Due Diligence in Influencer Marketing Managing Risk for Both Brands & Creators

Due Diligence in Influencer Marketing: Managing Risk for Both Brands & Creators
Influencer Marketing
3 Minutes
Ruhana DaSilva
November 16, 2022

When utilising influencers and content creators best in class Brands and respective Digital Agency partners work double time to ensure risk is accounted for in their selection. At REISE we’re constantly challenging our due diligence. Ensuring parameters are set from proposing and selecting a content creator that:

  1. Suits the brand/ product/ solution from a creative perspective.
  2. Can advocate for a brand/ product or service authentically based on their own unique experience.
  3. Meets our risk criteria.

On the last point, we review everything from sponsorship history, online sentiment, creative fit, and online authenticity to name a few. But what we see happening most frequently is the lack of due diligence on behalf of the creator. What happens when an endorsement goes south? Or a product or brand once being touted as the go-to option suddenly is caught in the heat of litigation or worse on the brink of being cancelled?


Credit: Getty via Forbes

That’s exactly what’s happening with the downfall of the FTX the crypto-exchange platform that once invested millions in celebrity endorsements such as Tom Brady, Stephen Curry and other top content creators.

Last week FTX filed for Chapter 11 and its CEO stepped down, while the U.S froze all withdrawals. Chapter 11 bankruptcy proceedings are filed when the company hopes or expects to be able to restructure its operations, rather than Chapter 7 bankruptcy proceedings,  which liquidate assets. The whiplash continues to unfold this week.

FTX had, and may still have existing influencer marketing contracts with dozens of high profiles celebrities, including content creators and athletes. These content creators are now collateral damage, left to retract their endorsements and release public apologies to their audiences. One of these high-profile deals includes a 19-year, $135 Million sponsorship deal with the Miami Heat, who has since ended the partnership. YouTuber Graham Stephan with 4.1M subscribers, recently published a video clarifying that he owes it to his audiences to explain the situation and that he trusted the information that was given to him at the start, and did not see this coming given the respected backing of big players like Blackrock & Sequoia.

Stephan is not the only one. As it stands there are over 50 million people online who consider themselves a creator. A large portion of this group has gone on to make lucrative businesses making content specifically for financial topics such as budgeting and investing. Largely, influencer marketing strategies for crypto-exchange platforms are always on the riskier side, as with any new product or solution. Based on our experience we’ve also seen creators turn down deals within this space given how unregulated the market is.

Two things come to mind:

  1. Who takes stock of the potential risks on the creator side?
  2. How can creators and solutions in crypto, or any new up-and-coming industry mutually benefit from a collaboration with less risk?

For one, creators should work with agency partners who are seasoned in this space and can anticipate risk. Macro creators who have the benefit of working with a dedicated agent should have pre-agreed terms on what works for them and what is considered red tape. We’ve arrived at a very saturated stage in the use of influencer marketing, we’re seeing a lot more creators and influencers be more selective in their process. Promoting products and brands that closely resonate with their profile, ambitions and the environment.

Secondly, at the core of what word-of-mouth is with the surplus of content-making opportunities and the clear financial incentive for creators, brands need to be less haphazard in their selection process in the quest to work with the next creator and treat the process as a true advocate program (long term). Just as your agency needs a good brief and ample time to deliver quality output, the same thinking applies when working with creators.

As with any new customer, a good product or service experience from the start, and long-term exposure are needed before an endorsement. We often see brands choose influencers for the sake of being a part of what everyone else is doing, not realising that this creator you’re investing in may be your loyal customer for the long haul. (Beyond paid efforts).

According to a recent study by Adobe “Future of Creativity,” there are 1.8 billion users with access to earn a living based on their creativity, out of this 53% earn money from their content, and 77% just started earning within the last year.

While the financial gain is a huge benefit for creators who do incredible work for their audiences, I’m sure we can all agree that it would be equally beneficial to be fully inducted into what it means to be a true advocate for a brand, and understand the product and or service at length.

After all, the more information the more the creator has to work with when deciding on the kind of content they want to produce.

Curious to know more about working with creators for your next project? Schedule a chat with us to learn more.