NEW YORK: PepsiCo and Unilever are among the advertisers seeking to use online branded content to engage with consumers in innovative ways.

According to figures from PQ Media, the consultancy, total expenditure on branded content reached $26 billion (€19.0bn; £17.3bn) in the US last year, an increase of 5% on an annual basis.

The company also reported that revenues generated by branded "webisodes" and advertising in online games climbed by 15.1%, to $306 million, in 2009, taking 7.7% of all spending on product placement.

Pepsi recently formed a sponsorship tie-up with If I Can Dream, a talent contest which was created by 19 Entertainment, the firm behind American Idol, and shown on Hulu.

Mountain Dew, also owned by the beverage giant, previously partnered with Paramount Digital Entertainment on Circle of 8, a mini-series that was hosted on MySpace last year.

At present, Pepsi is developing an animated project in support of Sierra Mist, its lemon and lime soda drink, and working on separate ideas with CollegeHumor and Electus, two units of IAC.

"More money is moving into digital and should move into digital, but we have to maintain a healthy budget on TV," said Frank Cooper, Pepsi's chief consumer engagement officer.

"However, you should push that TV button at the right time in the process for communicating to consumers – it should not be your default switch."

Unilever originally entered this space with In the Motherhood, which was broadcast on MSN in 2007, and promoted its own Suave brand as well as offerings from Sprint Nextel.

Its other initiatives have included The Rookie, developed for Degree Men, and short parodies of Gone With the Wind and King Kong as part of Breyer's "Smooth and Dreamy" campaign.

Bertolli pasta featured in a similar effort called Into the Heart of Italy, where three celebrities, such as the actress Marisa Tomei, travelled to the country to discover its cultural and culinary history.

"The wonderful component of digital is that there's an unbelievable amount of tracking and monitoring of consumer engagement," said Rob Master, director of media for Unilever North America.

"We're looking at everything from time spent to where users are viewing the content on our site, our partner sites and the rich-media units themselves, to length of time of these webisodes or entertainment shorts."

"There's really no clear-cut answer yet, other than it depends on the brand, objective and target. But we're starting to understand how much time a guy wants to spend with short-form content versus a woman, and that insight is helping us."

Data sourced from AdAge; additional content by Warc staff