Our twelfth minisode of the seventh season of “The Creative Influencer” podcast is available today. Jon continues our in-depth discussion of influencer agreements and brand deals, diving into one of the most crucial aspects of any influencer agreement—compensation. Understanding how and when you get paid underpins the entire influencer agreement and process. After all, isn’t getting paid the ultimate point?
We will continue to take a deep dive into each section of an influencer agreement in the minisodes to come in this special series…
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A transcript of the episode follows:
This is minisode twelve of the seventh season of The Creative Influencer podcast and it is the fourth installment in our series on Influencer Brand Agreements.
Today, we're diving into one of the most crucial aspects of any influencer agreement—compensation. Understanding how and when you get paid underpins the entire influencer agreement process. After all, isn’t getting paid the ultimate point?
Let's unpack the complexities of compensation structures, the timing of payments, and what to watch out for in your agreements.
First, let's talk about how influencers are typically compensated. Payment structures can vary significantly, but there are four common methods, which may overlap depending on the deal.
The first is Lump Sum Payments. Many agreements specify a single payment that covers all services, expenses, and taxes related to the creation of the deliverables. These are straightforward but make sure you understand what's included in the fee and what's not, especially regarding taxes and your agent, manager and lawyer commissions. The influencer is responsible for paying any management commissions, legal costs and all taxes arising from the fee. Typical contract language is something like the following:
The Fee will cover all of the Services and all fees, expenses and costs incurred by the Influencer in connection with the Deliverables and taxes will not be withheld. Influencer is solely responsible any agent or management commission and all taxes arising out of the fee.
Second, if there's a chance for more content beyond the initial agreement, know how this affects your compensation. This is when Contingent Fees are used. They are triggered when the brand opts for the creation of additional content beyond the initial agreement.
The third common payment structure is Travel and Per Diem. Especially for attending events or festivals like Coachella, compensation will usually include travel expenses, accommodations, and daily allowances (which are called a “per diem”). Ensure you know the specifics and that they are clearly detailed in the agreement. It is typical to specify first-class airfare, private ground transportation and a luxury hotel for the influencer and one guest.
And in other more rare cases, the compensation may be a donation in the influencer’s name to a charity. This can depend on a whole host of factors outside the scope of this minisode, but suffice to say that some influencers may have reasons to prefer this, especially if the donation is made in their name. I am not an accountant or tax attorney, but there are other tax reasons that an influencer may want to do this as well. Consult your accountant.
Next, let’s talk about the timing of the payments. I have two clients who are paid upon execution of the brand agreement, but that is rare. The more common scenario is for payment to be made 45 to 60 days after the content goes live.
Performance or compliance with agreement terms can also influence when payment is issued. The way many influencers get tripped up is, after they’ve created the content, they often forget the accounting portion of the deal. The influencer or their manager must submit tax forms (in the United States an IRS W-9 form). Most brands also require an invoice before they pay the fee—and in my experience, they never remind you to submit an invoice!
Also, if you're working with an agency, expect delays as payments go through them first.
To give you a clearer picture of what we’ve just gone through, I’ve picked three examples from real influencer agreements I’ve worked on for my clients recently:
These differences emphasize the variety in compensation structures.
Understanding the compensation structure of your influencer brand agreement is crucial. Always read the fine print, know when and how you'll be paid, and ensure you meet all requirements for payment. Be proactive in managing the accounting side, know the payment timeline, and ensure all required documents are submitted. This will help you navigate agreements confidently and ensure you're fairly compensated for your work.
That wraps up our discussion on compensation in influencer brand agreements. In our next minisode, we'll discuss Deliverables.
Until then, keep creating and influencing wisely.
The Creative Influencer is a weekly podcast where we discuss all things creative with an emphasis on Influencers. It is hosted by Jon Pfeiffer, an entertainment attorney in Santa Monica, California. Jon interviews influencers, creatives and the professionals who work with them.
Contact Jon and his team today.
