wild Wild West, because people are just sort of throwing these engagement relationships out there. And when you pick up the contract, when you look at it, it’s just very skimpy. I’m not trying to put them down, but I think they could use some legal help here.
Mike Whelan [00:06:37] Well, and I’m as I’m thinking about the responsibilities and what’s reasonable to ask, I’m drawn to the compensation for reasons that we’ll talk about. But let’s jump down to three to the terms of compensation in consideration of the rights granted and services provided hereunder. You’ll get compensated in the amount of a percentage of the net sales. You’ll receive commission for your lifetime. You’ll be paid on a certain day. I’m sort of like This is really good for this company to say, Hey, we’ll just give you a percentage of whatever you get. But in the section before I’m going to give you affirmative duties that you have to get like, this compensation arrangement doesn’t seem very well lined up with the section we just read. What do you think about three?
Shelia Huggins [00:07:18] Again, it depends on where you sit. If you’re the brand, this is awesome. This is awesome because your brand is getting out there. You’re now associated with this person, with their followers, with all of these people that they’re engaging with, even if they don’t buy anything. That relationship in and of itself is worth something. But if you’re the ambassador and it’s oh well, you have to make sales before you ever get any compensation at all. This just is not a good deal, at the very least, in order for both parties to feel like there’s some sort of mutual benefit. I would ask for a hybrid model. Hey, give me a percentage upfront for the work that I’m doing for the actual post that I’m putting out there. And then also give me a percentage of the sales because that’s a reflection of how I’m keeping customers coming back and engaged with your product. Are they really leaning in and listening to what I’m saying when I’m saying this is why I think you should buy that. It puts both parties, I think, on equal footing this sort of thing. It’s just, Hey, give me a percentage that might as well just be an affiliate relationship, right?
Mike Whelan [00:08:25] And the affiliate thing like what’s going down to four, if you’re not in this world and many of you viewers will not be. This is a fascinating issue. The issue of tracking and conversions, attribution, they call it in in marketing world because what they’ll do is they’ll give it. You’ve seen this on, on billboards where it’ll say, you know, call 555 or whatever and tell us that you saw, you know, billboards 70 to be or whatever you’ll you’ll call in with a coupon code or something. A lot of times, even in the internet world, which is way more trackable than direct mail or whatever, it’s still not very trackable. You get this signi– you know, this unique URL, this unique web code. But you know, just people might not click your link even though they were influenced by You’re saying you love this thing? Again, this feels one sided. What do you think about Section four? Do you think it compensates the ambassador in a way that really reflects this relationship?
Shelia Huggins [00:09:21] I don’t think so. You know, if I’m an ambassador and I’ve been in this position before review these and actually look at some of these for myself. It’s not. It’s not what I’m interested in. You know, I think that the post that you’re putting out there, the review that you’re doing is worth something in and of itself. And what I have seen a shift away from in terms of YouTube, I talk about YouTube for sec for a second. It used to be that people would do these one videos for this one product, and you don’t see that anymore. Now what you see is people putting the review in into their blog or into their video. It’s now maybe this two or three minute piece about whatever the product or service is and there is no longer this. I’m going to do a whole video for you that you get to keep forever and continue to market and make money off of instead. It’s this one thing here that’s in the midst of my whole video. So I think you’re going to continue to see these sort of shifts here. And if the ambassador is a person who has a large following, who has a large social media footprint, digital footprint out there, then they’re going to be able to call the shots anyway. And so the type of people that you see entering into these types of agreements where it’s, hey, here’s my unique identifier, you guys. Please use this when you go to the website so that I get credit, you’re going to see that mostly from people who are just starting out and are just getting involved at this level.
Mike Whelan [00:10:49] Yeah, I remember once I was working for a company and we were talking about attribution and that they’d put out, I said something on Twitter about a new feature. A lawyer saw this thing, and at the same time they received this lawyer received an email that said, Hey, try get a free trial and try it. And it was so interesting because she responded to me on Twitter and she said, Hey, I just wanted to let you know that your post, your tweet got me 97 percent of the way there to buying this thing. And then the email, I mean, it just was perfect. Just nudge me over that last three percent. Well, in terms of attribution, the email got the set like, I had nothing to do with it. And so, you know, in these situations, especially if you’re going to use the word ambassador, these kind of attribution relationships don’t really make sense with, you know, the use that you want, and we’ll talk in a minute about what the company was. But before we do talk to me about section five and six, it starts to get into more the technical. Let’s jump to the delivery of promotion in five. It talks about that the ambassador will be responsible for creating the related content for the, you know, wisdom essentials, not giving them materials. I take it, though that sort of doesn’t make any sense. Give them some language, give them some b roll whatever you like to to show up. But then it talks about the social channels. What do you think about five? Is this divvying up the responsibilities in a good way?
Shelia Huggins [00:12:09] Yeah. Well, again, you know, this is very much a one sided relationship in favor of the brand. If I’m the brand, I’m like, This is our best agreement here because we don’t have to really do anything if you’re the ambassador. You know, even if you’re just talking an Instagram post, you know, you’ve still got to get dressed and you’ve got to do the hair, the makeup, even if you’re a man now, you know.
Mike Whelan [00:12:33] Exactly. No, I get it. I get exactly. You think I just wake up like this? This takes work, people.
Shelia Huggins [00:12:40] Exactly. And it does. And that is precisely the point. It takes work. All of the set up, all of the planning to figure out what hashtags you’re going to use on your end and then also making sure you’re covering everything that they want you to use. And so here you are putting in all of this effort when you’re in and the only thing you’re getting is, well, if somebody buys something, I’ll get 15 percent. Yeah, nobody ever does anything. Well, I got my name out there was associated with this product. Well, you better make sure it is a really good product or really good service that you want to be connected to. They better come with some high value if they aren’t paying you up front. So again, I think it’s undervaluing all of the work that a person has to do. Even if you’re inserting just a clip in a video and that video is going to be edited, that section has to be edited, edited. Somebody who’s got to do that
Mike Whelan [00:13:33] well, especially now, like I read somebody recently was talking about their Twitter posts. Take them six hours to put this thing together because it’s so, you know, the attention market is so competitive that to to even get this work now you’re putting in a ton of work. You know, it’s not like days of old where it’s like I was writing the blog anyway might as well highlight some things and make them links. I mean, now people are affirmatively going out and they are pushing. They are doing marketing and sales material for a brand, and 15 percent just seems like. But we’ll get to that as well. Talk to me about six before we move to the big picture, what do you think about the term and termination section?
Shelia Huggins [00:14:10] So let’s talk about this because, you know, there are some other things in here, too. But this sort of term and termination thing, I’m always like, well put the one in there that says we can mutually agreed to get out of this thing at any point in time. If you’re, I think in this respect, regardless of where you sit, you always want to think about what if this is not working? Like, I tell my clients that all the time when they’re entering into agreements, oh, everything sounds fine and dandy. Now you love them, you love the product. Now you’re thinking about how much money you’re going to get 30 percent. That sounds good. But when things go bad, if things go bad, how hard is it going to be for you to get out of this agreement? And what is it going to cost you? And so, yeah, there’s there’s a little bit of language in here about they can terminate for any reason at any time. But again, if you are the. Ambassador, you’ve already put a lot of work in there and they just drop you then. You know, you really need to make sure you’re taking into account compensation beforehand so that you at least got something upfront. If they drop you at any point in time. So you know, you really have to keep that in mind.
Mike Whelan [00:15:19] Yeah. And you know, getting to the big picture, I think, you know, the cliche of business owners is, Oh, my lawyer doesn’t understand my business. This is the kind of case, the kind of situation where you not understanding this business is going to make you write all the wrong things. You’re going to say all the wrong things. You know, if companies are using the word ambassador, the United States government doesn’t take somebody and say, Hey, put an American flag on your backpack high. Five, You’re an ambassador now go, you know, represent the United States out in other countries, there’s training involved or standard language. There’s there’s a long term relationship. And so I guess my question, do you think in big picture is do you think the word ambassador is just like a token? I think Amazon uses the word ambassador for it’s legit, just a link. It’s really just an affiliate relationship. Do you think the miss here is that the company is using a fancy word when what they mean is a very distant relationship? Or do you think this document is talking about a relationship that doesn’t really meet the company’s goals for a marketing plan?
Shelia Huggins [00:16:22] Yeah, I think there are a lot of holes in this. You know, I think a lot of a lot of companies want to use the word ambassador because it comes with some cachet, right? This whole idea that, yes, there are U.S. ambassadors. Well, now you can be an ambassador for a brand and we would like you to be a part of our brand. Here’s our application. We don’t accept just anyone. And so they frame it in a way to make you feel like you’re special, you know, and that, yes, you’re one of the few who’s going to be selected and there’s going to be the special relationship. And in reality, very few brands when you take into account the number of brands that now put out these applications and have these contracts, I mean, just Google search, there are tons of them and you will see how quickly they fall apart. Like, you know, most companies don’t last, don’t make it to five years, and they’re starting year one with an ambassador program. The likelihood that you’re still going to be involved with that you’re six is like, this is really not going to happen. And so you have this piece where the brand is trying to build around. You know this this language in this phrasing and they’re trying to put something together. And then on the other side, you have this ambassador who’s saying, Yes, I want to be a part of that because I want to be able to say that I’m an ambassador for brand, you know, so it comes with a lot of meaning. And so yes, they are tapping into that. Yes, it is somewhat of a marketing strategy, but I don’t think that most brands have sat down and said, here’s what our policies are going to look like. Here’s what our expectations are going to be. And you can see this directly in this particular contract.
Mike Whelan [00:18:03] Yeah, yeah. I think I mean this, if you’re watching this, this might sound esoteric to you and sort of like, I’m a lawyer and I don’t do these business things. But this is a perfect example of the way that the drafting process can provide business value to the company. For you to sit with the company and say, Hey, you guys are dropping words, dropping phrases, but these things don’t really match up. Tell me what your plan is. Give me a marketing plan that involves ambassadors because ambassadors are long term investments and and and you support them in ways you give them marketing material. You give them standard language. You, you make sure that when they do work, that isn’t directly attributable because it came through an email link that they’re still getting compensated anyway in the hybrid model that you talked about. Yeah, this is this is a great opportunity to say, let me provide business value by questioning the language, and I think it’s a great example of that and also a new area, which is really cool. So Shelia, thank you for hanging out with us for people who want to get in touch with you to talk more about agreements like this to make sure that they understand this context. What’s the best way to connect with you?
Shelia Huggins [00:19:07] Oh, well, I’m on Facebook. Shelia Huggins Law dot com. After that, well, she lives well after the facebook.com. I’m hardly on Instagram, but Facebook is probably the best way to contact me. And then my email is SheliaH@SheliaHugginsLaw.com and that’s Shelia spelled S-H-E-L-I-A.
Mike Whelan [00:19:26] A perfect well, we’ll make sure that’s all included on the post over at Law Insider dot com slash resources. And if you want to be a guest on the contract tear down show to be mean to documents like this. Just reach out to us. We are at Community at Law Insider dot com. Thanks again, Shelia. We will see you guys next time.
Shelia Huggins [00:19:46] All right. Peace. And have a good day. Thank you.