First Reference company logo

Inside Internal Controls

News and discussion on implementing risk management

machine cogs image

Gowlessence: The insider view into the legal side of the influencer marketing industry

influencer marketing

Influencer marketing is a powerful weapon for brands. Influencers engage with target audiences through authentic storytelling, improve brand sentiment, and so drive a successful return on investment. However, with regulatory authorities increasingly scrutinising campaigns, mitigating against potential legal, commercial and reputational damage should be considered when embarking on working with influencers on digital marketing campaigns. Gowling WLG’s five-part series of Influencer 101 articles will equip you with the tools that your brand needs to ensure it’s in the strongest position when approaching influencer partnerships.

Meet Gowlessence, our fictional case study for this series and the latest beauty brand to pop up on your social media feed. Gowlessence produces cleansers, creams and serums that its customers swear make them look good on the outside, while also making them feel good on the inside. Gowlessence’s demographic is millennials that justify their indulgence on “self-care” by investing in Gowlessence’s promise of organic, cruelty-free products and lifestyle.

In order to capitalise on the beauty industry’s penchant for digital marketing, Gowlessence want to launch an influencer marketing campaign. Gowlessence has allocated a generous budget for this, in the hope that collaborating with influencers that already have loyal audiences will bring more eyeballs – and subsequently, sales – to the brand.

Legal and commercial considerations when working with influencers

Gowlessence appreciates that the reign of social media has reshaped commerce; rocketing trust as the integral element in consumers’ purchasing decisions. This has opened up the market for influencers to ascend as the bridge between buyers and brands, forging trust between the parties. Influencers are so-named because of their extensive social media followings. Influencers have a self-selecting and trusting audience, whose demographic and impact can be easily ascertained and measured. By utilising influencers as part of an overall marketing strategy, Gowlessence plans to tailor messages to its target audience with the hopeful assurance that such messages are delivered effectively.

As brands increasingly work with influencers, contracts between the parties have become commonplace. It may be daunting for brands to place their reputation in the hands of an influencer that they may have only had an email exchange with. Therefore brand protection and reputation management needs to be at the forefront of any legal and commercial negotiations. This article examines the key reputational risks that Gowlessence wants to mitigate against as it intends to work with influencers on both long-term marketing campaigns and one-off advertorial posts.

Due diligence

Gowlessence’s marketing team makes a shortlist of five influencers that have the “Gowlessence look”, and so would be an appropriate fit to promote its products. However, prior to public association with any of the five, Gowlessence conducts extensive due diligence. This goes further than a cursory Google search – Gowlessence does a “deep dive”: checking Reddit threads and the Wayback Machine to look for any potentially scandalous posts or gossip that could derail its campaign and cause negative publicity.

Gowlessence is particularly prudent about due diligence as its competitor, LawWow, recently had a PR disaster when it collaborated with an influencer to launch its new lipstick shade. On the day the campaign launched, it was discovered that a short scroll down the influencer’s Twitter revealed an expletive-filled rant about how LawWow’s lipstick wouldn’t come off – turning an adventurous dark lip attempt into a week-long Halloween costume. This quickly becomes a bigger story than the lipstick launch itself, diluting the time and money invested by LawWow into the campaign.

Once Gowlessence has finished scouring the internet, it removes two influencers from the list who are found to have made some questionable comments in the past, which could reflect badly on Gowlessence if these come to light. This leaves three influencers who Gowlessence decide to go forward with, and Gowlessence’s legal team begin to draft the contracts.

Mitigation

While Gowlessence conducted extensive due diligence on the influencers, Gowlessence still needs an “out” if a relationship with any of the influencers goes awry. Just as a vegan activist brand needs a plan if the influencer it’s working with decides to become a raging carnivore, mitigating potential long-term damage is a significant concern for Gowlessence. Gowlessence doesn’t want to be featured in a tabloid headline ridiculing a PR blunder which could have been avoided.

When the influencer contracts are drafted, Gowlessence includes a simple ability for it to terminate a relationship with the influencers if they go on a rampage that isn’t consistent with Gowlessence’s values. The contracts also include a clause preventing the influencers from substantively changing their lifestyle during the contract term. This is to avoid any unforeseen threats to Gowlessence’s campaign – for example, if one of the influencers suddenly becomes vocal about the fallacy of expensive skincare.

Gowlessence considers its long-term plans too – if a rebranding takes place and past campaigns with influencers no longer fit with the brand, Gowlessence needs the ability to have the influencers delete any content referencing a relationship with Gowlessence.

LawWow portrays itself as a younger, family-friendly brand. Previously, it collaborated with a vociferously “clean-living” child star, who promoted its pimple-cream. Eighteen months later, that influencer was a CBD advocate with a profane face tattoo. If this had been Gowlessence, its contract would provide for the ability to insist on a public disassociation with the influencer by having that influencer delete all relevant advertorial posts from its social media pages.

Post-termination restrictions

Gowlessence’s contracts ensure the influencers are restricted from discussing anything about Gowlessence that it would rather is not made public knowledge. This is particularly important if any of the relationships sour and terminate. Gowlessence wants to avoid a disgruntled influencer exposing how Sue in Accounts doesn’t realise what the aubergine emoji means. Gowlessence acknowledges that it must always retain control of its message – making such contractual protections imperative.

Following regulations

Finally, a crucial aspect for Gowlessence’s contracts to cover is the importance of following relevant regulations and guidelines. While these may differ across various jurisdictions, advertising rules tend to be substantively similar in their overall objective: protecting consumers. Gowlessence comprehends both the legal and reputational significance of adhering to the relevant regulations and guidelines. Sanctions aside, Gowlessence wants to be known as honest and transparent – fostering trust among its customers. By being aware of protecting against foreseeable risks in partnering with influencers, Gowlessence is cognisant of the relevant regulations and guidelines to be followed. These regulations will be covered in detail in an upcoming article in this series, where Gowlessence’s patience for the influencers’ caption choice will be tested.

By Isabella Hislop, Gowling WLG

Occasional Contributors

In addition to our regular guest bloggers, Inside Internal Controls blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of risk management and best practices in finance and accounting, information technology, environmental issues, corporate governance, sales/marketing and operations, not-for-profits and business related issues in Canada. If you are a subject matter expert and would like to become an occasional blogger, please contact Yosie Saint-Cyr at editor@firstreference.com. If you liked this post and would like to subscribe to Inside Internal Controls blog click here.
Send to Kindle

, , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.

This site uses Akismet to reduce spam. Learn how your comment data is processed.