W. Somerset Maugham said, "There are three rules for writing the novel. Unfortunately, no one knows what they are."
Sadly, the same holds true for marketing a novel. There are many, many ideas out there for spreading the word about your fiction and spurring the Reader, that beleaguered soul drowning in a murky sea of available written entertainment, to actually purchase your book instead of (or in addition to) the handful of big-name auto-bestsellers that dominate publishing today.
No one knows which ones work, and which ones are a waste of the writer's (and reader's) time.
One of the most popular promotional activities for authors trying to carve out an audience is the Book Giveaway. The idea behind this is to generate interest in your work, and perhaps persuade those who don't win a copy of your book to buy one instead. These days, the Book Giveaway is most often done online, either through your own blog or as a guest on someone else's. The contest can be complicated (find the answer to the question on the author's website or through an internet scavenger hunt) or simple (leave a comment and be entered to win!), but the end goal is always the same: get the Reader interested enough to take a financial chance on your book.
In theory, it doesn't seem like a viable strategy - because after all, someone is going to get a copy, so they'll no longer have to buy one. And those who don't win may lack a strong enough motivation to purchase the book. This is particularly true for the unknown author. Many readers enter these contests for a chance to "try before you buy" - and if they don't have the opportunity to try, they aren't likely to want to buy. Unless the reader had already planned to buy your book in the first place, giveaways do not (logically) seem likely to spur sales.
But if you give away copies of your book to everyone who's interested in a free read, will this bring about sales?
Some publishers have seen merit in this theory. The New York Times recently ran an article about the effectiveness of giving away certain titles by certain authors for free - the ebook version only, through Amazon's Kindle (read the article here). This includes big publishers like Harlequin, Random House and Scholastic, and well-regarded e-publishers like Samhain. In each case, the publisher reported an increase in sales corresponding to the free giveaways.
However, this experiment was only performed for authors who had several published books available. In most cases, one of the author's earlier titles was made available as a free e-book, and the increase in sales was reflected in the author's other books. This seems to prove the "try before you buy" principle as a general rule regarding an author, and not an individual title.
If you have only one book available for sale, perhaps the Book Giveaway is not the best promotional avenue for you. However, once you've built a backlist, you may want to consider giving your early work away. Whether it's akin to samples at the mall food court (especially when you're starving for something good) or just plain good karma, try-before-you-buy seems to generate reader interest. And that's always a good thing.