Sponsorships

How I Lost $5,000 on an Instagram Brand Deal

12 minute read

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Don't make the same mistakes that I made because you could lose thousands of dollars on sponsorships if you do. Especially if you're a creator in the early stages of your career, just starting to work with brands. It's really easy to ignore red flags, hope for the best, and just expect that everything will be okay, wrong!

It's your job as an influencer to vet every single potential brand or agency that you partner with to ensure that, when all is said and done, you make all the posts you committed to, you did everything you said you were going to, you need to make sure that they're going to pay you.

Here's the story of how I lost $5,000 on a brand deal.

This was about four years ago. First, an email came in saying we're an agency; we represent this juice brand. We think your Instagram would be a good fit. So they provided a link to check out the full scope of the campaign, which turned out to be three pieces of content that I would post on my Instagram and two pieces of content that the brand would post on their handle. I said, okay, it sounds like a fun campaign. Let me know your budget. Then the agency said, so glad to hear that you're interested. We can offer you $2,000 to participate. I said, okay, well, my current rate is about $2,000 for pictures, $3,000 for videos. So we'd likely need to get closer to $10,000 for it to make sense. Let me know if there's any budget flexibility. They said, okay, well, we can't do that, but we can make $5,000 work. And I said, okay, well, why not? By the way, a significant consideration here is that there wasn't any paid usage.

It was just organic. And I wouldn't even have to post two of the assets on my handle, right? Seemed pretty good. So I asked for an agreement, which they sent a few days later, and it looked great. I literally had no revisions to the agreement.

So here's where I made my first mistake. The compensation was listed in the contract as $5,000 to be paid after the completion of services. Always, always, always ask for at least 50% of the balance after execution of the agreement at their standard payment terms, whether it's net 30 or net 60. Yes, sometimes brands will say no to this. But more and more brands understand that creators have bills to pay. And they often can't wait around for the entire duration of the partnership. You know, maybe you're posting several times over a few months. Then once that's done, you have to wait another month or two to get paid. So always ask for 50% upfront. And in my experience, brands and agencies will agree to this about, you know, 60 or 70% of the time.

Okay, so putting that aside, I got to work on the concepts, right, which were approved. Then they sent a timeline that looked good. I was going to post three pieces of content once a week, over three weeks. And then they asked me to just let them know when the content goes live. So I said, sure. I sent them an email when the first post went up. No response. You know, that's okay, you know, not too unusual. Then a week passes. I post the second piece of content and email them again.

No response.

Okay, this is a little weird, but you know, still, at this point, I wasn't really thinking much of it. Then another week passes, and I post the final piece of content. And then, phew, they finally respond. The brand said, "Awesome, thanks." So here was my next red flag. Lack of responsiveness, in general, is something that a lot of creators overlook. But in my experience, this is when you need to start being overly communicative and following up more frequently than you would normally. But remember, I still had to deliver some extra assets for the brand to use, right? And post on their own handle. So I delivered those four days later, along with the invoice and my tax form.

So this is key here. The date of the invoice was July 14th, and the payment terms were net 45, which means that they were supposed to pay on August 28th. Then a few days later, they confirmed receipt of the invoice and everything. Now here's where I really dropped the ball. Remember when I said that the invoice was supposed to be due August 28th? I didn't follow up with them for payment until October 2nd. Over 30 days after it was due, terrible!

The thing is that you know, in the past, some brands paid us a little late, you know, but it was never really something that we stressed about or thought about that much. So just straight up, I messed up. I was not on top of it. So I followed up, and they responded a day later, saying; unfortunately, they don't have any update to provide. I sent an updated list of everyone who was quoted the 10/2 date to our accounting department, and they'll be reaching out to you guys today. I'm so sorry for the confusion on this.

So I said, wait a minute, October 2nd? Per the attached agreement, payment was due net 45 from the last posting date, July 14th, which would be 8/28, which is when it should have been rendered by; please advise.

Then I didn't hear anything for a few days. Then I get this one. Original payments were scheduled for 8/21 30 days from campaign completion, not 30 days from individual posting dates. We do it this way because there are so many influencers involved in the campaign that it would be very confusing to track so many different payment dates. Payments were rescheduled for 10/2, which date I referenced in my previous email.

We are now working to determine the next feasible payment date. Then I said, I understand your explanation. However, the contract clearly states after the last posting date, not at the end of the overall campaign.

Okay, so I'm starting to get a little worried here. The company is clearly trying to play games with when the payment was supposed to be rendered. So next day, October 6th, I got an email from the finance director, which I was copied on BCC, which seems like they sent it to all the creators

that were a part of this program. And it said we appreciate your patience with our pending payments for your participation in our program. We are working quickly to resolve this and expect a swift resolution. We know you were provided dates that have passed. And those were delivered

in good faith by our team given the information we had in hand. I will serve as your point of contact to keep you updated with our team.

So at this point, I'm thinking, okay, well, you know, not sure what more I can do. It seems like they're working on it.

A little more than two weeks passed, still nothing. So on October 23rd, I said the attached invoice is now almost 60 days overdue. Please advise ASAP when this payment will be rendered.

Nothing.

On November 6th, I emailed again. Can either of you please provide an update on the payment of this invoice? The lack of response from anyone at your agency is making the situation difficult.

Nothing.

By the way, you're probably thinking, well, why haven't you picked up the phone and just tried calling them? Trust me, I did that too. But all the numbers I had either just kept ringing, or I would leave voicemails, and no one would ever get back to me. I could never get a live human on the phone.

Uh-oh.

So now, on November 27th, I got an email from the CEO of the agency. "I was passed along a message I was told was from you but was cut off, so ignore if not. We understand your frustration. I can assure you, we understand the circumstances are not easy for you. We have never been in this situation in the past. So I understand your skepticism, but I can assure you, we will make sure you are paid. Please expect to see an email from myself or our team on timing. Thanks for your understanding, and we'll be in touch ASAP."

So I thought, okay, maybe this is going somewhere. If the CEO is involved now, right? So I followed up a week later, and they said, well, we anticipate this closing out in the next two weeks. Unfortunately, this situation has me in a strict confidentiality agreement, but I will do my best to keep as much information in front of you. Expect Monday updates from me. I don't know what kind of confidentiality agreement they could be in to prevent them from paying us.

But, you know, Monday came and went, no updates. So I messaged again, the response was, we're still on track and hoping that this is all completed by the end of the year. So what do you think, do you think that they pay by the end of the year?

Well, of course not.

So I followed up again on January 8th.

Here's the response. "Thanks for your patience. We missed our target of 12/31 but are still in the process of closing our transaction. I apologize for the delay in response. We will be sharing specifics ASAP."

Finally, I was just fed up. "Is there a firm date you could provide for payment? Respectfully, if you're still chasing the agency or the brand for payment, that burden should not fall on creators. Having worked on a hundred plus campaigns over the years, this is the most delinquent payment I've ever experienced."

The response?

"I understand your frustration. We realize this has been an extraordinary situation and not one we would like to put you in or through."

Then nothing for around a month and a half.

Then on February 22nd, I made the decision that I was prepared to come after them legally. Honestly, I didn't even think that I would get my money back, but by this point, I kind of just wanted to teach them a lesson, right? You can't mess around with creators like this. I was fully prepared to take them to court. So I sent them the following breach of contract notification.

"This letter is pursuant to your agreement to pay me for our services contract for a campaign dated June 5th, 2017, for the amount of $5,000. All social media posts were made, and services were completed in accordance with the contract. After repeated delays and promises of payment, your failure to pay as per the enclosed July 14th, 2017 invoice amounts to a breach of contract. Please acknowledge receipt of this letter within five business days. Please render payment via PayPal to this address no later than March 2nd, 2018. If you fail to respond, I will be compelled to pursue legal action. Thank you in advance for your prompt attention to this matter. I look forward to hearing from you. If you have any questions, please do not hesitate to contact me at this address."

And no response, of course, no response.

Then on March 2nd, I got this email. I want to introduce myself as your new contact at the agency. I will be corresponding and closing out your engagement. The team has brought me up to speed on the payment delays. I'll be working to have this brought to a conclusion as quickly as we can. I will be corresponding again with you on Tuesday, March 13th, if not beforehand, with information. I can imagine your frustration, but please know I am working with the team to bring this to a close. I appreciate your patience. Please feel free to contact me on this email.

Okay, great, new contact.

A few more emails back and forth with them. Stalling.

And then on May 30th, 275 days since the invoice was originally due.

I got this email.

I'm writing to inform you that this agency is officially winding down its operations and shuttering. After liquidating the assets and payments of a required statutory obligation, for example, taxes, secured lien holders, and judgment creditors by the company, we have no further funds for remaining creditors or our shareholders. Attached, please find a notice of dissolution. A copy has been sent to you via certified mail. And here's my favorite part. This email will no longer be monitored or active. I did pursue a few leads to try and submit a claim, but it didn't go anywhere.

By the way, you might be asking, when is it worth it to go after a brand legally? I actually asked that question to Influencer Lawyer Anita K. Sharma recently. And here's what she said. "I mean, look, it's really a cost-benefit analysis to be perfectly honest in terms of like what, you know, were you owed, you know, $5,000 or were you owed 25,000? I mean, if you're owed 5,000, it, sadly, might not be worth it. Because it's going to cost you more to litigate that and hire somebody, send letters, et cetera. And then, you know, what I always say to clients is like, we will never threaten to sue unless we're actually going to sue. So do not make that threat unless you're going to follow through on it. You know, if you say, if you don't do A, B, and C, we're going to sue, you have to sue if they don't do A, B, and C.

Meaning you don't legally have to, but you're just going to lose all credibility if you don't.

  • If it wasn't contingency, what's your ballpark cost of how much it would take to take a brand to court?
  • I mean, it's a minimum of like 10,000 at least.

So I almost forgot a crucial part of the story.

I even tried reaching out to the brand directly to figure out what the heck was going on. On June 7th, I got this message from a high-level marketing director at the brand. "Hi, Justin, your note was passed along to me, and I want to provide you with an update. The media agency that contracted the agency for us and I have been reaching out to that agency to try and get some answers. We had no idea this was happening and appreciated you bringing this to our attention." Since our campaign last year, the agency went out of business and provided creditors and shareholders with the following correspondence. Then they basically just told us to submit a claim. So the brand had already paid the agency. Honestly, reliving this entire saga has kind of given me PTSD all over again.

So you're probably wondering what you can learn as a creator from my absolutely horrible, terrible brand deal experience?

Number one, always stay on top of communication. If the brand starts slipping on their dates and responses via email, that's your cue

to start messaging them more, not less. And I think many creators tend to adapt to the cadence of how the brand or the agency is responding to them, just so that they, you know, don't seem annoying or rude, right? And that's hogwash! It's way better to be super responsive as a creator than to risk the brand slowly icing you and hoping that you'll forget about the fact that this deal is going south.

Number two, always try to get partial payment upfront. Especially if it's a significant amount of money, right? It protects you if things start coming off the rails down the line.


Number three, don't ignore your gut. Especially before you even begin the partnership. If something about the deal seems shady. You know, they're messaging you from like a personal email address, like a Gmail. Or you go to the brand's website or the agency's website, and it seems sketchy. Just pay attention to that. Yes, it may be tempting, especially if they're promising a giant payday, but trust me on this. From experience, it's not worth it. 


And just a last note, my wife and I have done hundreds of brand deals literally over the years. And this is the only time we've ever not been paid. But again, I wanted to write this because if it helps one creator avoid what happened to me, I will feel fulfilled. But in general, brand partnerships are incredible. As long as you use your head 99% of the time, you're going to be okay.


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