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The possibilities are endless, but generally fall into two categories... "the classics" (characters that have been around for awhile and are likely to be around for many years to come) and the "hot trends" (characters that are sizzling hot right now, but may or may not be around next year).
For a First Birthday Party, I recommend the "classics" so that when you and your child look at the pictures 20 years from now, you're not scratching your heads trying to remember what the theme was. Classics include Winnie the Pooh, Sesame Street, and many fairytale characters.
Fun Invitations
Make the invitations with a drawing or photo of the chacter or something that reminds people of the character (a honey pot for Winnie the Pooh or a glass slipper for Cinderella). Incorporate a popular slogan the character uses.
Fun Decorations
Buy character theme partyware if available. Decorate the party area with balloons and streamers in the characters colors. Display toy versions, drawings or posters of the character.
Fun Games & Activities
Play a game of Simon says, but change Simon to the name of the character. Example: Elmo says clap your hands.
Make a pin the blank on the blank poster (designed to fit the character). Make a ball or coin drop with targets that fit the character theme. Buy a pull string pinata of the character.
If your budget can afford it, hire an entertainer to dress like the character. If not, take Polariod pictures of guests sitting or standing next to a poster or cut out of the character.
Fun Foods
Does the character have a favorite food? For example, serve cookies for the Cookie Monster.
Serve small sandwiches, pizza, or macaroni and cheese and assorted fruit. Decorate a cake or cupcakes with figures of the character.
Fun Favors
Plastic figures of the character, stickers, and blowing bubbles make fun favors.