For an ad campaign that started a revolution in marketing, the Pepsi Challenge TV spots of the 1970s and '80s were almost absurdly simple. Little more than a series of blind taste tests, these ads showed people being asked to choose between Pepsi and Coke without knowing which one they were consuming. Not surprisingly, given the sponsor, Pepsi was usually the winner.

But 30 years after the commercials debuted, neuroscientist Read Montague was still thinking about them. Something didn't make sense. If people preferred the taste of Pepsi, the drink should have dominated the market. It didn't. So in the summer of 2003, Montague gave himself a 'Pepsi Challenge' of a different sort: to figure out why people would buy a product they didn't particularly like.

What he found was the first data from an entirely new field: neuromarketing, the study of the brain's responses to ads, brands, and the rest of the messages littering the cultural landscape. Montague had his subjects take the Pepsi Challenge while he watched their neural activity with a functional MRI machine, which tracks blood flow to different regions of the brain. Without knowing what they were drinking, about half of them said they preferred Pepsi. But once Montague told them which samples were Coke, three-fourths said that drink tasted better, and their brain activity changed too. Coke "lit up" the medial prefrontal cortex -- a part of the brain that controls higher thinking. Montague's hunch was that the brain was recalling images and ideas from commercials, and the brand was overriding the actual quality of the product. For years, in the face of failed brands and laughably bad ad campaigns, marketers had argued that they could influence consumers' choices. Now, there appeared to be solid neurological proof. Montague published his findings in the October 2004 issue of Neuron, and a cottage industry was born.

Neuromarketing, in one form or another, is now one of the hottest new tools of its trade. At the most basic levels, companies are starting to sift through the piles of psychological literature that have been steadily growing since the 1990s' boom in brain-imaging technology. Surprisingly few businesses have kept tabs on the studies - until now. "Most marketers don't take a single class in psychology. A lot of the current communications projects we see are based on research from the '70s," says Justine Meaux, a scientist at Atlanta's BrightHouse Neurostrategies Group, one of the first and largest neurosciences consulting firms. "Especially in these early years, it's about teaching people the basics. What we end up doing is educating people about some false assumptions about how the brain works."

Getting an update on research is one thing; for decades, marketers have relied on behavioral studies for guidance. But some companies are taking the practice several steps further, commissioning their own fMRI studies à la Montague's test. In a study of men's reactions to cars, Daimler-Chrysler has found that sportier models activate the brain's reward centers -- the same areas that light up in response to alcohol and drugs -- as well as activating the area in the brain that recognizes faces, which may explain people's tendency to anthropomorphize their cars. Steven Quartz, a scientist at Stanford University, is currently conducting similar research on movie trailers. And in the age of poll-taking and smear campaigns, political advertising is also getting in on the game. Researchers at the University of California, Los Angeles have found that Republicans and Democrats react differently to campaign ads showing images of the Sept. 11th terrorist attacks. Those ads cause the part of the brain associated with fear to light up more vividly in Democrats than in Republicans.

That last piece of research is particularly worrisome to anti-marketing activists, some of whom are already mobilizing against the nascent field of neuromarketing. Gary Ruskin of Commercial Alert, a non-profit that argues for strict regulations on advertising, says that "a year ago almost nobody had heard of neuromarketing except for Forbes readers." Now, he says, it's everywhere, and over the past year he has waged a campaign against the practice, lobbying Congress and the American Psychological Association (APA) and threatening lawsuits against BrightHouse and other practitioners. Even though he admits the research is still "in the very preliminary stages," he says it could eventually lead to complete corporate manipulation of consumers -- or citizens, with governments using brain scans to create more effective propaganda.

Ruskin might be consoled by the fact that many neuromarketers still don't know how to apply their findings. Increased activity in the brain doesn't necessarily mean increased preference for a product. And, says Meaux, no amount of neuromarketing research can transform otherwise rational people into consumption-driven zombies. "Of course we're all influenced by the messages around us," she says. "That doesn't take away free choice." As for Ruskin, she says tersely, "there is no grounds for what he is accusing." So far, the regulatory boards agree with her: the government has decided not to investigate BrightHouse and the APA's most recent ethics statement said nothing about neuromarketing. Says Ruskin: "It was a total defeat for us."

With Commercial Alert's campaign thwarted for now, BrightHouse is moving forward. In January, the company plans to start publishing a neuroscience newsletter aimed at businesses. And although it "doesn't conduct fMRI studies except in the rarest of cases," it is getting ready to publish the results of a particularly tantalizing set of tests. While neuroscientist Montague's 'Pepsi Challenge' suggests that branding appears to make a difference in consumer preference, BrightHouse's research promises to show exactly how much emotional impact that branding can have. Marketers have long known that some brands have a seemingly magic appeal; they can elicit strong devotion, with buyers saying they identify with the brand as an extension of their personalities. The BrightHouse research is expected to show exactly which products those are. "This is really just the first step," says Meaux, who points out that no one has discovered a "buy button" in the brain. But with more and more companies peering into the minds of their consumers, could that be far off?