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As advertising increasingly shifts to social media, Ranjan Narula and Padmini Paonam of RNA Technology and IP Attorneys explain how to safeguard a brand’s reputation despite the risks presented by the use of influencers

Businesses have worked with celebrities since the early days of advertising. Many advertising campaigns and brands have been inescapably linked with celebrities such as Michael Jackson for Pepsi or Michael Jordan for Nike. In today’s digital world, we have seen the rise of a new type of brand ambassador known as an ‘influencer’.

These are everyday consumers who share their day-to-day experiences with brands. They are paid to talk about a company or its brand.

The rise of social media platforms such as Instagram, YouTube, and Twitter have led many brands to engage influencers to raise consumer awareness of the products and/or services they offer. Influencers exert huge clout on such platforms, considering their followers run into millions. It is widely acknowledged that social media marketing via influencers is a powerful tool to gain clicks, generate engagement, and reach a new audience.

While endorsements through influencers are beneficial to a company, great care must be taken to protect the brand’s sanctity. Due diligence must be exercised by companies while selecting a spokesperson to be the face of their brand. Obviously, any bad press related to that person would reflect negatively on their brand as well.

Verifying the followers

Before hiring a social media influencer, brands should fully vet the influencer and be cautious of falsified engagement rates and ‘clickbait’.

It is widely believed that there is a lot of potential for error because engagement statistics can be manipulated by purchasing more followers and raising comments using bots. Manipulation of statistics is common in this industry; hence such statistics should not be the sole determiner when selecting an influencer for your brand.

Ensuring the safety of your brand

An NDA for the evaluation phase

A non-disclosure agreement (NDA) helps to define and identify confidential material, knowledge, or information that the company intends to communicate and share with an influencer. An NDA creates a confidential connection between the parties, often to safeguard any type of confidential and proprietary information or trade secrets at the stage of evaluation of an influencer and their suitability to the brand.

Prepare an endorsement agreement/contract

An endorsement agreement/contract allows a business to use another party’s image, likeness, name, and reputation to market a product or service. It is advisable to draft short-term ‘single project’ or longer-term ‘multiple’ endorsement contracts between the brand/agency and the influencer to clearly capture the terms of engagement. It should usually contain the following, among other clauses:

  • Term – a start and an end date.

  • Scope of work – specific platforms, frequency, music, message, visual effects, hashtag/tags, etc.

  • Compensation – including payment amount and process of payment, and what is covered, such as the use of the name, image, or likeness, and statistical data in terms of engagement, clicks, etc.

  • Exclusivity – a restraint from endorsing similar products.

  • Termination – a preset agreement on what will happen if the contract is terminated, in terms of how much notice the influencer would get and/or what sort of payment they will receive.

  • In addition to the above, the company can also insert morality and specific intellectual property clauses. Morality clauses are becoming a common practice in endorsement agreements. These clauses permit the contractor to terminate the contract unilaterally if the other party engages in illegal, immoral, indecent, scandalous, or harmful behaviour or activities. IP clauses in an endorsement agreement help to seek an acknowledgment of rights from the endorser and to cease the use of intellectual property assets post termination or at the end of the contract term.

Follow ASCI guidelines

For brands to identify themselves and establish their online presence among Indian consumers through influencers, it is vital for the brand owners to follow the Guidelines for Influencer Advertising in Digital Media set out by the Advertising Standards Council of India (ASCI).

The guidelines are comprehensive and cover responsibility for the disclosure, posts, and content. Thus, it is always advisable to double-check the ASCI guidelines to prevent bad public relations and misleading messages that may influence consumers’ purchasing decisions.

Final thoughts

As advertising is increasingly shifting to social media platforms, the monitoring of misleading advertisement content has become challenging. The advertising watchdog in India, ASCI, highlighted in its annual complaints report for the period 2021–22 that nearly 48% of the ads processed belonged to the digital medium; out of which, 29% constituted complaints against influencers. Most of the violations were in the crypto industry, personal care, and fashion and lifestyle categories.

The ASCI, on its website, also posted the names of 256 influencers who were found in breach of the Guidelines for Influencers Advertising in Digital Media. The names include famous movie actors, cricketers, and TV personalities. The fallout of this reporting can be negative public relations for brands and influencers. It can also lead to large fines.

Brands are therefore advised to take due care and exercise caution before engaging influencers.

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