The emergence of new digital video technologies, combined with the increasing ubiquity of Internet access, is challenging classical video-based marketing practices. As technological evolution has enabled the World Wide Web to improve its infrastructure, more sophisticated forms of digital video have emerged. Digital videos have the potential to add new dimensions of interactivity to product placements embedded within them. This thesis investigates how product placement effectiveness might be improved using hypervideo. In a hypervideo, through interactive placements, clickable spots are activated within a video, allowing viewers to retrieve information, or buy from, the brands portrayed. As a media vehicle, hypervideo has a greater ability to allow interactivity with consumers, and capture data, while offering a fluid and tailored product placement experience, in contrast with classical non-interactive product placement. The theoretical positioning of this thesis lays at the confluence of research on product placement, and its effects on central memory, in particular recall and recognition, and interactivity literature. Specifically, to examine whether interactivity increases brand recall and recognition of product placement embedded within digital music videos. Taking Balasubramanian, Karrh and Patwardhan (2006) as a theoretical base, 10 factors directly affecting placement recall and recognition were explored to gain an understanding of the effect of interactivity. This study followed an experimental between-group design, using human-computer interaction (HCI) recording software, a pre-questionnaire, an after-exposure questionnaire and a one-week after-exposure questionnaire. Evidence from a study of 280 participants suggests that interactive product placement is more effective than non-interactive product placement within digital music videos, as the interactive process increases recall and recognition of brands. This is the first empirical study on interactive product placement in digital music videos. This thesis proposes a Product Placement Interactivity Grid which incorporates different types of interactivity between the media vehicle, product placement, and user. Future research is required to understand the impact of interactive product placement in different media vehicles.