Though only 3% of its estimated $400 million soft drink ad budget goes online, that belies the emphasis placed on the Web. "This medium is here to stay, and we buy that," says John Vail, director of digital media and marketing for Pepsi-Cola.

One reason: Despite the difficulties in measuring online ad performance, Pepsi has crafted deals that already show benefits. In a barter arrangement with Yahoo! Inc. this summer, Pepsi plastered the portals logo on 1.5 billion cans. In return, Yahoo took the company's already established loyalty program, Pepsi Stuff, to new heights. A co-branded web site, Pepsistuff.com let consumers collect points from bottle caps. The points were redeemable on the web site for prizes - everything from electronic goods to concert tickets.

The results were considerable. Three million consumers logged on and registered at the PepsiStuff site, giving the cola company detailed consumer data that normally must be paid for in market research or gleaned from focus groups. Information that once took months to obtain could now be had in days.

What’s more, Vail was able to tweak the program while it was in progress, maintaining the right inventory of the most popular prizes. "Instead of lag time data, we had real-time and we could react to it," says Vail. Sales volume rose 5% during the online promotion and the cost was about one-fifth what it had been as a mail-in project.

Pepsi has intention of slowing its Internet rush. The web is the medium of choice for Pepsi's prime demographic audience, those under 25. "They are going to where their customer hangs out and flashing their name," says Tom Pirko, a beverage consultant for Santa Barbara based Bevmark uc. "This is aimed at flipping the next generation. For Pepsi, the Internet is serious, its not a toy."

For consumer Shane Erstad, 29, that’s good news. Intrigued by the prizes and the ability to collect the points online, he became devoted to Mountain Dew and a fan of the PepsiStuff site. Even now that the game has ended, he hasn’t cut back. "I hope they repeat the promotion," he says. He can count on it and much more.

Going forward, Pepsi plans to expand on its Web site-centric E-commerce marketing efforts. Although banner ads and other more traditional ad buys have had some success, it’s the creation of engaging Pepsi web sites that has given the brand the most traction online.

For example, Vail would like to bring a virtual experience to many other Pepsi promotions, such as Choose Your Music, a current in-store create-your-own-CD promotion at participating music outlets. "We're looking ahead to the next evolution," says Vail.