BEIJING: Online video revenues increased by almost 50% in China last year, and are expected to enjoy further growth as brands like Pepsi and Nescafé embrace the channel.

According to iResearch, the insights group, the online video category generated RMB9.3bn in 2012, versus RMB6.3bn in 2011 and RMB3.1bn in 2010. This total is forecast to hit RMB33.2bn in 2016.

The share of sector spending contributed by advertising came in at 72.6% last year, higher than the 67.8% recorded during 2011.

Copyright revenues accrued a 12.8% share of revenues in 2012, with value-added services on a modest 2.9%, having both lost share since 2011.

Advertising, by contrast, saw "substantial" increases in client numbers and unit prices, driven by high-profile events, rising consumer uptake and improved strategies from website owners.

The merger of Youku and Tudou, two such firms, has also created a parent company with sites attracting a combined 450m visitors, therefore underpinning these trends across the entire industry.

In a demonstration of these processes in action, Pepsi, the soft drinks brand, partnered with Tudou and Youku on a 30-minute film, premiered on their websites, called "Bring Love Home".

It released a related music video starring several celebrities, which, along with the film itself, received 71m views and 92,000 comments during its first day or so online.

"The Pepsi campaign is a perfect example of the kind of branding communications that we excel at," said Dong Yawei, senior vice president of Youku Tudou. "We understand the Chinese audience and consistently deliver content that strikes a chord."

Nescafé, the coffee range owned by Nestlé, has also allied with Youku to launch several "micro-movies", themed around different coffee flavours and starring writers, directors and travel bloggers.

"There is a paradigm shift in the way that consumers think," said Adrian Ho, Marketing Director, Nescafé China. "Consumers now want to hear inspirational stories of real life heroes whom they can look up to."

GM, the automaker, and Yili, the dairy specialist, are among the other companies that have run successful online video campaigns accruing over 100m views and 100,000 comments in China.

Data sourced from iResearch; additional content by Warc staff