Key Considerations When Collaborating with Influencers and Celebrities

In today’s brand-driven world, celebrity endorsements serve as a powerful marketing tool. However, for companies, the decision to collaborate with a celebrity/influencer (hereinafter referred to as “Celebrity”) has its own risks. The stakes are high, and the decision requires due diligence and consideration of potential risks. Here are five crucial factors that your company should keep in mind when collaborating with Celebrities.

1. Exclusivity Clause

This clause ensures that the Celebrity exclusively promotes your brand or product and preventing them from endorsing competitors during the agreement term.

The question now is, what can you do? In preventing the Celebrity from endorsing rival products, you may consider three factors when drafting the clause.

(a) Define the category of products that they cannot endorse.

(b) Specify the duration of exclusivity.

(c) Consider the geographic region where exclusivity applies.

However, note that excessive application of exclusivity may trigger the clause to become unenforceable.

2. Ownership and Intellectual Property Clause

The rights to a Celebrity’s intellectual property are beyond personal as it holds significant market value. If the ownership of content created with the Celebrity is not clearly defined, potential conflicts can arise.

What can be included as intellectual property? The contents, including but not limited to voiceover, name and image of the Celebrity.

There are three situations where disagreement could arise:

(a) When the company wants to use a Celebrity’s intellectual property in future campaigns or across different promotional channels.

(b) When the company wishes to repurpose the Celebrity’s voiceover in another video.

(c) When the promotional campaign has ended, can the company still uses the content they made with the Celebrity?

This clause is essential in any collaboration as it clearly defines who owns the content created. It is to note that you cannot use a Celebrity’s name, image, voice or likeness without proper authorization.

When drafting this clause, consider the following:

(a) The scopes of usage and ownership rights – whether the rights belong to your company or the Celebrity.

(b) The specific elements, such as voiceovers – whether it can be separated and used independently from the original content.

3. Indemnity Clause

What happens if the Celebrity is embroiled in a scandal or controversy that leads to people boycotting your company’s products or services? This is where the indemnity clause comes in, by protecting your company from reputational and/or financial damage.

This indemnity clause acts as a safety net, protecting your company from potential reputational or financial harm if the Celebrity’s actions lead to public boycotting or backlash.

What you can consider when drafting an indemnity clause:

(a) Scope of indemnity.

(b) Whether or not the Celebrity should indemnify the company for claims and losses. If yes, what kind of claims, losses or legal actions arising from their misconduct trigger this clause.

4. Performance-Based Milestone Payments

Rather than relying on a fixed payment structure, a performance-based milestone payments helps your company to meet certain targets or outcomes. This approach is effective when working with Celebrities, including live hosts.

There are two considerations. Firstly, determine whether your company has targets on engagement or sales conversions. Secondly, if your company does not have targets on engagement or sales conversions, your brand must ensure that the contents are based on guidelines.

This structure not only motivates the Celebrity to meet the targets or follows the guidelines but also ensures that your company’s budget is protected (which is paying only for successful deliverables). Importantly, it provides a fair and transparent way for Celebrities to receive payment based on the actual impact they make, ensuring they are compensated fairly for their contribution.

Therefore, to implement this clause, you may do the following:

(a) Clearly outline the performance metrics that will trigger payment, such as how many impressions, product sales or engagement rates your company is expecting.

(b) Payment will be done once the content adheres to the company’s guidelines.

5. Termination Clause

When working with a Celebrity, it is important to consider the potential volatility of their public image, especially in the age of “cancel culture”. Given these challenges, incorporating a flexible termination clause, you protect your company from the fallout of any public controversies or if performance does not meet expectations.

Three points to consider when drafting this clause:

(a) Include an exit option for situations like reputational damage together with failure to meet performance targets.

(b) Specify whether termination is immediate or need notice.

(c) Define the compensation terms, if necessary.

Conclusion

Incorporating key clauses into your collaboration agreements ensures the relationship is not only legally and commercially sound but also fair to both parties. Being specific in the contract helps prevent misunderstandings and ensure efficiency in managing the collaboration.

Some major companies even include a Duty of Decency clause in their contracts – something we will explore in greater detail in an upcoming article. Stay tuned!

Disclaimer:

1. Notwithstanding the above, this article is not intended to serve as legal advice and should not be a substitute for professional legal consultation.

2. Every effort has been made to ensure the accuracy and reliability of the information presented in this article.

3. For advice or opinions regarding the information provided or related matters, please contact the author(s) directly.