Psst—did you hear about the controversy at the Oscars? No, I don’t mean the dearth of minorities nominated for Academy Awards, which is a real and shameful scandal.
I’m talking about the swag bags.
This year’s purported thank-you package for Oscars presenters and prominent nominees, a basket containing goodies worth an estimated $230,000, is causing a furor. First, activists opposed to Israel’s occupation of the Palestinian territories urged a boycott of the costliest item, a $55,000, 10-day jaunt to Israel including first class airline tickets and luxury accommodations.
Then the Academy of Motion Picture Arts and Sciences stepped up with a lawsuit. That gift bag? Has nothing to do with them, no way, no how. Instead, the academy would like Distinctive Assets, the promotional and product-placement company that’s distributing the things to the 25 nominees in the directing and acting categories and host Chris Rock, to cease advertising its giveaway as the “14th Annual ‘Everyone Wins’ Nominee Gift Bags in honor of the Academy Awards®.” Specifically, the academy is alleging trademark infringement.
Why is the academy ticked off? It’s not because someone asked, “Hey, why does Leonardo DiCaprio (estimated 2015 earnings: $29 million) need a free round of laser skin tightening treatment valued at $5,500, a $45,000 junket to Japan, and a $275 roll of Swiss toilet paper?” Surely he’ll show up to the Oscars anyway.
The academy is angry because of the combination of almost obscene luxury—$230,000!—and family-unfriendly freebies like a $250 vibrator and something called a Vampire Breast Lift ($1,900) that apparently besmirches the Oscars’ good name. “Press about the 2016 gift bags has focused on both the less-than-wholesome nature of some of the products,” reads the complaint, which goes on to mourn “the unseemliness of giving such high value gifts … to an elite group of celebrities."
To be clear, no one’s being particularly generous here. Jennifer Lawrence isn’t getting that Swiss toilet paper because someone’s a huge fan (though they may be!). Celebrities receive these hauls each year because companies hope the gifts will boost their bottom lines.
And the gift basket is the least of it. There’s an entire subeconomy of freebies surrounding the Oscars, not to mention other high-wattage celebrity events like the Golden Globes, the Grammy Awards and even the Kids’ Choice Awards. And this onslaught of swag seems to be growing each year.
So not only will Oscars nominees receive that basket from Distinctive Assets; they’ll also be invited to an estimated eight to 10 “gifting suites” in the week leading to the Oscars, according to Gavin Keilly, the founder and CEO of GBK Productions, which is hosting one Friday and Saturday at West Hollywood’s London hotel. Items on offer include everything from hoverboards to a stay at the Paséa Hotel and Spa in nearby Huntington Beach.
“We call it celebritizing,” said Mark Harris, the director of integrated marketing at Wow Creations Media, which hosted a gifting suite earlier this week, in an interview that appeared on YouTube. “So it’s a great way to get your brand in the hands of some terrific celebrities, which implies celebrity endorsement without paying.” Points for honesty!
In other words, the image of a celebrity holding your product posted on Instagram or captured by “Access Hollywood” is just as good as traditional advertising. Or maybe even better, because if a celebrity’s embrace of, say, workout sessions with trainer-to-the-stars Alexis Seletzky isn’t obviously part of an ad, it might accrue some extra cred among consumers. “It certainly doesn’t hurt a spa’s business when Gwyneth Paltrow gets a seaweed wrap there,” wrote the New York Post—in 2000. Things haven’t changed. “The value is definitely there,” says Ginny Scales-Medeiros, the author of the novel What Is Normal?, who paid to place her products in gift suites over the years. “When you advertise, people know you paid for the ad.”
The Oscars gift tradition dates back to the 1970s, when the academy decided to thank actors for participating. The primordial swag bag, everyone agrees, wasn’t particularly lavish, just a small gesture of appreciation. Over time it became more elaborate, initially in an effort to entice presenters to actually show up at rehearsals for the Sunday night event. You may think of the Oscars as three to four hours of entertainment, but to a celebrity, it’s unpaid work. By 1999, the bag was worth an estimated $16,000. “A slow day,” joked Jay Leno.
And then it entered the stratosphere. By 2002, the swag bag’s value had nearly doubled to $30,000. In 2004, reports had it that winners and presenters received baskets that broke into the six figures, while the losers had to make do with a mere $45,000 of gimmies. In 2006, it came with an iPod, a BlackBerry, and a six days at Marriott’s Oahu resort. That was the year the Internal Revenue Service stepped in, deeming swag bags a form of noncash compensation and declaring that recipients needed to declare them as income. “There’s no special red carpet tax loophole for the stars,” the IRS declared.
Many predicted the end of superduper swag. Nope. The official basket wasn’t the only game in town.
As the age of celebrity blossomed in the late 1990s, a product-placement cottage industry entered the scene, setting up suites where companies shelled out cash to display their wares to specially invited stars. Sometimes it got funny. In 2010, for instance, the New York Daily News reported Sarah Palin turned up with an entourage at an Oscars gifting suite and “practically cleaned the place out,” snatching up everything from Skagen watches to jewelry designed by Pascal Mouawad to a robe from designer Jenna Leigh.
These suites also offered a way to minimize the tax bill. First, celebrities only took what they wanted, as opposed to an entire basket of things they’d end up second-handing to the housekeeper. Perhaps more important, the promotional company hosting the gifting suite wasn’t responsible for figuring out the tax implications. Instead, each individual merchant was. Say a celebrity received a basket of swag with 10 items worth $500 each. That’s $5,000 in income. But if he took those same 10 items from 10 different merchants at a gifting event? Now he’s on the honor system. A business doesn’t need to issue a 1099-MISC tax form for amounts less than $600. Maybe the items went declared, and maybe they didn’t.
While the notion of gifting suites suggests an aura of luxury and exclusivity, maybe it shouldn’t. While not just anyone can get her offerings into one of these events, one major prerequisite is the ability to pay. Keilly told me he’s charging interested companies anywhere from $5,000 to $50,000 for the privilege of giving away merchandise at his gifting suite this weekend. (If you’re wondering, the lower price point permits a company a table and one representative in the room while the higher number gets you a named sponsorship of the event.)
As for the latest swag bag contretemps, it seems unlikely the Oscars freebie basket will go away, though Distinctive Assets will probably have to come up with a new way to brand its offering. Official or not, the Oscars basket connotes selectivity, and every year its gaudy contents earn breathless coverage from (and reliable clicks for) gossip and fashion publications. The entire gifting industry is way too valuable to too many parties to slink off quietly.
Besides, everyone loves a freebie. Even celebrities who can afford to pay for the item in question thousands of times over. Remember, gimmies are themselves something of a status item, an object for people who are so important they need not even pay for things like the rest of us.
If you find this kind of gross, all you can really do is check yourself the next time you’re drawn to a product because a celebrity was photographed in its general vicinity. Or you can conclude that our modern swag economy is no more absurd than any other aspect of merchandizing. Why would anyone buy a Donald Trump dress shirt or a Kardashian Kollection jumper? Those are celebrity-promoted products, too. You didn’t think Trump was designing those shirts himself, did you?