Creator Licensing: Mitigating Legal Risk with a New Social Marketing Trend
With the growth of social media marketing, brands have recently turned to “creator licensing” (also known as “whitelisting” or “allow listing”) as a way to leverage the reach of influencers while still maintaining control over advertising campaigns that feature their products. Creator licensing is a marketing technique whereby a brand runs its advertising campaign directly under an influencer’s social media handle, after the influencer has granted the brand advertising permissions to access his or her social media accounts, such as Facebook, Instagram, and TikTok. In this article, we examine what creator licensing entails, its potential benefits and risks, and considerations for legal drafting when including creator licensing in social media influencer agreements.
What is creator licensing?
Creator licensing is a type of legal marketing permission – which can be further enabled through technical permissions – allowing a brand to post directly on a social media influencer’s social media accounts without the influencer taking any direct action. For example, a brand can publish content under the influencer’s handle, but can also boost previously posted content, add a call-to-action button such as “shop now” to a post, extend the longevity of a post, and view the influencer’s analytics in real time.
A notable type of creator licensing is so-called “dark posting,” where ads are displayed using an influencer’s handle but do not appear on either the brand’s or the influencer’s page, making the ad appear more “authentic” without cluttering either party’s social media feed.1 Although popular with brands, “dark posting” has been somewhat controversial given concerns that these types of posts can be used to spread false information without accountability. In response to calls for increased transparency, Meta has added a “Show Ads” button on its pages, which allows users to see all published and unpublished ads on a page, including dark posts.2
Many social media platforms offer tools to facilitate creator licensing. These tools and permissions vary from platform to platform, but might include, for example, a feature that allows the social media influencer to approve a post by a brand on his or her account.
What are the benefits of creator licensing?
When done correctly and in compliance with laws and regulations, creator licensing can benefit both brands and creators. Creator licensing allows a brand to leverage the style and audience of an influencer, as the ad is posted under the influencer’s handle and preserves the influencer’s voice, which audiences may find more engaging. A brand may have more professional experience or resources than an influencer to carry out a marketing campaign, and a brand can have more control of both the content and conduct of such campaign. Additionally, a brand can edit a campaign in real time, allowing the brand to optimize performance and target specific audiences.
Influencers can also benefit from these partnerships. When a brand boosts any post, it can reach a wider audience, which may help grow the influencer’s number of followers. Creator licensing can also save an influencer time by reducing the need to exchange multiple scripts for approval and content creation, which influencers must do in traditional sponsorships.
What are the risks of creator licensing?
Creator licensing arrangements are not without risks. Most importantly, any advertising by a brand (whether directly or via an influencer) must comply with applicable advertising rules and regulations, including the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “FTC Guides”).3 Among other requirements, any endorsements by an influencer must reflect the influencer’s actual opinion and experiences, and any material connection with the brand must be disclosed. A risk of using creator licensing in particular is that the content published by a brand directly onto an influencer’s page may not accurately reflect the influencer’s opinions or experiences with the product. Brands will need to be careful to have procedures and policies in place to ensure that they have an agreement with an influencer in advance about what substantive statements will be made about the product from the influencer’s perspective. Also, brands and influencers will both have to be careful not to mislead consumers who are interacting with the relevant posts and social media pages.
Further, a significant amount of time and money goes into creator licensing. Setting up approval flows and access requirements to influencer content can be complicated, time consuming, and costly, adding to the costs that are already associated with monitoring influencers’ posts and engaging with influencers in a more traditional sponsorship arrangement. Additionally, influencers tend to charge more for creator licensing as opposed to traditional digital advertising, as the brand is requesting additional rights and permissions. A survey by Lumanu found that 51% of influencers polled charged additional fees for creator licensing, with larger influencers (those having over 50,000 followers) being more likely to do so than smaller influencers.4
Of course, a risk with any influencer advertising (whether or not utilizing creator licensing) is that any post made by an influencer outside of the sponsorship arrangement could potentially affect the brand’s reputation. A brand is borrowing an influencer’s authenticity, reliability, and reputation to sell its product. If any of those things are called into question, the brand’s reputation may also potentially be affected.
For influencers, creator licensing inherently involves risk, as control of the social media platform must be given to the brand. An influencer can potentially take on reputational or legal risk if any post by a brand is morally repugnant, generally distasteful to consumers, or otherwise not compliant with applicable law. This risk can be minimized in arrangements where the influencer individually consents to each post, as is the case on Tik Tok. However, in many cases, influencers may only provide general permissions. This risk can be compounded if the two parties do not agree up front on the standards for any post, or if the brand does not have a robust legal compliance program around marketing – or at least familiarity with marketing laws and regulations.
Legal drafting considerations with creator licensing
Both brands and influencers should consider the following topics when negotiating marketing or other sponsorship arrangements:
Degree of Access: Agreements should clearly spell out the nature of access granted by the influencer. For example, which social media platforms does the brand have access to? Does the influencer need to provide passwords and passcodes to the brand? Does the brand have the right to engage in paid media amplification of the content? Does the brand have the ability to interact with followers (such as via responses to posts or through direct messages) and use other audience tools? Does the brand have the ability to view data analytics or other audience engagement metrics with the post? Agreements should spell out the specific rights that the brand has.
Content for Campaign: The parties should also discuss what content will be posted by the brand to the influencer’s platform. For example, will there just be a general description of the content in a statement of work or other work plan? Will the social media influencer have any specific number of rounds of review and approval prior to publication, and if so, how much time should the influencer have to review content and under what circumstances may the influencer object to content? The parties will need to balance the influencer’s need to control his or her reputation with the need for the brand to respond in real time to audience and other market dynamics. To address these concerns, parties could potentially include clauses prohibiting any content that tends to shock, insult, or offend the community or public morals or decency, or may otherwise bring the influencer into public disrepute, contempt, scorn, or ridicule – however, these standards can often be subjective and lead to disputes. The parties should also agree in advance on the scope of the influencer’s experience with specific products, and confirm that certain types of statements reflect the influencer’s actual opinions.
Time Period of Control: Influencers and brands should expressly identify the length of time in which the brand has access to the social media accounts. For example, does the brand have only 24-48 hours’ access to the account or a longer period of time? Does the influencer also have control of the account at the same time? How long should the brand’s review of data analytics extend for?
Use Rights: The parties should also consider how long the brand has rights to the posted content. For example, brands will likely want rights to use content in perpetuity, allowing them to make use of the content even after the paid advertising period ends, while an influencer may want to limit this to a defined period of time, such as six or 12 months. Alternatively, the parties can consider whether the campaign will involve only “dark posting.”
Exclusivity: It is common for influencers to have multiple industry sponsors. Therefore, brands will want to ensure that the influencer does not promote the brand’s competitors, and the influencer will want to be compensated for this exclusivity. To avoid disagreements, the scope and length of these obligations should be carefully laid out in an agreement.
Modification Rights: Parties should consider the degree either party is able to modify content after posting. For example, can an influencer change content posted on his or her account by a brand? Could a brand make any immaterial changes to content after the influencer has approved the content? At what point, or under what circumstances, could an influencer delete the content posted by a brand? Likewise, under what circumstances can the brand require the influencer to delete posts that relate to or purport to relate to the brand?
Termination: Brands often have an ability to terminate social media influencer agreements for convenience or for other cause (e.g., through “morals” clauses), but parties should carefully consider how creator licensing might change this dynamic (both the conditions for termination and the effects of termination). For example, if the brand does not materially comply with the agreement, does the influencer have the right to immediately suspend access by the brand to the account, or should the brand have an opportunity to cure or otherwise discuss any concerns with the influencer? If account access is suspended, should the influencer receive full payment or only a pro rata portion of payment?
Legal Compliance Obligations: As discussed above, both parties should also make sure that the legal agreement spells out compliance obligations with marketing laws and regulations. Brands should be aware of the FTC Guides, and keep abreast of updates to such guidance issued by the FTC from time to time. To ensure compliance with such FTC guidance, agreements should make clear the need for clear and conspicuous disclosures regarding material connections between the influencer and the brand (e.g., through hashtags such as #ad, #paid, and #sponsored). More broadly, the agreement should prohibit social media content that makes deceptive or misleading claims, or uses any third-party copyrights, trademarks or other materials without appropriate licenses or permissions. In particular, use of music in social media posts is the subject of recent high-profile copyright litigation, so brands’ and influencers’ obligations in licensing music associated with any posts should be specifically addressed. Brands and influencers should also be careful not to engage in any fraudulent activity to artificially increase “likes” and “comments,” and brands should also review the applicable social media site’s terms of use and privacy policies to ensure compliance with their terms.
Risk Allocation: Parties should also carefully review the indemnification and limitation of liability clauses in the agreement. Is the brand responsible for any gross negligence, willful misconduct, fraud, or other breach of applicable law with respect to its use of the social media account? Brands will want to ensure that there is a liability cap for any potential damages arising from its use of the social media account, while influencers may want to ensure that indemnification obligations, breaches of confidentiality, gross negligence, and willful misconduct are carved out of the liability cap.
Conclusion
Despite offering potentially lucrative opportunities for influencers and the brands that sponsor them, social media creator licensing is not without risk. However, brands and social media influencers can help manage these risks by adopting appropriate legal terms in agreements, keeping open lines of communication between the brand and the influencer, and making use of various technical tools offered by social media platforms to manage creator licensing.
This article was authored by Erica Han, David McIntosh, Georgina Jones Suzuki, and Leah Miano. The team was also supported by summer associate Meggie Corcoran.
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