Influencer marketing is a form of social media marketing involving endorsements and product placement provided by influencers — people and organizations who have a purported expert level of knowledge or social influence in their field. To put it simply, companies hire individuals with a large social media following to promote products/services through their personal accounts. According to the Association of National Advertisers ("ANA"), marketers are significantly increasing their influencer budgets for 2023. Of note, advertisers suggest that the "quality of customers and traffic from influencer marketing is better than other sources." As with any new advertising endeavor, there are many complicated legal considerations to take into account when creating effective and compliant influencer marketing campaigns. Of course, the most prudent course of action is to consult with an experienced marketing attorney prior to initiating a new campaign.

Is Influencer Marketing Worth the Effort?

You may be wondering, does influencer marketing really work? Is it worth the effort? According to a Harvard Business Review article, the answer is "yes." In fact, the author points out that in 2022, the influencer industry reached $16.4 billion in revenue. Further, it has been reported that, more than 75% of brands now have a dedicated budget for influencer marketing. The study results revealed that "on average, a 1% increase in influencer marketing spend led to an increase in engagement of 0.46%, suggesting that the strategy can in fact yield positive [return on investment]" Based on this data, marketing companies would do well to pursue both contacts and contracts in this arena. But of course, the industry, like many others, comes with a host of "best practices" that should be followed. In addition to such practices, there are regulations that influencers must comply with, or they may find themselves in regulatory trouble.

What Legal Issues Should be Considered When Engaging in Influencer Marketing?

There are many not-so-obvious legal concerns that companies in the influencer marketing industry should be aware of. The more common issues include, but are not limited to: 1) risks associated with intellectual property rights (including Copyright, Trademark, and right to publicity matters); 2) the need to comply with product endorsement guidelines when reviewing or promoting any goods or services; and 3) the importance of protecting oneself by creating a limited liability company or LLC.

Pursuant to applicable Federal Trade Commission ("FTC") regulations, social media influencers are required to disclose their advertising relationships, including when they receive benefits in exchange for their endorsement, testimonial, or review. Notably, influencers can only promote products that they have used and must give their honest opinion about such products.

How to Pursue Influencer Marketing Within Applicable Regulations?

We have mentioned only some of the regulatory issues associated with influencer marketing in this blog post. Businesses that fail to ensure that their promotions are compliant with FTC regulations (as well as the many platform rules governing the use of social media websites) are exposed to the risk of regulatory investigation and legal action. Given this prospect, the best way to be sure that your marketing campaign is compliant is to work with an experienced marketing attorney.

Related Blog Posts:

Legal Concerns For Product Endorsements By Social Media Influencers

NFT-Influencer Contract: Don't Get Cancelled

Why Social Media Influencers Should Form LLCs

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.