CREATIVE, ONLINE & SOCIAL AGENCIES: TOP TIPS FOR CONTRACTING WITH BRANDS AND TALENT

Over the past few years brands have increasingly turned to online talent, content creators and influencer marketing campaigns as a means of growing their audience, increasing engagement and expanding their brand awareness. But for many brands, creating and executing a successful social and creative strategy is best achieved using the services of specialist online and social media agencies whose creative expertise and skillset, and network within the world of online content creators, makes them the perfect fit to run and deliver a successful campaign.

How deals are typically structured

In the above context, creative agencies essentially act as a “middle-man”, sitting between the brand and the talent. A brand will typically appoint an agency with a budget, ask them to brainstorm ideas for an online marketing and social media strategy, and then implement that strategy through procuring the services of online talent. In many cases, a full 360° service is provided – this could involve out-of-home deliverables, influencer marketing and social media strategy.

As the middle-man, creative agencies tend to enter into one contract with the brand (“Brand Contract”) and another contract with the talent (or a talent agency acting on behalf of the talent) (“Talent Contract”). The brand won’t deal directly with the talent, so ensuring that those contracts match-up is absolutely fundamental to successfully executing such a business model and managing risk and liability.

Top Tips

Contractual consistency is key. Ultimately, the creative agency will be on the hook to both the brand and the talent. Money will flow through from the brand to the agency, and then on to the talent. Services and deliverables will flow the other way; from the talent to the agency, and then on to the brand.

If the brand doesn’t get what they want from the talent, they won’t pursue the talent directly (as they won’t have a contract with the talent) – they’ll go after the agency. Similarly, if the talent isn’t paid their fees, they’ll look to the agency too.

With that in mind, we’ve put together a list of some of the key issues for agencies to consider when contracting with brands and talent:

1.   Fees: It may seem obvious, but matching up the commercials is a good place to start. If, for example, a brand is committing a budget of £100k for an agency to run and deliver a social media campaign, the agency needs a commercially viable model for procuring the services of online talent. Particularly when multiple talent is involved, keeping an eye on the budget is crucial.

2.   Payment Terms: Perhaps just as importantly, the timing of the payments should also line up. The ideal scenario is to secure payment from the brand before being on the hook to pay the talent, and this should be reflected in the respective payment terms. So if the Brand Contract provides that the brand will only pay the £100k fee on completion of the services or conclusion of the campaign, the agency should ensure that its Talent Contracts provide for the same (otherwise the agency may face cash flow issues). One way to get around this is to ensure that the brand pays up-front for any fees which are going to be passed through to talent, with any sums over and above that (which will be retained by the agency) to be paid on completion. This can prove to be challenging, however, when dealing with large, global brands.

3.   Services/Deliverables: the services/deliverables need to be clearly and consistently set out in both the Brand Contract and the Talent Contract. If, for example, a brand is paying for x5 Instagram posts and a one day shoot for a promotional video on a certain date, those obligations should be clearly set out in the Talent Contract. As mentioned above, ultimately it is the agency who is on the hook for performing its obligations in the Brand Contract, so it must be able to procure the correct services/deliverables from the talent under the Talent Contract.

4.   Advertising Regulations: Brands will often require a clause in the Brand Contract requiring the agency to ensure that all of the talents’ social media posts comply with applicable advertising regulations (for example correctly labelling posts with #ad). If so, it is important that the same obligations are "pushed down" onto the talent in the Talent Contract. However, if the brand has approval rights over the social media posts (see below) and the talent publishes the approved materials, the agency should ensure that it is not in breach of the Brand Contract if the posts fail to comply with the advertising regulations.

5.   Approval Rights: In respect of social media deliverables, the brand will almost always require approval rights over posts to ensure that the messaging/content is consistent with brand values and guidelines, and the campaign objectives. Where this is the case, the agency should ensure that the Talent Contract expressly provides that brand approval is required before posting. On the flip side, high profile talent may want certain approval rights over the brand’s use of their image - and that should be addressed properly in the Brand Contract.  

6.   Intellectual Property: In essence, whenever the agency is granting IP rights to a brand, it must be sure that it has those rights to grant in the first place. For example, if a brand requires a licence to use the talents’ image, the agency must first obtain the relevant rights from the talent under the Talent Contracts. The agency should also give thought to whether it needs any IP from the brand - if, for example, the brand wants its logo to be incorporated in the talent’s social media posts, the agency will require a licence to use that IP (which it can then pass on to the talent). Agencies should also carefully consider whether the brand is able to put paid media spend behind the posts; and the brand’s use of content and image rights post-term and post-campaign (this is often a point of negotiation).

Conclusion

One of the fundamental issues for agencies to bear in mind when entering into Brand Contracts and Talent Contracts, and delivering multi-faceted online campaigns, is risk. The primary way of managing and mitigating risk in these types of deal structures is ensuring that its contracts with brand and talent are not just clear and robust, but also match up. There is always a risk that things won’t go to plan; whether that’s the campaign taking on a different direction or budgets being re-evaluated, but it’s sensible and good practice to proactively manage those risks at the outset. In the end, as explained above, that can only be achieved through contractual consistency.