Digital marketing has since taken over the internet via social media. Companies are moving away from traditional marketing and would instead prioritize engagements with Key Opinion Leaders (“KOL”) and influencers to promote their business.

KOLs are often regarded as people with a strong social status and following that their recommendations and opinions are often considered by the public when making important decisions. KOLs are sometimes also regarded as influencers although there is debate about the distinction between the two. For this article we will use the term “influencer”.

Businesses engage influencers to promote their products online, and these obligations often come in the form of online postings in exchange for payment. If you are a budding influencer looking to sign your first engagement, here are things to look out for:

  1. What are your obligations?

You need to know your duties and responsibilities in the engagement. Your obligations could be a minimum number of postings on social media, attending promotional events, or appearing in videos produced by the client.  Some obligations could be very specific such as “having 15 posts by X date with a clear image of the product, and achieving at least 1,000 likes”

Before signing on the dotted line, ensure that you can comply with the obligations and commitments in the engagement.

  1. Exclusivity clauses

Some companies include exclusivity clauses to ensure that you do not promote a competitor’s business simultaneously.  Breaching this clause could have legal consequences, including legal action or the termination of the agreement. For example, in Miliyasutra Industries Sdn Bhd v Vanidah Imran [2018] 1 LNS 453, the Company counterclaimed a repayment of the sums already paid to the talent, as they alleged she had breached the talent contract by promoting a competitor’s brand.

  1. The Duration of the Engagement

Influencers are not employees of the company, and are engaged for a fixed period to fulfill their obligations. The duration of the engagement should have a clear start and end date. Identifying the end-date is important as it would have a bearing on any exclusivity clauses in the engagement.

  1. IP Rights

Influencers sometimes craft their own promotional material. For example, coming up with a catch-line, jingle or video solely to promote the product. Who owns this intellectual property? Do they belong to the influencer or the company that engaged them? The answer to that question often lies within the engagement. Usually, the company will request for ownership of the IP rights, so they can continue to use the promotional material. 

  1. Termination

An important aspect in every agreement is the termination clause. The termination clause should set out the circumstances in which the agreement can be terminated before its end date.  Since terminations can be disputed, it is also relevant to consider the dispute resolution mechanism under the contract. For example, if there is an arbitration clause, this could be onerous to an individual influencer given the costs involved in an arbitration.

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Social media marketing through influencers continue to be a form of advertising by businesses. The right approach can yield more consumer traffic. Given the surge of young social media influencers on the internet, it is crucial to have your rights and interests protected.

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Zi-Han Lim is an associate in the dispute resolution practice group at Donovan & Ho. He is experienced in dispute resolution, focusing on employment and industrial relations, administrative law and commercial litigation. 

Donovan & Ho is a law firm in Kuala Lumpur, Malaysia. Our practice areas include employment law, dispute resolution (litigation and arbitration), corporate and tax advisory, and real estate/conveyancing. Have a query? Contact us.

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