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Shmoozing Celebs Is a Whole New Bag

By Stacy Perman Lash Fary is doing a little product testing. That's to say he has just indulged in a leisurely acupuncture treatment. "I like free stuff, too" laughs the founder and president of Distinctive Assets, an entertainment marketing company based in Santa Monica, Calif. "It's really in the best interests of my clients."

Then again, Fary's clients include the Grammy Awards. His outfit is charged with putting together the official Grammy goodie bag -- worth over $30,000 -- that will be given to presenters this weekend. That means collecting lavish products fit for Hollywood royalty and coveted by the hoi polloi.

SULTANS OF SWAG. In addition to the gratis acupuncture, this year's bag will be stuffed with an assortment of luxury gifts, including complimentary Lasik eye surgery (worth $5,600), a one-year membership at celebrity fitness mecca Sports Club/LA ($4,000), and a U2 Special Edition iPod ($450) to listen to on the treadmill.

From the recent Screen Actors Guild (SAG) Awards to the upcoming Grammys and Oscars, award-show season is upon us. And for a handful of specialty companies, it's time to take their own stroll down the red carpet. Over the past several years, a cottage industry of professional gifters has capitalized on the union between award shows, product placement, and celebrities, giving birth to an enormous and growing marketing opportunity for brands big and small.

These days, no affair is complete without a bag bulging with the latest beauty products, cell phones, resort vouchers, and fragrances. "It's an integral part of the event world right now," says Samantha Haft, co-founder of New York-based On 3 Productions, which has produced gift bags for the Tonys and the Independent Spirit Awards.

FIVE-FIGURE FREEBIES. For years, Hollywood's premier awards show, the Oscars, had quietly thanked presenters with a relatively modest gift collection. The idea of the five-figure freebie basket only really took off recently, as event planners and publicists noticed the public's increasing fascination with celebrities -- and their shopping habits.

Los Angeles-based Backstage Creations was one of the first gifters on the scene. As a talent coordinator for the Emmys and other award shows, part of founder Karen Wood's job was to get the performers and presenters to rehearsal on time.

"I started bringing entice them to come early," she says. "It gave them something to do while they were waiting." Quickly, word spread among companies wanting to get their products into the hands of the stars. About six years ago, Wood says, "I realized there was a service here."

LINGERING GLOW. At last weekend's SAG Awards, Backstage delivered bags filled with freebies, including Tattinger champagne, a sapphire ring, and a luxury getaway to the Grenadines. Although not at liberty to disclose the price tag -- on strict instructions from SAG -- Wood says "it's one of our highest." To put that in a little context, her most expensive basket to date -- for the 2003 MTV Video Music Awards -- rang in at $33,500.

At a time when most companies have tightened their traditional advertising and marketing budgets, gifting is a way to position products for maximum impact. Seeing Jennifer Aniston in a particular pair of jeans or George Clooney with a certain cell phone can generate much sought-after buzz.

Moreover, that buzz has a healthy afterlife, as the image of the stars and their swag continue to turn up in magazines and on TV long after traditional ads have run their course. In the past few years, St. Tropez has offered its tanning products at the Golden Globes and other events.

"GREATER EXPOSURE." "We've gotten a large amount of coverage," says Larry Batchelor, St Tropez' director of sales. "The exposure is not just with the celebrities attending, but we get additional press coverage that would be very costly to buy."

Likewise, for a fledgling firm or up-and-coming designer, a celebrity gift-bag alliance can create an effective showcase. Jewelry designer Scott Kay began giving celebrities his sterling silver creations at the American Music Awards (AMA) eight years ago. Now he participates in six events annually, giving away about $100,000 in jewelry.

"At the last AMAs, Alicia Keys came back during rehearsal, and the things she selected she actually performed in onstage," he says. "It's worth millions of dollars in marketing. And it creates a greater exposure, mystique, and allure."

MAGIC CARPET. With each year and each award show, the bags get bigger and more expensive. In 2001, the official Oscar bag -- which organizers still create in-house and embargo until just before the ceremony -- had an estimated value of $10,000. Last year, it was reportedly worth $110,000 and included a 43-inch HDTV. At the same time, the star treatment is no longer limited to the award shows themselves, with companies now organizing backstage lounges and off-site beauty makeover suites.

Just as the opportunities to give have increased, so too have the methods. Jane Ubell-Meyer, president of New York-based Madison & Mulholland, recently started giving bags filled with beauty products and best-selling books to United Airlines (UALAQ) first- and business-class passengers flying between New York and Los Angeles.

Come Oscar night, Ubell-Meyer will be on the red carpet showing off her own (unofficial) $30,000 Ultimate Nominee bag -- including a night in the presidential suite at New York's Mandarin-Oriental Hotel and fur-trimmed leg warmers -- which she will send to 20 A-listers. "Our clients are thrilled that their products are in the hands of trendsetters," Ubell-Meyer says.

PRICE OF FAME. "Historically, celebrities have helped drive product sales," says Adi Kishore, senior media and entertainment analyst with Boston-based Yankee Group. "Now what is in the baskets is a topic of discussion in the industry. And if the celebrity uses and likes the product and even mentions it, from an advertiser's perspective, that's gold."

Months in advance of an event, gifting firms begin scouring magazines and assembling armies of stylists and publicists to find products with cache. Not much is off-limits. Past items include everything from Altoids to George Foreman grills.

The business works on a pay-to-play model. In addition to donating their products or services, the gift companies work out either a per-product or flat fee, the latter ranging anywhere from $1,000 to $7,000 per basket.

VEGAS IS FOR LOSERS. The backstage lounges where celebs cool their designer heels cost more -- up to $100,000 if the retreat carries the name of an exclusive sponsor -- because their plush confines provide a prime opportunity for corporate titans to rub shoulders with performers. "When I first started calling companies," Wood says, "they couldn't believe that I was asking them to donate and pay a fee to do so. Now many companies have a whole division just for celebrity placement."

For now, gift bags are a growth industry. "You can't have an event without one," Fary boasts. And deft gifters continue to find new entry points. For one, Fary started giving consolation bags to the nominees who don't take home a statuette. This year's Oscar "losers" can look forward to, among other things, $22,000 Las Vegas weekends.

"Have we created a monster?" he asks, answering his own question: "It's a fine line between a monster and an industry." It may be better to give, but increasingly, it's not so bad to receive either. Perman is a reporter for BusinessWeek Online in New York

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