Branded content is a relatively new form of advertising medium marketing communications activity that blurs conventional distinctions between what constitutes advertising, product placement, program sponsorship and what constitutes entertainment.
Branded content is essentially a fusion of the two into one product intended to be distributed as entertainment content (programming), albeit with a highly branded quality.
Branded content, unlike conventional forms of entertainment content, is generally funded entirely by a brand or corporation rather than, for example, a Movie studio or a group of producers, but differs from traditional advertising in that it does not contain overt commercial messages about the product or service featured.
Its nearest reference is product placement, but the difference lies in that branded content is scripted so that the story enhances the product or service and creates a natural reference, rather than, as in product placement, finding a relevant slot for the product or service in an existing script. Program sponsorship, finally, is about associating your brand with an existing program or format with little or, at best, minimal influence over the actual content and/or production.