- Contractual constellations influence billing and liability risks in the collaboration between agencies and influencers.
- Agencies acting in their own name have full control, but bear a higher financial risk.
- In the power of attorney constellation, the financial risk is lower because the influencers are party to the contract.
- Agencies acting as intermediaries benefit from the lowest risk, but also have less control over the representation of interests.
- Billing takes place in different ways: directly to influencers or via the agency, depending on the contract model.
- Important factors that influence the choice of contract type are risk appetite, resources and economic margins.
- Long-term success strategies require careful consideration of the advantages and disadvantages of the respective contractual constellation.
As an influencer agency, there are various options for structuring contracts with clients and influencers. Each of these constellations has its own advantages and disadvantages and also influences the type of billing. In this blog post, we will take a closer look at the three most common contract constellations and explain what they mean for billing.
Conclude contracts in your own name
In this constellation, the influencer agency concludes contracts with clients and influencers in its own name. The agency acts in a similar way to a media agency and passes on the campaigns to the influencers.
Advantages:
– Full control over contracts and campaigns
– Opportunity to achieve higher margins
– Easier coordination and communication between agency, clients and influencers
– Better negotiating position with clients and influencers
– Opportunity to build a strong network and brand
Disadvantages:
– Higher financial risk, as the agency is liable
– More administrative effort and responsibility
– Higher costs due to the payment of social security contributions to the artists’ social security fund
– Need to conclude performance contracts with influencers to minimize liability risks
– Possibly higher tax burden, as all income initially accrues to the agency
Billing: In this case, the agency invoices the client for the entire campaign. After receiving the payment, the agency distributes the money to the influencers and issues them with a credit note. The difference between the amount paid by the client and the amount paid to the influencer is the agency’s commission.
Conclude contracts with power of attorney for influencers
In this case, the influencer agency concludes contracts in the name and on behalf of the influencer. The agency therefore acts as a representative of the influencer.
Advantages:
– Lower financial risk, as the influencers are the contractual partners
– Less administrative work, as the agency is not directly involved in payment processing
– No need to pay social security contributions to the artists’ social security fund
– Lower liability risks for the agency, as the influencers bear the main responsibility
– Possibility for influencers to receive and manage their income directly
Disadvantages:
– Less control over contracts and campaigns
– Possibly lower margins as influencers could claim a larger share
– More difficult coordination and communication between agency, clients and influencers
– Dependence on the reliability and professionalism of influencers
– Fewer opportunities to build a strong agency brand
Billing: In this case, the client pays the influencer directly. The agency invoices the influencer for its commission, which is based on an agreed percentage of the campaign fee.
Arrange contracts and have influencers sign them
In this constellation, the influencer agency merely acts as an intermediary. It brings clients and influencers together, but the contracts are concluded directly between these two parties.
Advantages:
– Lowest financial risk, as the agency is not involved in the contracts
– Little administrative effort, as the agency is not responsible for processing payments
– No need to pay social security contributions to the artists’ social security fund
– No direct liability risks for the agency
– Possibility to concentrate on the core competencies of placement and consulting
Disadvantages:
– Hardly any control over the contracts and campaigns
– Lower margins as the agency only receives a commission
– Less loyalty between the agency and influencers
– Difficulties in enforcing quality standards and deadlines
– Limited opportunities to build long-term customer relationships
Billing: The client and influencer settle the payment directly with each other. The agency issues an invoice to either the client or the influencer for its agency commission.
Conclusion
Each of these contract constellations has its own strengths and weaknesses. Which one is best for an influencer agency depends on various factors, such as risk appetite, available resources and desired margins.
It is important to carefully weigh up the pros and cons and adjust the billing according to the chosen constellation to ensure a smooth collaboration between agency, client and influencer.
In particular, the aspects of liability and the artists’ social security fund should be taken into account when making a decision. If the agency concludes contracts in its own name, it is advisable to conclude additional performance contracts with the influencers in order to minimize liability risks. In addition, social security contributions must be paid to the Künstlersozialkasse in this constellation.
Ultimately, the choice of contract constellation should be tailored to the individual needs and goals of the agency in order to be successful in the long term and build a trusting relationship with clients and influencers.
