The impact of pre- and post-launch publicity and advertising on new product sales

When companies launch new products, they need to understand the impact of publicity and advertising on sales. What is their relative effectiveness? Do they strengthen each other (have a positive interaction effect) or weaken each other (have a negative interaction effect)? Further, does the timing of these activities (before or after launch) affect their impact on sales? This paper develops hypotheses regarding the elasticities of pre- and post-launch publicity and advertising on sales. The hypotheses are tested on a large-scale empirical data set that tracks sales, publicity, and advertising for 3336 video games across 52 weeks covering the pre- and post-launch phases. The results demonstrate that pre-launch publicity is more effective than pre-launch advertising but that the reverse is true post-launch. Surprisingly, the analysis reveals a negative interaction effect between pre-launch advertising and publicity, which means that publicity becomes less effective when it is accompanied by higher levels of advertising for the same product. Simulations indicate that companies can gain most sales by focusing on publicity pre-launch, and that there is little benefit from increasing publicity and advertising during the same phase, which is consistent with negative (pre-launch) and zero (post-launch) interaction effects.