What is Exclusive Management of an Influencer | Influencer Management Issues
If you are an influencer, at some point, you will likely reach out to an agency, a specific agent, a manager, or someone who’s going to facilitate the sponsorship opportunities that an influencer can get. And you will ultimately sign a contract as well, which dictates the terms of the relationship between the influencer and the agency. In all those types of contracts, there’s going to be a clause that’s called exclusive management. And this is going to dictate what the influencer can do and can’t do. Exclusive management simply means that whoever you sign with is going to be the only party that facilitates deals between you and a brand. So, even if, a brand contacted the influencer directly, if they had an exclusive management contract, it’s very likely there will be language in there that states even if we had nothing to do with this deal, if someone contacts you for opportunity, you must refer them to the agency.
Influencer Marketing Agency Concerns
And then the agency would be the ones that undertake the negotiation with the sponsor and then they would reach agreement. And then that opportunity would be presented to the influencer. Additionally, it’s the job of any manager or agency to go out and find deals for the influencer. And once again, they would be the only party that would be allowed to do that. Even if you had a friend that came to you with a deal, or even if another agent came to you with a deal, if you have an exclusive management contract with an agency or an agent, they will not be able to get compensated for whatever they bring to you. You would be required to refer them to your agency and they would be the ones to facilitate the opportunity.
Now, why is this? Quite simply. If someone is managing you, they’re going to want to benefit from the commission percentage that’s been negotiated between the two parties. 20% is kind of an industry-standard amount. If someone brought to you a sponsorship opportunity and it was 2000 a month, something like that, if they got 20% of that, every month that you would get paid, the manager would receive 20% of 2000. And then that is how the compensation would occur between the two parties. Other topics of interest include:
- When Does an Agent No Longer Have Access to Influencer Data?
- How Can an Influencer Terminate a Management Contract?
There are also clauses that likely will state if the influencer decides to terminate the management agreement, any sponsors that the influencer has had a relationship with while with the management company, they’ll still have to pay the commission percentage for a period after the contract is terminated. Most of the time, that’s one year. Let’s say you established a relationship with a meal prep company. And then you decide, you know what, I’m going to move on to a different manager, but the meal prep company still was like, hey, even though you’re not with the manager, we still want to associate with you. The contract would likely state if it’s an exclusive management contract, that even if they are no longer your manager, you still must pay them the 20% for a year after the contract terminates. That’s standard.
I mean, obviously, the biggest fear of any management company, is they’re going to bring a bunch of deals to an influencer, the influencer terminates the contract, and then they essentially avoid having to pay the 20% to the agency or manager, whoever brought them the deal. Now, where you can negotiate is certainly the amount of time after the contract ends, that payback percentage would last, and then the percentage of what the agent or the manager would receive is also something that’s negotiable. Are exclusive management contracts good or bad? Well, on the most part, they’re good. Most influencers are not as business savvy as a reputable marketing agency. An agency will have established relationships with companies, and they have a broad reach and they can generally bring you things that you either wouldn’t know how to bring to yourself or have the contacts to facilitate those deals.
Most Influencers Have Exclusive Influencer Talent Management
And then the agencies can also push their people onto the different marketing opportunities and say, hey, look, we have a client, they fit this profile. We think they’d be a great match for your brand. And for the most part, an influencer, although they could do those things themselves, it’s much quicker and kind of establishes their identity and brand faster if they’re working with a marketing firm or an agent or a manager. There will be some people who tell an influencer, you know, I can do all of these things for you. And the percentage may be even more than 20%. Always look to see what’s the track record of this person, who else have they represented, and even contact the people that they’ve represented to determine if they’ve done a good job.
Usually, people who are bad or burn influencers can get a bad reputation quickly, and that spreads amongst the influencers and you can kind of figure out, alright, this person is just trying to take advantage of the influencers. But always do your due diligence when you are about to sign an exclusive management contract because there will be repercussions after the contract ends.
Influencer Management Contract Termination
How can an influencer terminate a management contract? Most influencers will have either an agent or a manager or maybe even a marketing agency working for them. And then you should have a contract with them and there are times where it might just not work out and the influencer is interested in terminating the agreement and then determining what the implications are if they terminate the agreement. In any kind of contract, there’s going to be a section that states how you can terminate the agreement, normally called termination. And there are generally four common ways you can terminate a contract. One, your influencer management contract is going to have a term.
And the term just simply means how long it lasts. Somewhere between one all the way up to five years is kind of a normal amount for an influencer management contract. And then it will state after that initial term if it automatically renews or not. Many contracts, let’s just say it’s a one-year term, will just state if neither party terminates the agreement, it’ll just automatically renew for successive one-year terms that just kind of go on forever until terminated. There are some contracts that don’t have that language, and it’s just a fixed term, meaning, it’s one year and that’s it. And in that scenario, if your contract ended after a year, neither party renewed it, it’s done. The contract is terminated. The second way would be through mutual agreement. If either party, for whatever reason just said, you know what, this isn’t working out, regardless of what the contract says, I’m just interested in kind of washing our hands of the situation, moving on.
That would be another way you could terminate the agreement. The third way would be with cause. There are things that both parties must do during the term of a contract. And if one of those parties is breaching the contract, so they’re not kind of fulfilling the terms of the agreement, let’s say you’re an influencer and your agency or manager simply stopped providing you or reaching out to find you deals or something, and they’re just not doing the job that they were contracted to do, well, you would find them in a breach of contract. In most well-written contracts, it’s going to state how you can provide notice of the breach. And then normally, there would be what’s called a cure period. If the manager was in breach of contract, you would give them a letter that states, here are the things you’re doing to breach the contract, and then there’d be cure period normally. And a cure period would be basically an amount of time that the manager or agency could fix whatever the breach is. And then the influencer could not terminate the contract with cause. That’s the third way, with cause termination.
Can a Marketing Manager Influence Success or Failure?
And then the last and the most common way is without cause termination. Without cause termination simply means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. In most influencer management contracts, it’s going to be somewhere between 30 to 120 days’ notice. And what that would mean is if you’re the influencer and you were just unhappy with the agency, you would give them the, let’s say it’s a 60-day notice. And then both parties would kind of work through those last 60 days. And then at the end of that, they could move on and find new management. Now, there’s usually one kind of, I guess, thing that sticks with the management contract.
And that would be if you had any sponsoring companies while working for the management company, and obviously, if they were worth what you were paying them, they should have plenty of sponsoring companies for you. There will usually be a clause in the contract that states, for a period after the contract ends, you can’t work with that sponsoring company. For instance, if a manager brought you a deal for a meal prep company and they said, alright, you must give one 90-second spot once a month for every YouTube video you do. Well, you couldn’t go back to that same company the day after the contract terminated and tell them, hey, I want you to pay me directly from now on. And the reason why most management companies do that is they don’t want to bring an influencer deals.
And then most management companies get around 20% commission. So, whatever they bring the influencer, they’re going to get 20% of that. They don’t want to bring them deals, have the influencer terminate the contract, and then just basically circumvent having to pay the management fee or commission. One year is kind of a standard amount for that. Now, certainly, that’s negotiable. I’ve seen some that I would consider completely unreasonable are four, or five years in length and that’s not something influencers should agree to. So, that’s how an influencer can terminate a management contract.
Influencer Management Contract Terms | Influencer Contract Agreement
The market for social media influencer content is on the rise. IZEA, a social media marketing agency, publishes a report each year in which they detail some figures about how much influencers are being paid. For 2021, IZEA reviewed a total of $60 million in payments to social media influencers to see how that money was distributed. Here are some of their findings:
- Nano-influencers (1,000-10,000 followers) were paid an average of $901 per post. This is a 36x increase from what they were paid in 2015!
- Mid-tier influencers (50,000-200,000 followers) were paid an average of $3,087 per post. This is up 6.4x what they were paid in 2015.
- Mega influencers (500,000-1,000,000 followers) were paid an average of $6,786 per post. That is also up 4x compared to 2015.
The overwhelming trend in these numbers are that brands are willing to pay influencers much more than they were just years ago. It is also true that they are willing to pay for larger audiences. Both things are valid simultaneously, meaning much more attention is being paid to influencer marketing.
Social media influencers often appear to do all of their promotions and endorsements spur of the moment without a care in the world. Of course, this is staged just right to make it appear that way, even though much thought goes into what they do. Almost every aspect of an influencer’s endorsement is part of a contract they make with the brand or company they are working with. As such, we wanted to look at some of the terms contracts often contain to understand better the work-life an influencer has.
Influencer Contract Terms
Parties will clearly discuss the kind of content the influencer will produce for the brand ahead of time. Both sides of this transaction need to get together to determine what type of content they will put out and how that content will correspond with the brand’s overall strategy. The influencer management contract will contain a few terms within this aspect of the contract that includes:
- Exclusive Management Clause – A social media influencer manager will likely want to have a clause written into the contract that they offer their talent that dictates that they are to be the sole manager of that talent. This is done to ensure the content put out by the talent follows what both parties have previously agreed to.
- Length of Access to Data – Managers need access to influencer data to decide who to hire and how long. However, that data connection needs to be revoked after a while when the performer no longer works directly with the manager they originally signed up with.
- Non-Compete Clause – There is likely to be a clause within the contract that requires the influencer not to produce endorsed content for any other brand that directly competes with the brand currently signing them up.
- Commission – The manager will likely put in information about how much commission they expect to get for helping the talent find endorsement deals in the first place.
- Termination – There should be specific information about how an influencer can terminate the contract they have set up. This will make it easier for them to end an agreement not actively serving their purposes.
These are just a few aspects of influencer management contract terms. There are many more aspects of these contracts to consider as well.
Essential Requirements for Social Media Influencers
It is ideal to have all of the essential elements of an influencer management contract hammered out in specific detail within that contract. Failure to do so can mean that important aspects of the relationship get left out. Companies will want to make sure it is clear what their goals are for the relationship that they develop with an influencer that they pay to market their posts. Here are some examples of things that most companies want to ensure are a part of their overarching goals for the campaign:
- Increase Brand Awareness – Virtually every marketing campaign has been used in part to increase brand awareness, which is no different for social media influencer marketing. Brands want to ensure that they get their messages out to the broader public in a way that promotes who they are and what they offer in a way that is appealing to their target demographics via an influencer.
- Gain Traffic – Getting more traffic to a company website or driving sales in some way is a clear objective that the contract should spell out in the contract. Failure to improve the amount of traffic one receives to their website can certainly be a good enough reason to eliminate the contract deal you have set up with a social media influencer. You don’t want to continue offering a deal to such an individual if they are not providing your company with the type of returns you expect.
- Connect with a New Audience – Another explicit goal of the campaign can be to connect with a new audience you haven’t reached before. The value in doing this is that you can reach out to a group of people who might otherwise have never heard about your products or service. They may be interested in what you have to offer, but until you take the time to reach out to them, you will simply never know if this is the case. The influencer management contract terms can and should spell out this desire.
What is a Standard Influencer Management Commission? | Influencer Marketing
What is a standard percentage of commission that a social media influencer management company will take? At some point, if you’re an influencer and you get big enough, you may want to reach out and try to find some assistance in securing some more sponsorship opportunities. And you’ll do that by finding an individual agent, an agency, a manager, or a marketing management agency. It’s all the same thing. Their role is to go out and bring the influencer deals that they might be interested in. And then for that, they will get a percentage of whatever the compensation that’s paid to the influencer for the sponsorship opportunity. Before the management company starts looking for potential deals for the influencer, they will sign an exclusive management contract.
And then that contract will dictate the terms of their relationship, so how long it lasts, how it can be terminated, what are the expectations of the influencer, what are the expectations of the management company, and then included in that would be how much, or what percentage of the compensation that the influencer receives goes as commission to the marketing agency. A standard amount would be around 20%. Now, everything is negotiable. There is certainly wiggle room to bring that down if you are an influencer, however, just like in any industry, the better someone is at their job, the more they can charge. And so, if you find a rockstar agent, and they’re certain they can bring you from this level to this level, but they’ll charge 2% more, 5% more, or whatever percentage than somebody else, well, you’re going to have to make a decision and kind of do a math equation of, alright, I could go with someone who may not have as much experience for 10% or go with someone who’s extremely experienced for 25%. Will that 15% difference be made up in all the better, higher-paying, higher volume of opportunities that a more experienced agent may bring?
Influencers Commission to a Manager
And then the influencer terminates the contract, takes those deals, then avoids having to pay the 20% to the management company. That’s an industry-standard restriction after a contract ends. Now, what you could negotiate is the length of the restriction, the percentage that the management company will get during that period or limiting the look back. In most contracts, it’ll state any deal that they brought to you during the relationship between the influencer and the management company. So, if it’s been a five-year relationship and they brought you a deal in year one, you haven’t worked with that brand for four years, and then they come back to you after you terminate the contract within that one-year period, theoretically, the management company would still be owed 20%. So, you want to limit that look-back period. One year is what I would consider a reasonable amount, someone might consider a longer than that.
But it’s the role of anyone who’s advising you to tell what would be advantageous to you. And I would say limit to one year, looking back, and then one year going forward, that would be considered a reasonable amount. You could also reduce the percentage that the management company receives, maybe quarterly, so every three months, go from 20 to 15 to 10 to 5. And then after that one-year period, it’s over with. So, 20% is kind of an industry-standard amount. Could be more, could be less, but that’s about the average.
Is There a Non-Compete in an Influencer Management Contract? | Influencer Non Compete Agreements
Do exclusive management contracts have non-competes? In most contracts for social media influencers, there can be what’s called restrictive covenants, and these are things that an influencer cannot do after the contract ends. Let’s just take a physician, for example. They could have a non-competition clause that would then say they can’t work as a doctor within 10 miles of their office for one year. Well, obviously as an influencer, that doesn’t make any sense as you are all over the place. And you’re not in one specific location. What management companies do, and this would be an agency, an individual agent, an individual manager, or anyone who has an exclusive contract with the influencer to go out and find deals and negotiate with them.
Social Media Influencers Must Pay After Termination
There will be a clause in there that states the influencer cannot contract with any sponsor that they did business with, while with the management company for a period. And I’ll just give an example. Let’s say a skin company reaches out to the influencer and states, we’d like to have relationship, and then they go through your management company, and they negotiate the deal. Then the management company comes back to you and says, are you interested? You say, great. You work with them for two years. Well, let’s say at some point, you don’t want to use the same management company anymore and you decide to terminate the agreement, so the agreement ends. Well, there’s going to be a clause in there that states you won’t be able to work with that skin company for, usually, one year.
Terminating an Influencer Agreements
How can an influencer terminate a management contract? Most influencers will have either an agent or a manager or maybe even a marketing agency working for them. And then you should have a contract with them and there are times where it might just not work out and the influencer is interested in terminating the agreement and then determining what the implications are if they terminate the agreement. In any kind of contract, there’s going to be a section that states how you can terminate the agreement, normally called termination. And there are generally four common ways you can terminate a contract. One, your influencer management contract is going to have a term.
And the term just simply means how long it lasts. Somewhere between one all the way up to five years is kind of a normal amount for an influencer management contract. And then it will state after that initial term if it automatically renews or not. Many contracts, let’s just say it’s a one-year term, will just state if neither party terminates the agreement, it’ll just automatically renew for successive one-year terms that just kind of go on forever until terminated. There are some contracts that don’t have that language, and it’s just a fixed term, meaning, it’s one year and that’s it. And in that scenario, if your contract ended after a year, neither party renewed it, it’s done. The contract is terminated. The second way would be through mutual agreement. If either party, for whatever reason just said, you know what, this isn’t working out, regardless of what the contract says, I’m just interested in kind of washing our hands of the situation, moving on.
That would be another way you could terminate the agreement. The third way would be with cause. There are things that both parties must do during the term of a contract. And if one of those parties is breaching the contract, so they’re not kind of fulfilling the terms of the agreement, let’s say you’re an influencer and your agency or manager simply stopped providing you or reaching out to find you deals or something, and they’re just not doing the job that they were contracted to do, well, you would find them in a breach of contract. In most well-written contracts, it’s going to state how you can provide notice of the breach. And then normally, there would be what’s called a cure period. If the manager was in breach of contract, you would give them a letter that states, here are the things you’re doing to breach the contract, and then there’d be cure period normally. And a cure period would be basically an amount of time that the manager or agency could fix whatever the breach is. And then the influencer could not terminate the contract with cause. That’s the third way, with cause termination.
Contract Termination Language in an Influencer Marketing Agency Contract
And then the last and the most common way is without cause termination. Without cause termination simply means either party can terminate the agreement at any time, for any reason, with a certain amount of notice to the other party. In most influencer management contracts, it’s going to be somewhere between 30 to 120 days’ notice. And what that would mean is if you’re the influencer and you were just unhappy with the agency, you would give them the, let’s say it’s a 60-day notice. And then both parties would kind of work through those last 60 days. And then at the end of that, they could move on and find new management. Now, there’s usually one kind of, I guess, thing that sticks with the management contract.
And that would be if you had any sponsoring companies while working for the management company, and obviously, if they were worth what you were paying them, they should have plenty of sponsoring companies for you. There will usually be a clause in the contract that states, for a period after the contract ends, you can’t work with that sponsoring company. For instance, if a manager brought you a deal for a meal prep company and they said, alright, you must give one 90-second spot once a month for every YouTube video you do. Well, you couldn’t go back to that same company the day after the contract terminated and tell them, hey, I want you to pay me directly from now on. And the reason why most management companies do that is they don’t want to bring an influencer deals.
And then most management companies get around 20% commission. So, whatever they bring the influencer, they’re going to get 20% of that. They don’t want to bring them deals, have the influencer terminate the contract, and then just basically circumvent having to pay the management fee or commission. One year is kind of a standard amount for that. Now, certainly, that’s negotiable. I’ve seen some that I would consider completely unreasonable are four, or five years in length and that’s not something any influencer should agree to. So, that’s how an influencer can terminate a management contract.
Have a Lawyer Look Over the Contract
It is highly recommended that you have an influencer management contract attorney review the contract you produce for your talented influencers.
The best-written contracts ensure everyone is on the same page as far as expectations are concerned, and the only way to reach that point is to use an attorney who knows how to create such a contract.
Please contact us today to set up a free consultation and get started with an experienced lawyer from our team.
Influencer Management Contract Questions?
Contract Review, Termination Issues, and more!
