It's hard to believe a Canadian company – let alone an Ottawa company – is behind McDonald's breakthrough virtual Happy Meal project. After all, the burger giant has always dealt with the Disneys and Pixars when it came to developing animated marketing campaigns. But when the virtual Happy Meal project launches this summer, it's expected to reach 80 million kids in 40 countries – not bad for a little shop in the capital's trendy Westboro neighbourhood.

But branded entertainment studio Fuel Industries has been quietly plugging away with their cutting-edge marketing products for almost a decade now. The 100 or so artists, programmers and animators who occupy a non-descript warehouse (and former bra factory) focus on youth markets and have become one of the most coveted branding companies around.

Now, the bra factory story could just be a joke. Company founders Mike Burns, the chief executive and Warren Tomlin, chief creative officer, are big kids at heart. But that's not necessarily a bad thing, considering a sense of the juvenile is what has helped make Fuel the huge success it is today.

“If you think about kids between the ages of six to 26, if you think of how they behave with the Web, how they think, the traditional advertising agency has a really hard time getting through to them. They download their shows. They TiVO their shows about 15 minutes (late) so they avoid commercials. When you mix that with 300 channels, it is not impossible but it is very hard to get through to that generation,” says Tomlin.

The McDonalds campaign, Fuel's latest and probably biggest project, came to them while they were in California for Billboard's Demmx Awards.

McDonalds actually sought them out and loved their idea for a virtual Happy Meal featuring Fuel's own characters, Fairies and Dragons, says Burns.

Fuel's idea was to include a small toy and a CD-ROM in every Happy Meal. The child installs a program on their computer and picks one of four fairies and one of four dragons. The animated characters lives on the desktop where kids can making them dance, juggle and hide behind icons. Each disk also comes with a game.

“We do branded entertainment, so what we do is engage that demographic in immersive entertainment experiences whether that is a game, or a viral piece, or a Facebook application. We have customers interact with the brand in a very positive way whether that is a Fed Ex golf game or whether that is an Alien vs. Predator game that we did for FOX.”

With so many companies failing to tap into the lucrative youth market, Fuel is an example of how new thinking can reach a generation that has grown up online.

Tomlin says by offering something people actually enjoy, rather than say, a commercial interrupting their favourite program, they can get their message out more effectively, especially to tech-savvy youth.

“Instead of a 60-second spot that the kids aren't watching, we engage them in a 300-second branded experience. Depending on the campaign, we would get between eight and 14 minutes of brand experience,” Tomlin said.

The numbers speak for themselves. Just last month, Fuel again made the list of PROFIT Magazine's fastest-growing companies in Canada with five-year growth of 695 per cent from just over $1-million in revenues in 2002 to $8-million in 2007. Not bad for a branding company that doesn't make commercials.

“What we do is immerse the customer with content that is relevant to them and build a relationship with them so we can relate the brand to them,” said Burns.

But since the launch of the McDonalds project, Fuel has already sent out yet another project for A&E's Two Coreys DVD release, a reality show featuring 80s heartthrobs Corey Haim and Corey Feldman.

The season finale had the two Coreys at odds with each other, so Fuel developed a rock'em sock'em game that pits the two against each other using video from the show.

“I don't think we do any Canadian work any more. About 80 to 90 per cent is in the U.S. and the rest is in Europe. That's not because we don't like Canada, but the companies with the biggest budgets and the brands who can take the biggest bets are in the U.S.,” said Burns.

Tomlin said even tough Ottawa has a great animation pool churned out of the local college and universities, their staff is also international. In an industry known for chewing up and spitting out talent, they have managed to attract people from all over the world.

“Studios and agencies … tend to grind people to a pulp. Juniors build up their portfolios and get crushed by hours and deadlines. But we try to be different,” he said.

So what is the secret to their success? How do they keep their highly skilled animators and programmers motivated?

“We yell at them constantly,” deadpanned Burns. “Quick! Be creative!”